Solar’s New Era: Regulation, Tax, Grid Stability

Q: KIIN Energy recently completed a landmark solar-plus-storage project with Grupo Lomas in the Riviera Maya, totaling over 15MWh of battery capacity. What does the success of this project mean for regions with challenging access to energy, such as the Yucatan Peninsula?

A: The Grupo Lomas project has been operating above expected results since its launch. This success is seen not only in the performance of the five battery and six solar photovoltaic projects but also in the economic and operational benefits for the client.

Crucially, this project is demonstrating a broader benefit for the local grid. The energy we are delivering is specifically targeted during peak hours, which is when the highest energy needs occur. By delivering power during these critical times, we are helping to decongest the existing grid infrastructure. This action improves the quality and quantity of energy available at that node, benefiting not just the hotel but also the other users in the surrounding area. The successful months of operation have been very positive for the client and are already generating other opportunities for us in the region.

Q: KIIN Energy is the primary renewable energy supplier to the automotive industry in Mexico. Which other industrial sector is your next major target for large-scale C&I deployment, and why?

A: We are focused on three main sectors. First, the hotel sector nationwide, not just in Cancun, but also expanding to areas like Puerto Vallarta and Los Cabos. Hotels have a significant need for energy. The hospitality sector often has limited space for large photovoltaic systems, which makes our energy storage solutions a competitive differentiator to serve a sector that historically has not fully benefited from distributed generation projects. 

Second, the automotive sector remains critical. We are a major renewable energy provider for Tier 1, Tier 2, and Tier 3 suppliers. We are finalizing major projects, such as a 6MW solar generation project coupled with 20MW of batteries for a Tier 1 supplier. We are also building and initiating construction on numerous contracts for their Tier 2 and Tier 3 providers.

Our third major line of business is the mining sector. We are actively working with several national mining groups. The reason for this new focus is that changes in tax concepts and fiscal rules for mining have reduced their possibilities for deductions. This makes on-site energy generation and maintenance a viable path for them, as they can utilize accelerated depreciation on photovoltaic systems to gain a fiscal advantage in this or the next fiscal year. This financial mechanism, following the shifts in mining tax laws, is making our solution very attractive.

Q: How do you compare the incentives these industries have today versus 10 years ago for contracting renewable energy?

A: The government, through its new regulations, has become a promoter of on-site generation and energy storage. This is an important incentive because it removes the permit barriers we previously faced. 

The market offers another incentive. While Mexico generally has a relatively low energy price compared to other markets, the price consistently rises due to inflation and other factors specific to each grid node. This price escalation, combined with a decrease in the cost of solar photovoltaic systems and a favorable exchange rate (as most components are imported), has made these projects highly attractive. Furthermore, while the price of batteries and capacity charges has increased, the cost of the overall storage solution put in place has also allowed for improved returns. Projects that previously offered returns of five or six years now show returns of three to four years, and in high-energy-cost zones, we are even seeing returns in as little as two years. The project itself, simply by virtue of its generated profitability, is worth pursuing, as the economic incentive is now far more compelling than it was a decade ago, in addition to the environmental benefits. The technological advancement and reliability of both solar and storage products have also made these long-term projects successful and quite robust.

Q: What do you consider to be the most important regulatory change that has impacted KIIN Energy in the energy sector?

A: The most significant is the possibility of developing projects up to 20MW on-site. While the window for this has only recently opened and we are beginning to submit documentation, this change is a crucial detonator for the industry.

Previously, to reach a 20MW capacity through distributed generation (DG), which was capped at 500KW, we needed 40 separate clients. This required managing 40 projects, 40 contracts, and 40 locations, which ultimately affected our profitability and execution capacity. If we can now develop much larger, unified projects, up to 20MW, with the same number of clients, we could potentially sell 10 to 20 times more. This new regulation creates a substantial market advantage, and companies that are well-prepared and organized with trained teams stand to capitalize on it.

Q: Beyond your opportunities in solar with industrial clients, what does the future hold for your other business lines, such as electromobility services? How is your portfolio evolving?

A: We have just launched the first electromobility marketplace in Mexico, called Solarbit.com. This platform targets both the final user and the automotive industry. We are already building both private and public charging infrastructure for some major automotive brands.

The goal of this marketplace is to establish our position in the country’s electrification, serving not just the auto manufacturers but also the end customer who wants to purchase charging stations for their vehicles. Typically, a car includes one charging station for home use, but customers soon need stations for their offices, second homes, or businesses. This marketplace aims to simplify and specialize the purchase of these electromobility products for the general Mexican market. We view this marketplace, launched recently, as a major step forward in expanding our business.

Q: What are the main targets for KIIN Energy for the next year and the medium term?

A: This year was positive; we grew by approximately 30% compared to last year, and our numbers look strong for the end of the year. We anticipate that 2026 will be a pivotal year for the industry. We believe the major catalyst will be the anticipated signing of the USMCA agreement in March. Many projects currently under negotiation are awaiting a clear definition of the rules under the treaty with the United States and Canada before moving forward. We believe that once these rules are firmly established, many of the projects we are currently negotiating will materialize, leading to a significant growth process for us.

Furthermore, the World Cup next year will be key for Mexico, particularly for the hospitality industry, with whom we work closely. This event will generate significant economic revenue, which we believe will indirectly boost our business growth in 2026.

For the medium term, we have four or five very important national clients with whom we already have two to three years of contracted work. This provides us with a strong operational foundation to ensure the company continues growing over the next three years.

KIIN Energy is involved in large-scale energy generation projects, covering all aspects of development. The company provides comprehensive engineering and construction services to ensure reliable electricity supply for its clients.