The Solar Future | Solar Energy Mexico | Scoop.it

On 28th February the Chamber collaborated with the Dutch solar business association, SolarPlaza on their all-day-conference, “A Solar Future”, part of their commercial mission to Mexico. The mission was made up of 13 international delegates and over 120 people attended the conference.

Mexico is very attractive to those wishing to invest in solar energy, with enviable levels of insolation - the global-mean average annual radiation is over 5kWh/m2 per day - and a plentiful supply of young workers.

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The conference began with a talk from Claudia Hernandez, the Director of Environment and Renewable Energy for the Energy Secretariat (SENER) who presented the context of  Mexico’s energy mix and future goals. Hernandez confirmed that the Mexican government is aware that it has to change and improve its processes to reach their 2026 target of having 35% of Mexico’s energy coming from renewables.  

John Padilla, Managing Director for IPD, was able to offer some insight into the current “state of play” in the energy sector in Mexico for the delegates. He discussed Mexico’s current - and potentially growing – dependency on natural gas, thanks to North America’s shale revolution and consequent plummeting prices (Mexico’s gas prices are based on the Henry Hub and South Texas indices.) However, looking on the ‘bright side’ he did explain that Mexico knows it has to invest more in renewables to reach its 2026 target, especially as demand for nuclear energy has all but died following recent tragedies around the world. There are also 2 million households in Mexico not connected to the central utility grid and it is in the Federal Electricity Commission’s (CFE) interests to get them connected. Padilla also explained that Mexico’s power capacity is expected to grow by 4.5% annually to 86GW in 2026 with 19.73MW coming from solar photovoltaic (PV).

Yet it remains uncertain what role solar energy and other renewables will play in Mexico’s highly anticipated Energy Reform, expected by the second semester of this year. The release of Mexico’s National Programme for Sustainable Energy is also anticipated for 2013 (the last one was published in 2009.)

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Edgar Lopez Satow, Director of Renewable Energy for the Regulatory Commission for Energy (CRE) was able to offer more practical information about the process of marketing excess electricity generated by solar PV. This can be done by connecting to Mexico’s utility grid. This grid is managed by the CFE, who are the only body in Mexico endowed with the right to sell electricity in the country. The CFE is one of the largest and most powerful public companies in Mexico which is why the CRE’s mission to promote greater competition, lower barriers to entry and balance externalities is so important.

In 2008, Mexico’s congress passed a law (Ley para el Aprovechamiento de las Energías Renovables y el Financimiento de la Transición Energetica) granting the CRE greater powers and responsibilities to better support the renewables sector.

Renewable energy can now be delivered to the utility grid when generated which the CFE buys at the prevailing rate at the interconnection point. If the energy is not used after 12 months, the CFE will buy it from the supplier at 85% of the marginal cost. Most companies and individuals (small and medium scale producers) can agree these contracts directly with the CFE. So far 1,700 contracts of this type have been signed and the majority for solar photovoltaics (see graph above). However for plants producing over 500kW of energy, contracts must be agreed upon with the CFE and the CRE.

The CFE and CRE can also schedule an “open season” to allow for new infrastructure to be constructed to transmit electricity from its source. The CRE determines the capacity of the new transmission line to be built, establishes how this new capacity will be paid for, and allocates transmission capacity among the different users.

Traditionally transmission rates are based on energy flows and location but, as this does not apply to renewables, the CRE has issued special wheeling rates based on location, tension levels used and minimum variable costs which are adjusted monthly for inflation.

Offering first-hand experience on this process, Conermex Founding Partner Carlos Flores spoke positively of the net-metering process for self-suppliers of solar energy and the fast-track interconnection process for small to medium scale producers.

Miguel Medina from Solartec – a self-starter company with a 10MW Capacity Park in Guanajuato - supported Flores’ comments. However he did acknowledge that his company had had problems sourcing initial investment and that time estimates for securing contracts with the CRE (supposedly 60 days maximum) are not so efficient in reality (approximately 180 days.)

Flores described residential high consumption users as those who can benefit most from solar PV as they currently pay “some of the highest energy tariffs in the world.” This segment is then followed by small commercial users. However the 20 million residential CFE users would need major financial incentives to switch to solar PV for cost-efficiency reasons.