Stakeholders Await Mexican PV Market Take Off: Solar Finance Tour Mexico Wrap Up

In 2014, the Mexican government announced a massive energy reform that would completely restructure the energy industry, bringing a specific emphasis to the importance of renewable energy within the Mexican market. Solar PV has been at the forefront of the global renewable energy market, so it comes as no surprise that Mexico, home to some of the highest solar irradiation levels in the world, coupled with rising electricity prices and an increasing demand for power, would be ready and willing to begin their huge PV undertaking.

With these perfect conditions in place, the Mexican PV market is ready to take off, but it has yet to make the huge waves that experts are predicting. So what can stakeholders do while Mexico is teetering on the edge? The answer is simple: be patient.

Investors from all over the world came together during Solarplaza’s Solar Project Development and Finance Tour Mexico, from March 9-13, 2015 to discuss how they can work together within the emerging Mexican market that is slated to soon dominate the solar PV world. But the question still remains: when?

Government officials from SENER (Ministry of Energy), the CRE (Energy Regulatory Commission) and CENACE (National Energy Control Center) all participated in Solarplaza’s executive event, as well as the Trade Mission where they attended exclusive face to face meetings, bringing enthusiasm and expertise to quell the masses all eagerly awaiting the confirmation from the Mexican government that they may continue adding projects to the pipeline. Investors and financiers from all over the world were told that within the next 6 to 18 months, the Mexican market will begin to produce the results expected.

Other high ranking industry officials such as Vishal Shah, Managing Director of Deutsche Bank, Hector Olea, President of ASOLMEX, and Adam James, Senior Analyst for GTM Research shared their optimism and visions for the up and coming Mexican PV market. Mr. Shah explained that grid parity is already occurring in parts of Mexico, and anticipates faster implementation of the newly established government regulations. Adam James importantly noted that though the primary opportunity for solar is presently in utility-scale development, which amounts to 77% of expected capacity between 2014-2018, solar will make a huge impact in all areas of the market.

Host of the Solar Project Development and Finance Tour in Mexico, Borja Gutierrez of Solarplaza, emphasizes that the government has made an exceptional amount of progress, but is not yet finished. Cites Gutierrez, “Companies looking to get involved in the Mexican market need to do so now. Although there is still uncertainty in the market, the companies that are establishing their network and strategies for Mexico now will be at the forefront of the market in the coming months when all the market rules finally emerge. As we have learned from the experience of previous projects, the whole process of signing a PPA can take up to 24 months. Companies thinking about investing in the next year or two could be too late.

Stakeholders are now working together to form strategic partnerships, exchange ideas and develop marketing strategies. Panelist Claudio Rodriguez spoke highly of the event in his evaluation of the week, “It was a highly interesting event where things were told as they really are at present. This is what the audience expects, and I think the topics of lessons learned and concrete steps to give more coverage to solar energy were well received."  Daniel Rosen, a participant of the conference expressed, “Bravo for a substantive, quality event!  I felt I really obtained a better sense of the overall market, the market data available, and connected with some of the leading industry players.

Investors and financiers considering to make long-term solar PV investments in the near future should also look towards other emerging Latin American markets, such as Chile, to invest in going forward. According to Ignacio Fernandez Stearns of IDB, a participant of the event, added in his evaluation that “Chile is a more mature market in which our organization already has closed transactions. Mexico has enormous potential in the long term and along with Chile is one of the most promising markets in Latin America.

The outlook is very good for the Chilean solar market, making the second edition of Solarplaza’s high-level Trade Mission, Solar PV Trade Mission Chile from June 1-5 2015, of even more importance to future investors and global stakeholders seeking to get further involved in the booming Latin American PV market. Chile, like Mexico, has excellent solar irradiation, and a rising demand for more electricity (for more information visit www.pvtrademissionchile.com).

According to Vishal Shah, emerging market yieldcos in 2015 will be even more significant because of the potential to lower the cost of capital emerging market projects by 300-400 bps and reduce solar electricity costs by 3-4 cents per kWh. With this information, emerging market yieldcos are likely to be very relevant for Chile and many other developing countries this year. Solarplaza will organize YieldCon, the first international conference on solar yieldcos on 2nd July 2015, in London: for more information about visit the website www.yieldcon.com