Powering Mexico's Solar Market

The magnitude of Mexico’s utility-scale projects generated by the long-term electricity auctions is opening the door for specialized private players to participate in every stage of the projects. Raquel Igualá, LATAM Director of Power Electronics’ Solar Division, says the strong framework surrounding the auctions is only calling more attention to Mexico, from both local and international companies. “The design of Mexico’s long-term electricity auctions generates certainty about costs and contract maturation, together with Mexico’s stable macroeconomic variables,” she says. “It is well-known that Mexico’s economic and demographic growth will translate into increased demand for electricity, paving the way not only for long-term electricity auctions but also for private PPAs.”

With increased demand comes more competition, and Power Electronics offers two differentiating factors among power manufacturers. “First, our company is focused on customer service across the entire value chain, particularly in the development of projects and technical services. Power Electronics always tracks the entire project process, up to execution and operation,” Igualá says. “Second, our response time for any customer-related requirement has yet to be matched.” The company’s Power On Support service means service is guaranteed 24 hours a day, 365 days a year in countries where Power Electronics has a local presence. “We strive to show a level of commitment to our customers that is not seen anywhere else in the renewable energy industry,” she adds.

The Spanish power manufacturer is supplying 759MW in Latin America and 6GW worldwide. Power Electronics first established in the US and continues to consolidate throughout the Americas. It has spearheaded several flagship projects, such as the Uyuni solar park in Bolivia, located at 3,800m above sea level. “This is testament to our effective and high-level products and services,” Igualá says. Power Electronics is also supplying the first large solar park in Argentina and outlining a strategy to penetrate the Colombian market. As for its current projects in Mexico, besides the two developments it is supplying to Iberdrola, Power Electronics signed an additional 418MW in 2017. “We are working with virtually all of the first and second auction winners,” says Igualá.

But the awarded projects from the auctions have faced several challenges in terms of social and environmental impact assessments, which have delayed permits and subsequently the launch of projects. “Some of the awarded projects are still in the first phase of development and the issue of permits has extended the planned implementation date,” Igualá explains. “As for construction, only Enel’s PV park in Villanueva has reached this stage. Iberdrola’s 300MW of solar PV projects, for which we are suppliers, are also at the construction stage, but those two projects are being built through PPAs.”

Power Electronics views PPAs favorably and decided to diversify operations by expanding its business line beyond the electricity auctions. “We have secured several projects ranging from 30-40MW and we believe that the market will grow not only through auctions, but also through the multiplication of private contracts in the coming years,” Igualá says.

With a growing energy sector comes the need for professionals to take on new, more complex roles and this process brings alongside it a strengthening of the talent in the region. “This is a constant throughout Latin America. When the Chilean renewable energy market began to develop, most of the participating private companies were from Europe,” says Igualá. “Panama and Uruguay went through the same process, and in Brazil we have seen the same phenomenon, with the difference that it is a much less-developed market.” Power Electronics seeks to hire and train local talent that will contribute to the development of the sector throughout the region in general, and Mexico in particular.

Mexico’s energy demand is already transforming the country, and it is expected to grow further while electricity costs will remain high. “The country’s stable macroeconomic variables encourage financing from private banks and other financial institutions,” says Igualá. “Mexico’s energy market continues to take its first steps and Power Electronics will be there every step of the way.”