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Analysis

Solar Underpins Alternative Energy Success

Mon, 02/25/2019 - 17:15

Mexico is blessed with high levels of solar irradiation across most of its territory and sliding prices have opened the door to a greater participation in the energy mix. PV large utility-scale facilities dominate the solar landscape but the country’s regulatory framework is also making distributed generation a reality. Together, thermo solar technologies represent an opportunity to seize the full potential of this resource.
“The entire sector has worked to make photovoltaic energy generation the most competitive in the world and improve on prices offered by conventional technologies,” says Álvaro García-Maltrás, President of Trina Solar Latin America and the Caribbean. “When the authorities developed this plan, they were unaware of its potential reach. Mexico is becoming a success story for alternative energy. Most alternative energy projects have been implemented within a predicted budget and with the budgeted energy generation. It is now necessary to improve the strategy and continue growing.”
According to the Mexican Association of Solar Energy (ASOLMEX), 2018 closed with 32 solar parks in operation with the most relevant growth in the northwestern region of the country. Among these is the second-biggest solar park in the world: Villanueva, a 754MW park located in Coahuila and developed by utility giant Enel Green Power.
After three successful long-term electricity auctions, solar PV has emerged as the leading technology for power generation, driven by record-breaking prices. The country’s high solar irradiation combined with market incentives have also helped position Mexico as one of the most attractive markets for investment, although the cancellation of the fourth long-term electricity auction has raised uncertainty and cast doubt on bankable contracts. As Guillermo García, President Commissioner at CRE, states: “The risk that we are facing of not renewing the auctions, from our perspective, is the risk of having blackouts in 2021. We are running late and we have to implement the necessary measures to ensure there are enough plants in three years to keep up with the pace of demand.”
In the meantime, the installations that already entered into operation will need O&M services, a niche that will have to be reinforced in the coming years. Mexico should focus its efforts on this segment, as the manufacturing industry has already been covered. “An overwhelming majority of the market’s solar panels come from China,” says Arturo Duhart, Co-Founder of EXEL Solar. “These panels have reached a degree of quality, competitive pricing and state-of-the-art technology that is hard to surpass. As such, Mexico is at disadvantage and should prioritize other solutions rather than local assembly or actual manufacturing.”
THERMO SOLAR FOR INDUSTRIAL PROCESS HEATING
According to the IEA’s 2018 edition of the Solar Heat Worldwide, in 2017 solar thermal heat supplied 388TWh, followed by photovoltaic technology at 494TWh. The 2018-2032 Renewable Energy Outlook Report, published by the Ministry of Energy, states that the installed capacity of thermo solar technologies equals 0.01 percent in terms of electricity generation. Nevertheless, the 2032 landscape does not contemplate any growth in the power generation area. On the other hand, there is room for thermo solar applications in the heating segment, mainly for industrial consumers.
High solar irradiation and strong industrial production are key ingredients for the solar process heat market, and Mexico has these characteristics. “In Mexico, 70 percent of the energy used in industrial processes comes from heat and the remainder comes from electricity,” says Angélica Quiñones, President of the National Solar Energy Association (ANES). According to the 2017 National Energy Balance, the industrial sector is the second-most energy intensive, accounting for 35 percent of the country’s energy consumption. In September 2017, Mexico had 65 projects with solar heat applications for industrial processes, totaling an installed capacity of 13.7MW. The main technology used for this purpose is parabolic trough collectors. To exploit this segment to its full potential, the existent regulatory framework should be adapted to address high-enthalpy applications, Quiñones says. “Successful case studies are what is missing for the industry to embrace thermo-solar technology. At the same time, this generates major consciousness. With supporting data, we can motivate the construction of a better policy strategy for the industry.”
GETTING READY FOR DG BOOM
Despite CFE filing a legal protection against distributed generation because of its potentially negative impact on the company’s bottom line, it has taken steps toward collaboration. From 2017, solar distributed generation has grown 70 percent, with the appearance of approximately 82,000 solar roofs. The legal framework is up and running, with interconnection modalities that encompass net metering, net billing and direct sale. The next step toward this revolution is collective distributed generation. “This model has already been implemented elsewhere in the world and it is something that the industry has requested, so we are working on its regulation,” says García. “Having multiple injections to the distribution network creates a more stable system with frequency regulation and high-power services throughout the day. Moreover, this development is creating employment opportunities and strengthening the Mexican industry, which is a priority for the new presidential administration.”
Additionally, the new tariff scheme determined by CRE has marked a major milestone in the deployment of distributed generation. “Now, Mexico’s electricity price evolution will obey market variables, such as supply and demand equilibrium, node saturation and transmission solidity,” says Juan Ávila, Director General of Top Energy. “Volatility is commonplace in mature energy markets and will start to show in Mexico. To address it, Mexico’s final users can either start generating their own energy for self-supply or capitalize on their bargaining power now that CFE is no longer the only energy supply option and energy efficiency measures are available.”
REVOLUTIONIZING TECHNOLOGIES
Industry innovation no longer relies on increasing solar cell efficiencies. Elements such as tracking devices, energy storage systems and bifacial modules are revolutionizing how these energy systems seize solar irradiation.
PV trackers are an indispensable component for any large-scale project as they increase generation capacity. “Considering the standard life cycle of a PV park with fixed panels, trackers unlock an energy-efficiency factor that goes well beyond the standard 20 percent,” says Cesar Alberte, International Vice President of Sales at Array Technologies. Given the resource in some regions of the country, this amount could increase to 25 percent. In addition to solar tracking devices, the market has seen the penetration of bifacial modules. With this technology, power can be produced from both sides of the panel. According to Solar Power World, when installed in high-reflective surfaces, a 30 percent increase in production can be achieved. The industry is adapting this trend by merging trackers with bifacial modules. “Mexico will be one of the countries where bifacial modules will be implemented faster on a large scale as this technology will allow tenders to become more competitive,” says García-Maltrás.
Energy storage technology is yet another disruptor that is already available, although pricing is a key hurdle today. “This is a movie that we already watched with PV equipment – not only with inverters but with solar panels as well. From 2013 to 2018, energy storage costs have dramatically decreased and this motivated a 70 percent decrease in generation costs as well. Big utility storage through battery systems is the second wave of innovation that will hit renewables,” says Héctor Olea, President of the Mexican Association of Solar Energy (ASOLMEX). There is only one project in Mexico that showcases the capabilities of energy storage, but the regulatory framework is setting up the conditions for this transition to happen. Says CRE’s García: “We have identified over 18 storage services, such as frequency regulation, transmission in peak periods, generation in peak periods, storage in hours of negative costs and sale in hours of high costs.”