Carlos Flores
Director General
Conermex
/
Insight

Small-Scale Solar Projects Can Step Into the Light

Wed, 02/19/2014 - 14:42

Good things come to those who wait. For Carlos Flores, Director General of renewable energy solutions firm Conermex, that wait has lasted a long time. “35 years after I began my degree studies on renewable energy against traditional sources of energy, we have finally become competitive. The moment has arrived at last.” The appeal of renewable energy, particularly solar, has been heightened by favorable economic changes, such as the cost of solar panels dropping by 50% from 2010 to 2012. When set against the high electricity prices that large domestic consumers are still paying, the appeal becomes clear.

Growth may not come overnight, Flores knows. In 2012, the National Association of Solar Energy (ANES) predicted an increase in installed solar capacity of 7MW per year, a figure dwarfed by the 7.6GW Germany installed that year. However, the companies operating in the nascent solar market must plan ahead and be ready for rapid expansion. In 2012, Conermex sold 2.7MW of PV modules, which accounted for 25% of the wholesale market. However, Flores anticipates that large solar projects could soon jump to 50MW each, if not more. Should Flores prove right, those companies who have not scaled up their availability of financing or of human risk falling by the wayside. Conermex does not intend to be among them. Its shareholders combine Mexicans and Germans who have worked in the solar business for decades, in their respective countries. This double influence is moving Conermex to accommodate that expected growth, from seeking new partners to expanding their warehouse storage space.

Although keeping an eye on future expansion, Conermex sees its near-term market opportunities still lying within the residential market and small commercial projects. Such opportunities do not require a speculating financial investment but promote the company’s commitment to sustainability and environmental issues. Flores says that small-scale systems represent a 9MW market for the company, including a 180KW project for the Science and Technology Council of Zacatecas that opened in October 2012. A larger 1MW project with the government of Guerrero is also underway in Acapulco. While companies wait for big projects to arrive, solar energy has increasingly been harnessed to provide solutions to Mexico’s smaller energy problems. Conermex has been integral in helping CFE with its rural electrification efforts. It has built mini-grids for CFE where a small solar plant provides for a few homes, such as one covering 30 houses in Sierra Del Nayarit. Flores is a firm believer in such budget solutions, and hopes to see CFE soon build the 50 mini-grids it has promised. As Flores says, such mini-grids coupled with the residential solar panel market instill a long-term commitment to sustainability.

After residential solar instalations increased from 1,700 in 2012 to 4,000 in 2013, the future seems bright for small commercial installations. Flores is confident that the correct financing could see the market move on to bigger plans. “FIDE, the national commission for energy savings, is starting to fund this type of projects,” according to Flores. These signs of confidence from the government, in terms of solar, is why Conermex has been seeking to guarantee a nationwide presence for its services, despite the relative size of the market.

So just when will the awaited bloom happen? Flores expects market pressure to drive that through alone, although government help would certainly help it go faster. Flores is gladdened to see such initiatives as “FIDE testing a financing scheme where savings in electricity costs would equal repayment of loans, which could see loans paid off in as little as five years.” Combined with “CFE tariffs that are high enough to make financing feasible up to repayment terms of 15 years,” such initiatives are making large plants feasible, as can be seen with plans to develop plants in four municipalities in Sonora. Flores is quick to warn that the potential for solar plants in the municipal market may be high but that developers must take into account that administration  at the municipal level change every three years, whereas the lifecycle of a PV system runs for 20 years. Flores is confident that a perfect storm of market forces will take shape. He states that with prices dropping across the value chain, the government ready to make changes to its regulatory framework, with a growing market, effective suppliers and technological improvements, solar energy will be able to punch well above its weight class.

Is he concerned that the heavy hitters have not yet committed to solar? “No,” he answers, “Iberdrola, Abengoa and other big guys have not taken a step in this market despite having been in Mexico for many years. When they do take that step, very big changes will happen.” When those companies do decide to do more than dip their feet into the solar energy pool, they might find Conermex swimming right beside them.