Trend: More Mexican industries turn to PPAs

Mexico is seeing an increase in the number of companies and industries turning to the private sector and renewables for their energy needs, signing long-term power-purchase agreements (PPAs) in a bid to lower their electricity costs and reduce their carbon footprint.

This month the US$40mn, 16MW Los Santos I solar park (pictured) opened, the first in Chihuahua state, developed by local firm Buenavista Renewables and financed by loans from the North American Development Bank (NADB) and the US' Overseas Private Investment Corporation (OPIC).

The 52,000-panel facility will supply factories belonging to Leni Cable and educational institutions in various northern states.

The plant's trackers were supplied by NEXTracker, which expanded its manufacturing operations in Mexico last year in response to growing local component demand. In an interview with BNamericas in May, the company's sales director for Latin America, Alejo López, described Mexico as brimming with solar growth potential.

Los Santos I is the latest in a series of renewables projects supplying electricity to local industry, in addition to those under construction as a result of last year's electric power auctions in March and September, which will supply electricity to state utility CFE. The third auction will be held in November.

Mexico expects to add 5GW of renewable capacity by 2019, with solar and wind generation capacity seen increasing 170% by 2020, according to the energy ministry.

Also read: Mexico could be world's 7th largest solar market by 2021

Last October, Enel Green Power México signed a 10-year PPA with HSBC to supply electricity to the bank's corporate offices and more than 1,100 branches, beginning in 2H17, from the company's 200MW Dominica wind farm in San Luis Potosí state.

Iberdrola Generación México and Grupo Modelo announced the signing of a long-term PPA in March of this year, under which the local subsidiary of the Spanish energy company will supply the brewer with electricity from a 220MW wind farm it will build in Puebla state, supplying around 490GWh/y and reducing its CO2 emissions by some 225,000t/y.

Also in Puebla, Iberdrola is also developing a US$400mn, 150MW farm in conjunction with Impulsora Latinoamericana de Energía Renovable (ILER), a subsidiary of Mexican hygiene product manufacturer Grupo PI Mabe, to supply PI Mabe's local manufacturing facility as well as other industries through PPAs.

ILER and Iberdrola also built the US$130mn, 65MW Pier II wind farm in the state, which supplies PI Mabe's factories as well as 14 other firms in Puebla, Veracruz and Jalisco.

Also read AT A GLANCE: Mexico's wind power expansion to 2020

That same month, Iberdrola signed a PPA with the Soriana supermarket chain to supply 69 stores in Baja California from its 314MW Baja California III combined cycle plant near Ensenada.

Speaking at a a renewables conference in Mexico City last year, Mario Pani, Latin America manager at German renewables firm BayWa RE, said companies in Mexico need to "wake up to the benefits of entering into PPAs with private generators" and break their dependence on state utility CFE and its "artificial" prices.

In April, work was completed on the 200MW Eólica de Coahuila wind farm in the state of the same name, and which will supply power to local mining group Industrias Peñoles.