New Alliance Boosts Solar Distributed Generation

For over a decade now, the use of distributed generation (DG) in Mexico has gradually built momentum as the country tries to accelerate the energy transition and replace fuel oil and diesel with renewable energy sources. On April 29 2022, the National Institute of Social Economy (INAES) presented a nine-year roadmap to develop cooperative community-based business models to produce sustainable power, hoping to spread DG’s benefits to Mexico’s many communities.

Since 2020, INAES, a decentralized body of the Ministry of Welfare, has collaborated with the German Cooperative and Raiffeisen Confederation (DGRV) and the German Development Cooperation Agency (GIZ) to develop strategies to further the potential of energy cooperatives that enable sustainable, local and equitable development. The organizations intend to use DG as a tool toward eradicating social inequality in Mexican communities.

Juan Manuel Martínez Louvier, Managing Director, INAES, highlighted the urgent need to take action to fight climate change and its relentless effects. Additionally, he described the project as a relevant planning tool that drives progress based on social development, with which organized communities can create solutions to their specific needs and attain wellbeing.

The roadmap is based on five strategic points: multifactored platform, the development and training of abilities, support to pilot programs. social integration, communication and social awareness. Gender parity-based issues are to be considered too.

During the first stage of the project’s implementation, to take place between 2022 and 2024, the focus will lie on building the project’s structure, developing the tools and technical abilities needed for model-building and strengthening implementation processes based on the lessons learned during the pilot programs. 

The roadmap’s business model for DG is founded on Mexico’s current energy regulation, which establishes that these types of systems should not exceed a capacity of 0.5MW, as well as on the law on the Social and Solidarity Economy.

Philipp Schukat, Lead Advisor BMU, GIZ, emphasized the importance of the alliances between the Mexican government and GIZ to contribute to local and national sustainable development. These cooperative community-based business models will create opportunities for the “development and stimulation of local economic activities, as well as to create exchange networks and dignifying jobs for the people of the communities,” as Schukat put it.

Recently, BBVA and GIZ published a study that evaluates the current state of DG and its prospect in a potentially growing market. In the past ten years the installed capacity of DG and its number of interconnection contracts have increased sharply, which amounts to a compounded annual capacity growth rate of 91 percent. Moreover, the study also indicates that the accumulated investment required to reach this forecast for 2026 will lie between US$3.2 and US$5.268 billion.