Opportunities and challenges abound in Mexico's DG sector

Mexico's nascent distributed generation (DG) landscape offers attractive opportunities to the private sector, but challenges also abound in terms of regulation and creating customer certainty, panelists at a renewable energy conference in Mexico City agreed.

José Hernán Zambrano, CEO of Galt Energy, highlighted the business potential the company sees in DG, given that, previously, after a 12-month period, surplus energy would be lost. Now it will be paid for by state utility CFE and companies are able to generate a larger amount of electricity, seen as a positive change by private electricity generators.

Zambrano said: "We are in talks with various industries to rent rooftops to install solar, which provides us with a secure location for energy generation, and which would be followed by a specific targeting of clients.

"The solar market in Mexico is financially viable and there is access to financing, but the market also needs better regulations, because we are in a situation where anybody can install solar panels, but there is no quality control, and this could damage the industry, and consumers do not know in who to trust when choosing technology and installers.

"The standards in the Mexican solar industry need to be raised so that it can offer greater certainty to customers."

Also read: Mexico 'well on the way' to self-supply, distributed generation for C&I sector

Carla Ortiz, director of business development at RER Energy Group, said: "There is now room for much more creativity in the market and opens a window not previously available, and DG will be one of the most important factors for the growth of self-supply. However, information is still lacking and regulators need to work more on allowing the integration of more companies into the DG space.

"Mexico's solar market is still very young and there will be consolidation, and quality is fundamental to bringing credibility to the country. But there will be challenges for foreign companies, and they will do well to partner with local firms to gain local knowledge."

However, Mexico still does not have the conditions in place that would permit the interconnection of DG to flourish, and work still needs to be done to ensure sufficient transmission and distribution capacity, according to Alberto Valdés, CEO at ISDMex.

"We need more integration to make the market more competitive and attractive," Valdés said. "And the growth of DG must also be coupled with energy efficiency."

"Mexico's energy reform brings an opening to private firms' participation in DG and interconnection via net metering, and new opportunities now exist for energy exchange and the sale of surplus electricity," Francisco Mendoza, head of DG at Mexico's energy efficiency council Conuee, said.

And regarding oversight of the industry, he said the country's energy-saving trust Fide does evaluate companies active in the solar sector such as suppliers and installers and provides certification as a way of assuring consumers of their suitability and reliability.

Also read: PROJECT FINANCING: New fund to invest in Mexico's distributed solar energy