DG Infrastructure Driven by Need to Enhance C&I Value Chains

Distributed Generation (DG) continues to be a big part of the energy transition toward renewable and cleaner power sources. A future where solar panels are ubiquitous in every home or business lies ahead. All efforts to accelerate this will help reduce CO2 emissions and mitigate climate change. In Mexico, much of the DG infrastructure is developed by private companies, although a restrictive regulatory framework holds back an industry boom.

For Ricardo Zúñiga, Country Manager, CapWatt, the opportunity for DG is clear and urgent. Zúñiga states that it is paramount to ensure these projects are successful, now more than ever before due to the urgency of climate change. He highlights that DG’s value chain is more developed and the technology costs are more accessible than they used to be, ensuring short times for ROIs. “Today, solutions for all types of demands are present because the market has developed and created different business models that work very well. However, optimal market conditions must be ensured to develop DG. We do not know what will happen once subsidies go down and if we do not move the transition forward today, we will have a problem in the future,” said Zúñiga.

DG is a term used when electricity is generated from distributed power sources, often clean energy, near the point of consumption instead of centralized power plants, whose electricity is then transmitted. DG is not necessarily isolated from the public grid but can be linked to it, capable of injecting energy surpluses when required. DG can help support the delivery of clean, reliable power to more customers and reduce electricity losses along transmission and distribution lines.

In Mexico, current regulation limits DG to 0.5MW. Companies that are investing in DG consume much more energy than this limit and are left without alternatives to continue expanding their energy decarbonization strategies. Experts recognize the impediment these regulations often pose to making DG more attractive for clients that need more power. According to Ivan Islas, Associate Director, Carbon Trust, while the conditions in other countries certainly vary, there are examples of success abroad. “We want to generate more, and more importantly, this also opens the door for innovation and can further drive down the prices along the value chain of the industry,” he pointed out.

Furthermore, experts identify secondary benefits of enhancing the DG industry. “The development of DG can also drive innovation. Information Technologies (ITs) represent a huge opportunity that will definitely grow further. ITs allow users to gather information, which provides valuable insights regarding the state of operations. This translates to financial and decarbonization benefits,” concurs Fernando del Cueto, COO, Solfium.

Mexico has up to 300,000 DG interconnection points and more companies are emerging in the market, tightening margins and complicating the sector’s growth due to the lack of professionalization or added value from participants.  Luis Miguel Aguilar, Sr. Sales Manager DG Mexico, LONGi Solar, sees the importance of regulation as a crucial factor for further professionalization and standardization in the sector. “From the point of view of technology developers, what we have to do is adapt to the environment, including regulation. Having personnel trained to respond to regulations is extremely important to also have systems that comply with all regulations for the benefit of all members of the sector,” said del Cueto.