Mexico's Solar Energy Deployment Faces Challenges
Mexico has one of the most attractive solar irradiation profiles in the world with daily solar irradiance levels between 4.4kWh/m2 and 6.3kWh/m2. The country enjoys around 2,190 hours of sunshine a year. The hotspots for the solar energy market in the country are Baja California, Coahuila, Chihuahua and Sonora, although pretty much any other area is viable, too. However, some challenges limit the country’s potential to meet the clean energy goals set by 2030.
Carla Medina, President, ASOLMEX, says industry insiders believe Mexico nearly has the double installed capacity of what is necessary to meet the country’s energy demand. Nevertheless, regional transmission capacity must be accounted for to ensure a clean and sufficient power supply.
Boosted Mexico’s huge solar potential, rapid growth in renewable energy deployment could enable the country to achieve its 35% clean energy generation goal by 2024, said Jennifer Granholm, the US Secretary of Energy. Despite Mexico’s changes in energy legislation, it has made important steps toward its energy transition by allowing companies to invest in photovoltaic solar systems and generate their own energy to use within their facilities if these systems do not exceed the 0.5MW threshold.
However, fulfilling goals may be complicated by the actual capacity to develop proper clean energy infrastructure. “Mexico does not have enough clean energy and its renewable energy development has decreased in comparison to previous years. The effective generation of clean energy is forecasted to decline, even after considering the energy generated by the Sonora Plan if it materializes. This will result in a widening gap between the country's energy generation goals. Mexico will only generate 28% of the 35% clean energy target it set for 2024 if the Sonora Plan is fully deployed. Without the Sonora Plan and other planned projects, this figure could drop down further to 26.6%,” Medina said.
Mexico must deploy 2.5GW of solar energy and 1.3GW of wind energy per year between 2023 and 2030 if it is to become a clean energy powerhouse. Medina stressed that the government and private sector must therefore work together because no one can achieve such ambitious goals by themselves.
Medina highlighted that Mexico’s deployment of clean energy infrastructure was mainly driven by the private sector but no company or government can lead the energy transition alone. “The private sector constructed 11.3GW of renewables in contrast to 0.2GW from CFE between 2016 and 2022. According to ASOLMEX, 3.8GW of new energy capacity should be deployed every year, which will require US$50 billion in the next seven years to develop generation, transmission and distribution capacity,” Medina added.
Although solar energy has been identified as the key to success for clean energy development, boosted by the technology’s availability and economic viability, Mexico must implement strong strategies for the attraction of large solar projects, enable institutional finance mechanisms for development and avoid delays in permitting.
According to Medina, to establish a strong framework for the growth of Solar PV generation, three fundamental aspects must be addressed. Firstly, reliability, which can be achieved by dividing grid investment projects into smaller segments, using bidding mechanisms to select private players for local reinforcement, easing congestion between regions with excess green energy and high-demand centers and developing proper regulations for energy storage systems. Secondly, political concerns should be addressed by creating collaboration opportunities between private players and CFE. Lastly, Mexico has to ensure certainty in the regulatory environment by guaranteeing the autonomy of energy regulatory agencies and promoting transparency as well as the independence of CENACE.