David Rico Garibaldi
Director General
Solarscape Mexico
/
Insight

Waiting for Right Government Actions on Solar

Wed, 02/19/2014 - 14:32

Sonora is one of the areas with the highest solar irradiation in the country, making it an attractive place for the installation of solar plants. The government has taken a special interest in the development of solar power plants recently and CFE has assigned a special office dedicated to the sector. In addition, the government plans to create the National Center for Innovation and Energy in Hermosillo. “Although we do not have any plants at the moment, we are simply waiting for the government’s final approval to unlock projects,” says José David Rico Garibaldi, Director General of Solarscape Mexico. “In Mexico, more than 40 different rates exist making the cost of Kw/h hard to determine. If these prices were clearly specified, taking into account the subsidies applied to reduce them, a variety of challenges would be solved. A flat rate would be the best option as the subsidies could be outlined in a clear and well-defined way,” he adds. Solarscape uses PV cells on the projects it develops, and has signed agreements with Sunpower to take advantage of this firm’s high efficiency portfolio. Despite having access to new solar technologies, Solarscape is aware of its most important competitor: natural gas. 

The low price of this resource is what makes it highly competitive in producing electricity. Solarscape offers a complete solution that includes purchasing, installation, maintenance and financing of solar energy systems but challenges appear during this process. The main challenge for the company is finding customers at the right rate and size. Not all producers can benefit from projects of less than one megawatt since that is the minimum transmission requirement. In addition, financing has represented another important challenge when working in the residential sector. Solarscape cooperates with financial institutions to obtain lower interest rates, such as the American Ex-Im Bank.

The company is looking to establish long-term relationships, which is the reason why it has been skeptical of acquiring Chinese solar panels. In general, the Mexican market is very sensitive, placing a very high premium on pricing. Therefore, developing a local manufacturing hub is unlikely to happen. Garibaldi says it is too expensive and the market is too small to create good business opportunities. Finding panels with a good price-quality ratio is not a challenge due to the competitiveness of the international markets.

“The future of the large scale industry will probably be promoted by CFE when projects over 100 MW are built. It is a CFE priority to look for foreign companies that have developed similar projects in recent years,” says Rico Garibaldi. As for Solarscape, its immediate priority is to build the first 1MW plant for online retailer Coppel. “This is just a test project for Coppel but if the company likes the project, the opportunities can be very big,” says Rico Garibaldi. “The initial investment can be recovered in seven or eight years and the average life span of the equipment can reach 30 years. In the meantime, actions taken by the government are expected to boost the sector as a whole.”