As Mexico stalls major solar projects, companies turn to smaller workarounds – EQ Mag Pro
However, for many companies, DG projects are the best option as they do not require a power permit and can take only weeks to obtain approval, compared to months or years for utility-scale projects. Analysts say they don’t expect DG’s regulations to change anytime soon, but that trend is likely to continue, at least for now.
“Companies have said, ‘A decentralized generation will give us control over our destiny.’ Friedman, a client, said:
Mexico is embroiled in tensions with its main trading partners, the United States and Canada, over President Andrés Manuel Lopez Obrador’s tightening of state control over the energy market. The United States is demanding dispute settlement negotiations with Mexico, arguing that the move is unfair to U.S. companies and likely violates regional trade agreements.
López Obrador’s quest has imbued the renewable energy sector with deep uncertainty, with currently 1,000 billion dollars by large developers such as German firm BayWa (BYWGnx.DE) and Italian company Enel (ENEI.MI). At least nine major projects over megawatts (MW) are underway. Valentina Izquierdo, a Mexico-based solar analyst at Wood Mackenzie, said it has stalled as it waits for permits from the state’s electricity regulator.
Spain’s Iberdrola (IBE.MC) has a 100 MW wind farm already built that was denied a power permit.
The majority of distributed generation projects in Mexico center around easy-to-install solar panels that can be used on site, rather than large wind turbines.
“Currently, more and more clients are turning to the DG market in Mexico because commercial and industrial clients have no other choice,” says Izquierdo.
Enlight, a Mexican solar company focused on DG projects for industrial customers, said it has customers looking to harness renewable energy from larger sources, but the political climate has made it difficult We have moved to DG as a more proactive step towards our ESG commitments.
Oscar Garcia, Chief Growth Officer at Enright, who has worked with Grupo, said: Slut.
Sector experts estimate that DG investments in Mexico have surpassed $3.5 billion over the past eight years, with another $500 million expected by the end of this year.
Green Party (PVEM) MP Nayeli Arlen Fernandez Cruz is pushing to double capacity to 1 MW, and there are also attempts to raise the threshold for DG projects, which is lower than in countries such as Brazil and Colombia.
Mexico’s latest power development plan for 2022-2036 is seven years behind the country’s previous commitment to generate 35% of its energy from renewable sources by 2024.
However, DG remains a key growth area for renewable resources, projected to reach a cumulative 16,500 MW by 2036 in a best-case scenario, an increase of nearly 725%. In contrast, no utility-scale solar or wind project scenarios were included. This is a sign that the government will continue to withhold them.
Maria José Trevino, country manager at consultancy Acclaim Energy, said: “This can be interpreted as very little permitting for utility-scale projects for renewable energy generation.
Source: Reuters
