Solar Consolidates Potential Despite Challenging Year

Q: As the new president of ASOLMEX, what is your assessment of Mexico’s solar sector?

A: The past 12 months have been challenging for all markets. The renewables sector in particular has continued its development thanks to the constant effort and commitment from all of us who are part of it. In Mexico, we are experiencing a high level of uncertainty derived from the regulatory changes that have been implemented in recent months. This has limited the growth capacity of private renewable energy projects.

Despite this situation, solar energy continued to consolidate its potential, reaching a total installed photovoltaic capacity of 6,574MW at the end of 2020. This represents an increase of 31 percent compared to 2019.

Currently, there are 72 large-scale solar plants in operation across 17 states in Mexico, which is nine more than at the end of 2019. Among these is the largest power plant in Latin America, located in Viesca, Coahuila. The state of Puebla also now has a solar power plant in full operation called Cuyoaco, which has 200MW of capacity.

The development of clean energy and the solar sector in Mexico has created more than 70,000 jobs throughout the entire value chain, with more than US$9.1 billion in investments.

Q: What growth projections for solar in Mexico for both the utility scale and distributed generation (DG)?

A: We need to remember that by 2024, Mexico is committed to ensuring that 35 percent of its energy comes from renewable sources; therefore, it is necessary to continue working to meet this goal. ASOLMEX's efforts to promote the use of renewable energy in the country are unceasing. Nevertheless, we require regulatory certainty and clear planning in regard to a national energy policy.

Within the national context, distributed solar generation (DSG) is a niche where there are great opportunities for development, as the government has indicated its intention to promote this type of technology.

DSG schemes in Mexico have gained popularity thanks to the decrease in electricity generation costs for users and because there is a stable regulatory framework in the country for this segment. In fact, the National Electricity System Development Program (PRODESEN) 2020-2034 has set among its priorities the promotion of distributed generation to benefit end users and move toward an energy transition.

Q: How is Mexico’s solar sector reorienting itself to make better use of the opportunities in DG?

A: All 32 states in the country have DSG facilities, with more than 165,000 contracts nationwide and an installed capacity of 1,197MW. This highlights the multiple advantages GSD offers users by converting them into “prosumers," allowing them to produce and consume energy through relatively simple facilities that have minimal operating costs and equipment that has an increasingly longer useful life.

ASOLMEX has been actively involved in nationwide efforts that encourage the use of renewable energy across Mexico. An example of these efforts is the association's constant dialog with members of the Chambers of Deputies and Senators in 2020 to promote initiatives that allow the generation capacity exempted for DSG contracts to be increased from 0.5 to 1.0MW.

Q: What are the main challenges solar players need to overcome to attract the investment needed to complete their projects?

A: According to the Coalition for Action of the International Renewable Energy Agency (IRENA), Mexico has one of the world’s most important development potentials in the sector. This positioned the country among the main players in the energy transition efforts in the last decade.

To continue this positive trend, and allow more players in the sector to contribute to the development of the renewable segment in the near future, actions must focus on prioritizing the competitiveness of the energy system and promote certainty and long-term stability in sector-related policies, as well as promote a market that supports the integration of renewables in the energy sector.

It is also a priority to resume investments in Mexico’s transmission and distribution systems.

ASOLMEX’s goal is to contribute to a promising vision of the future, where technology continues its rapid evolution.

Q: How do you think battery storage combined with solar will grow in Mexico, despite the often-mentioned lack of a substantial legal framework to support it?

A: Several years ago, when renewable energies began to gain popularity internationally, there was widespread concern about the generation and storage capacity for these types of technologies. Today, thanks to technological development, concerns have gradually disappeared.

Solar energy storage in batteries has increased in efficiency every year, and its installation has been multiplied around the world. This type of renewable energy can be considered an efficient and self-sufficient generation alternative, regardless of its generation time schedule.

The viability of battery storage has been a reality in Mexico since 2018, when Baja California Sur became the first entity to host a solar power plant with energy storage: Aura Solar III.

Q: What is ASOLMEX’s main focus for 2021 and what does it hope to achieve?

A: Mexico’s potential for solar power generation is extraordinary. We will continue to hold talks with the government to obtain an understanding that values the development that has been created, as well as to achieve certainty, which is necessary to consolidate the solar sector, both at the utility scale level and in distributed generation.

ASOLMEX groups operators, investors, providers and developers of utility-scale solar projects. It represents the interests of the industry through a forum that motivates the advancement of the regulatory and legal framework.