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News Article

Paradigm Shift in Distributed Power Generation

Wed, 02/24/2016 - 13:00

The afternoon session of Mexico Energy Forum 2016 was focused on renewables. To start the green energy discussions, SolarCity Mexico’s Vice President shared his view about the solar energy and distributed generation sectors in Mexico. Initially, Desentis shared the six success factors that helped SolarCity boost solar energy in the US: incentives, costs reductions, financial schemes, process of excellence, a focus on quality and efficiency, and investment in research and development. He explained that the US market represents one of the biggest solar markets worldwide currently and that California alone has around 50 times more solar energy production than Mexico. According to Desentis, if Mexico maintains momentum, solar energy production in the country could reach 1GW by 2020.

Besides the potential growth, the opening of the wholesale electricity market piqued SolarCity’s interest in investing in Mexico, and Desentis explained that the company considers the utilization of net metering schemes to be solid incentives, which involves the accelerated depreciation and the incorporation of clean energy certificates in the Mexican market. Compared to the US, capital costs in Mexico are considerable higher, but in terms of variable costs the latter offers more competitive numbers, mainly due to the cheaper labor cost.

Despite all the benefits, Desentis explained the challenges to overcome to make solar energy successful in Mexico, such as the need to develop a national regulatory framework with a special focus on distributed generation and isolated supply technologies, as well as the potential impact that the separation of CFE could have in the solar sector, especially as a direct competitor.