Distributed Generation Solutions Support Nearshoring

Q: How has the appetite for renewable energies changed over the past three years?

A: Renewable energy is now more attractive and competitive. In the past, it was not that economically viable, but it is now highly competitive, and there is also a push from international companies toward these energies. For example, major automakers will not contract suppliers unless they use a certain percentage of green suppliers. Hopefully, companies not only meet the requirements but also have the appetite to be more environmentally friendly and socially responsible.

Q: What changes have you perceived in the Mexican market regarding the development of commercial and industrial-scale (C&I) solar energy and battery storage projects?

A: Mexico has seen little infrastructure development during this administration, so large-scale projects do not have the capacity to release energy effectively. As a result, projects have had to become more geolocalized or distributed. As a result, clients need to rely on resources much closer to their facilities instead of a large 200MW or 300MW plant. The lack of infrastructure also pushes us toward this sector. Even if there were investments in infrastructure, the quantity and outcome required would be greater. Nearshoring is also contributing to distributed generation. We all seek to have everything closer to optimized costs.

Q: How well-received are your storage and solar solutions in the market?

A: The lower investment in energy and infrastructure have led to the generation of energy of less-than-optimal quality, which is favorable for energy storage. Solar projects are ideal when the sun is shining but require storage for the rest of the time. The country needs legislation that promotes energy storage, especially regarding tax incentives. In the United States, there are many fiscal incentives to foster the growth of renewable energy.

Q: How is the arrival of more international players influencing ESG compliance and guiding sustainable efforts?

A: In every market, some simply aim to deliver a product while others strive to deliver a quality service. We take ownership of the product. Others sell directly to the end customer and leave the operation and functionality of the product to the client. As intermediaries, if a product does not perform optimally, we are affected because our business model depends on the income from that product.

Safety is our top priority. For example, during hurricanes we sometimes shut down all our systems on the peninsula to avoid risks. This is for both safety and quality reasons. Quality is crucial for the customer, but it is also important to us. In the long term, we take ownership of the product, ensuring the customer receives it in the best possible condition and that it operates at peak performance throughout its life cycle

Q: How are you navigating the challenges that the sector is facing, such as regulatory delays, grid strain, and lack of financial incentives?

A: We have sought to adapt to the market. We develop larger projects, but we have found them to be somewhat riskier and subject to more delays. We look for markets where the benefits are maximized for both the client and us. We act as facilitators to ensure the customer receives a quality product.

Regulatory incentives, such as subsidies or transferable tax incentives, would benefit the sector by simplifying access to renewable energy with fewer regulatory hurdles. This could foster synergies with financial entities to offer more in a more liberated market.

Q: What role will Power Purchase Agreements (PPAs) have during the next administration?

A: Any change could be positive for the sector. PPAs will continue to exist. They are mechanisms for the end customer to gain economic value, giving them access to a quality product without needing to be heavily involved.

Q: What are the main challenges holding back Mexico’s energy market and how could these be solved?

A: Incentives and regulations accelerate market growth. With the regulatory requirements in place to meet environmental objectives, growth is inevitable. Large companies are not interested in products that do not meet these requirements; they seek green products. Our group is transitioning toward greener and socially responsible practices. When this trend is supported by regulation, it opens the market further. This is what the United States has: multiple markets with well-structured regulatory incentives.

Nearshoring in the energy sector translates into distributed generation. Microgrids and bringing energy as close as possible to consumers lead to better quality while avoiding losses. Demand for these products will drive faster deployment.

Q: How well-prepared is Mexico for the arrival of more automotive players and the electromobility trend?

A: The country has the professional capacity to adopt this trend. Mexico has highly skilled individuals across all fields, on par with talent from the United States. Mexico has the necessary conditions for growth. Infrastructure is greatly needed, but developing it requires regulation that promotes such investment.

Q: What are Forefront Power's main objectives in the Mexican market for 2024 and 2025?

A: In broad terms, our goal is to continue investing in Mexico. Forefront Power is part of the Mitsui group, and is the flagship for its renewable energy business. We aim to support the group in becoming more socially responsible and sustainable, while continuing to grow in Mexico. We hope that the transition from one government to another does not hinder decisions and that the environment remains favorable.

ForeFront Power is a leading developer of commercial and industrial solar energy and battery storage projects for the United States and Mexico, also offering vehicle fleet electrification services. The ForeFront Power team has 15 years of experience working together to develop over 1,800 behind-the-meterand community solar projects, totaling more than 1.6GW-DC of renewable electricity.