Working Toward Solar Energy's Bright FutureWed, 02/21/2018 - 13:23
Mexico offers solar irradiation levels averaging 5.5kWh/ m2 per year, according to Mexico’s Institute of Electric Research’s (IIE) Geographic Information System for Renewable Energy in Mexico (SIGER). In its latest Renewable Energy Progress Report, the Ministry of Energy counted 290MW of installed solar power capacity in the first quarter of 2016 and expects to close 2019 with an aggregate 5,400MW of total installed capacity of solar power alone. The country's electricity industry is mobilizing to further boost this renewable source of energy.
“We believe Mexico’s largest growth in 2018 will not only be in the utilities sector but also in distributed generation,” says Javier Romero, Executive Director of the Mexican Association of PV Equipment Manufacturers (AMFEF). “It is very simple: most of the production that members of AMFEF are selling in the local market is for distributed generation. Our experience demonstrates that it is a great market where we can compete both in price and productquality levels.”
Despite a rich solar resource and exponential growth projections, Mexico’s solar power is not without its hurdles, particularly considering electricity tariff levels across the country’s different types of users. “If you look at domestic high consumption, as well as the commercial T2 tariff and the municipality tariff, we already have grid parity,” says Romero. “It is absent from the rest of the sectors, particularly in the industrial segment. This requires adopting a new scheme that was recently approved by CRE, which enables net metering, total energy sales and net billing.” With this regulatory modification, CRE expects to close an additional 15,000 small and medium-scale interconnection contracts, twice as much as it had in 2016. “With these types of credits, the government will no longer be required to subsidize the T1 tariff in the short term and it will have a positive effect on the user’s electricity consumption.”
Another major element surrounding solar power in Mexico involves financing PV installations to bolster distributed generation. “For the moment, only two banks are lending money for these type of projects,” Romero says. “We have set out to show them that renewable energy is perfectly capable of cementing itself as a long-lasting industry, that the technology works as it has been working for the last 20 to 30 years in other countries and will continue to perform well in the future.” Several governmental programs in place can change these subsidies into credits and allocate them toward solar panel ownership. To that end, Romero says AMFEF’s primary focus is the financial sector, looking for investors interested in participating in the country’s distributed generation opportunities and to provide capital for the T1 tariff users.
AMFEF wants to capitalize on the country’s proven track record for excellence in the manufacturing sector, as shown by Mexico’s automotive and aeronautics industries. “Mexico must take advantage of this opportunity to reach a position where it can create its own solar industry, capable of competing with the quality levels and competitive prices of the rest of the world.”
The association is working closely with the government to build productive chains and consolidate the PV market. In the coming years, AMFEF hopes to diversify and integrate new PV sector members, including companies specialized in solar trackers, solar inverters and other PV implementation equipment. While AMFEF highlights its three founding members, being the largest PV manufacturers nationwide, Romero estimates Mexico does not have more than eight local manufacturers, half of which manufacture on a small scale. But the future looks bright for Mexico’s solar power. “In the coming years, we expect bigger players to arrive on Mexico’s solar scene, as well as increased production lines at our founding members,” says Romero.
Mexico's capacity to increase the operating interconnected PV systems nationwide will have an important role in the future. “We only have 25,000 interconnected contracts to this day,” says Romero. “Our major challenge is to get more users to trust PV systems and organically grow toward technological solutions like batteries and energy storage that further cement solar power’s reliability.”