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Solar in Mexico

Bruno Bernal is CEO of Eosol Energy, a company that operates internationally through the promotion and development of all types of projects related to the production and supply of energy, with particular emphasis in the field of renewable energy. The company's business is still mainly in the areas of wind, photovoltaics, solar thermal and biomass.

Eosol Energy has a photovoltaic plant in the Mexican state of Durango, noted for being the first to be fully integrated into the electricity grid managed by the Federal Electricity Commission (CFE). Under the name of Tai-I, these facilities have a current capacity of 16.8MW and increasing the rate of production in the near future,  it will generate 32GW of electricity per hour to benefit each year to more than 2000 customers in Mexico : a series of advances that contribute significantly to meeting the highest levels of energy demand from non-conventional sources.

In anticipation of RenovaMex 2014, which takes place 19 to 20 November in Mexico City, Mexico, Brandon Paramo, Project Manager of FCBI Latam, a research firm that supports emerging markets, spoke with Mr. Bernal about the emerging photovoltaic market in Mexico.

FCBI Latam: Could you tell us more about your experience in the construction of the photovoltaic plant Durango and the different stages of the process? What were the main challenges that had to be overcome to ensure the success of the project?

Bruno Bernal:  In 2009, we participated as founding partners in the construction of the first photovoltaic plant in Mexico. It was projected to be a 350 KW solar power plant, and it was owned by Chrysler, which gave us the opportunity to meet our local partners. 

From then on, we began to study the entire Mexican geography to find the most appropriate place in which to develop our plans; a location that would provide a good combination of solar radiation and temperature, plus favorable geopolitical. We opted for the state of Durango because it presented a balance between all these requirements. For example, the state of Baja California has higher levels of solar radiation, but their electrical infrastructure is poor.

Finally had the very great fortune of having with the government under President Enrique Peña Nieto. We met with the governor of Durango to resume negotiations and expedite the procedures, which concluded with the signing of the agreement. Currently working with CFE (Comisión Federal de Electricidad) is easier because they have shown that they are more willing to help, but in some specific cases are still too reluctant to collaboration.

FCBI Latam: How should renewable markets be designed to make them more competitive in the future?

Bruno Bernal: I am convinced that Mexico should follow the example of Germany and Canada at the time of planning the development of this industry, considering how well the model worked for Feed-In Tariffs in these two countries. If you believe a previous registration in which the rate is fixed, either by self-regulation or function of the emergence of new players in the market, it is logical that prices be set by the needs of the moment. Anyway, my personal proposal - which I defended in my PhD thesis - is a little more radical: I would establish a fee for a period of 20 years and after that time, nationalize the entire facility in order to encourage a drop in progressive price. I am clear that clean energy can also be the cheapest in the world once you have recovered the initial investment, since an adequate regulatory framework for its operation gives rise to reducing energy costs significantly over time.

Imagine you are an investor willing to put part of your capital in a renewable project that offers a 15% interest over 20 years, with a rate of 80 or 90 dollars per MW generated. That would be at about the same price line that is handled in the sectors of gas and coal. After that period ends, you would spend to receive $ 25 per MW rather than the amount initially fixed with the intention of preparing the ground for a more competitive market, which would be more than enough when you have recovered your investment and its corresponding return. Of course, the key to this system is required to submit to the agreed upon rate reduction: would not be allowed to get out of this mechanism to operate independently. I think this approach would not only ensure that renewable technologies were able to meet the growing energy demand, but also to do so by offering the most competitive prices, even below those presented by nuclear energy. I think that 100% of the PV industry in Mexico would choose this model if became operational.

FCBI Latam: In regard to the purely technological terms, what are the most pressing challenges ahead for the renewable sector to consolidate its position in the energy landscape of Mexico?

Bruno Bernal: Our ultimate goal is to be able to generate electricity continuously, 24 hours a day, and the day when we can meet this goal, I really do not have to worry about anything else. However, the technological developments that are required to achieve these levels of production does not come from the hand of the energy industry, but will do so in the automotive sector and, more specifically, innovative companies such as Tesla.

FCBI Latam: What are the competitive advantages of solar energy relative to other sources such as nuclear?

Bruno Bernal: It has been revealed that Mexico is planning the construction of a nuclear power that, if I am not mistaken, is expected to generate 10,000 MW of electricity, and the last reference price that we have in this area corresponds with Feed-In Tariff that the British government awarded Areva and EDF, which is estimated at 110 euros per MW / hour produced. This example makes it clear that not only the rates that are used in this field are greater than those that could be fixed in the photovoltaic sector, but this circumstance should add a wait of at least 10 years before the nuclear plant was built and ready for operation, plus the attendant costs associated with the construction, public administration and other legal formalities.

By contrast, the development of photovoltaic systems would not only be more cost effective for the first 15 years of the Feed-In Tariff, but after the end of the first phase under the contract, prices would fall drastically -about 25 euros per MW / hour- and end up in the lower end of the market. The disparity in costs in this comparison are obvious and it should be thoroughly considered when planning the energy future. I'm sure that in a period of 20 years, solar PV could clearly outperform nuclear as the most affordable and competitive in the context of non-conventional energy source.

Bruno Bernal will be participating as a speaker in RenovaMex 2014.

Labels: Mexico,Central America,clean energy,renewable energy,solar energy,Energy Eosol,Bruno Bernal

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