Solar PV’s dominance of Mexico’s inaugural Clean Energy Auction – in
which it claimed 74% of the contracts offered – has compelled analysts
at GTM Research to revise their installation forecasts upwards for 2016
to 646 MW.
Last year, Mexico added 104 MW of solar PV, meaning this year’s
revised forecast represents a growth rate year-over-year of 521%. This
bullish revisit stems from solar PV’s performance in the country’s
auction, in which seven leading developers secured 1,860 MW of solar PV capacity, with all 11 projects receiving four million Clean Energy Certificates (CELs) in the process.
Solar picks up the pace
GTM
Research’s Latin America PV Playbook, in which it analyzes the nation’s
solar portfolio and plans, found that Mexico ended 2015 with 246 MW of
cumulative solar PV capacity installed. The analysts had forecast growth
of 382 MW of new solar for 2016, of which the bulk – 300 MW – would be
in the large-scale sector. All of this capacity was expected under
projects "grandfathered" under the now-discontinued new energy
transition law, with no further demand for the year anticipated.
Even prior to March’s auction, GTM expected solar to secure not more
than 200 MW back in January, but quickly increased that estimate to 500
MW following a burst of interest from large international developers in the then-forthcoming auction.
In securing more than 1.8 GW of PV projects, however, solar has
outperformed all forecasts, prompting the GTM revision upwards for the
year to 646 MW of new capacity. In 2017, that figure is expected to
reach 1,513 MW – a growth rate of 134% as opposed to a previous 77%
growth forecast.
Also noteworthy, GTM Research said, was the average contract price of
$50.7/MWh, which was described as "very aggressive", particularly
considering its broad range: Enel Green Power’s proposed 437 MW solar
project was awarded a strike price of $35.44/MWh, while Photoemeris
Sustentable’s 29 MW farm closed at $67.5/MWh.
In comparing these average large-scale prices to other enigmatic
solar markets, Mexico comes out favourably, besting the likes of India,
Peru and a pre-ITC extension U.S.
"Clearly the solar industry globally has seen an opportunity in
Mexico that has already been acknowledged by the likes of SolarCity last
year," wrote GTM’S Mohit Anand. "Low labor costs, excellent
irradiation, a stable economy, and a strong PPA by a government-backed
utility in the auction are some of the common reasons why local
developers and experienced international players alike have flocked to
Mexico for a piece of the solar pie."
Based on government clean energy ambitions – Mexico is targeting 35%
renewable penetration by 2024, rising to 45% by 3036 – GTM Research adds
that cumulative solar PV in the country could be between 4-6 GW by
2030.
Mexico’s strength lies in its attractive internal rates of return
(IRR) for developers, while the country’s ties and proximity to the U.S.
make international, low-cost financing easier to come by, particularly
as many contracts are secured on a U.S.-dollar-denomination basis. The
size of the projects awarded in the auction – average 150 MW – is also
helping to keep costs down, GTM’s analysis added.
The auction’s completion deadlines of January-March 2018 could add
pressure on some developers, and there may be a delay or overspill of
around 300 MW of projects into 2018, the analysts add, but the general
consensus is one of unstinting positivity that the ball really is
rolling now for Mexico’s solar market.
(
http://www.pv-magazine.com)