Will Mexico’s Solar Potential Be Boosted by COVID-19?

One day after Mexico entered Phase 3 in its fight against COVID-19, it might be a challenge to see the bright side with people stuck inside and negative news dominating front pages. Nevertheless, for some industries this pandemic could benefit their finances. Although COVID-19 could lead to a serious recession in Mexico, its untapped solar potential could see a boost caused by indirect effects.

COVID-19 has had a strong impact on producers in the solar sector, particularly in China. The first country that was affected by the global pandemic hosts most of the world’s PV module and inverter factories. Green Tech Media (GTM) reported that the shutdown halted the predicted decline in solar panel prices almost completely during 1Q20. Nonetheless, analysts at Wood Mackenzie Power & Renewables predict that the decrease in prices will pick up again. As factories restart production, they might suffer from the decline while trying to deal with uncertain demand levels. Chinese factories, for instance, have resumed production, although major buyers such as the US are not buying due to the country’s decision to cease non-essential activities.

Nonetheless, what can only be seen as a loss for producers turns into a gain for buyers. El Economista already reported in March that the predicted drop in solar panel prices led to an environment where the investment in their purchase can be recuperated in a short timeframe of two years. If prices drop further, this timeframe will shrink along with it. For Mexico’s solar project developers, this is good news. It is no secret that the country has a fantastic potential for solar powered projects, with excellent access to sunlight and no shortage of potential areas to start building. Solar panels grow more efficient by the year, with some major developments having been announced just this month. Their lifespan is excellent as well, as they can easily reach over 20 years of service if they are maintained adequately.

The situation arises at an opportune moment, when Mexico is already adapting more and more solar into its energy mix. Earlier in April, ASOLMEX announced that the country hit a 5GW solar record coming from 67 solar power plants operating within its boundaries. This puts Mexico in a prominent position regarding solar energy and in a good place to benefit from recent developments in the sector.