The breakneck pace of utility-scale solar power development in the southwestern U.S. desert regions of California, Arizona, New Mexico and Nevada may have some competition, especially with the political battles occurring in Washington over U.S. solar subsidies. A few American solar developers have already begun forming alliances with Mexican developers in the solar radiation-rich regions of Northern Mexico.
Mexicoremains seriously underdeveloped in terms of utility-scale solar energy. Until recently, Mexico's solar industry has focused on small, off-grid photovoltaics (PV) installations in remote areas to supply the over 3 percent of rural Mexicans who are not currently connected to the grid, according to the Mexican government. To date, about 80,000 rural PV systems are now in operation across the entire country. But even with relatively high electricity prices (about $.10 per kilowatt hour higher than the U.S.), large-scale solar power plant projects have not been forthcoming, in part due to the state-controlled energy sector monopoly and high domestic reserves of oil and gas.
The lack of credit and financial incentives for renewable energy projects had also slowed solar development until the Renewable Energy and Energy Transition Financing Law passed in November 2008. Known as LAERFTE, it calls for a framework to finance and regulate renewable energy development by consolidating existing financial and contractual incentives though Sener, Mexico’s national energy department. So far, Sener has been reluctant to set a specific target for a mix of renewable energy.
In 2009, a 174-kW array of PV panels on the roof of Wal-Mart Mexico was the largest solar array in Latin America. But in October 2011, construction began on two concentrator photovoltaic (CPV) power plants in Mexico that are slated to be the largest anywhere in Latin America. One of those projects is expected to supply about a 25 percent increase in the solar power capacity of Mexico.
Mexico’s Solar Potential
Mexico’s solar insolation has been calculated at about 5 kilowatt-hours per meter squared per day (kWh/mW/day), which is comparable with southern California. It is estimated that developing just .06 percent of Northern Mexico’s land (about 25 square kilometers) in Chihuahua or the Sonoran Desert could provide the entire country with electricity. In fact, the country’s entire average solar insolation is 60 percent greater than Germany where solar is currently seeing heavy development, according to the International Energy Agency.
The U.S.-Mexico border region, which has the best solar potential for solar technology, is currently the focal point of several current and future projects.
Solar in Durango
On October 7, 2001, a ground-breaking ceremony took place for a 500 kW CPV project in Durango, Mexico - the first phase of a 10 MW CPV power plant that is expected to be the largest CPV plant in Latin America. DelSol Systems, one of Mexico’s leading solar developers, will construct the project using Mountain View, California-based Skyline Solar’s X14 CPV System.
Skyline Solar was founded in 2007 and their X14 CPV system is so named for its ability to concentrate sunlight 14 times using glass reflectors onto PV cells backed with metal cooling fins and mounted on an integrated single-axis tracker.
The company says the system - which just received IEC 62688 certification from TUV SUD America in October and will be California Energy Commission (CEC) listed before the end of November 2011 – “delivers a levelized cost of electricity (LCOE) of less than 10 cents per kWh in sunny climates.” The X14 CPV system
can also be upgraded in the field when higher efficiency PV cells become available.
Meanwhile, Spain’s Siliken, S.A. - which has PV module production plants in Mexico and the U.S. - also announced on October 10, 2011, they will build one of the largest solar parks in the world in the Mexican State of Durango. The $300 million, 300-hectare solar park will have a power output of 100 MWs and has been dubbed by the locals as “The neighborhood of the Sun”. The first solar panels are expected to be installed in the summer of 2012, with the entire project to be carried out in 4, one-year phases.
CPV in Guanajuato
Mexican renewable energy developer Granite Chief, and San Jose, California-based SolFocus, announced on October 12, 2011, thatthey are collaborating on CPV power plants to Mexico. Granite Chief will lead the deployment of projects while SolFocus will provide the technology.
In one project, Granite Chief will install a 1 MW CPV solar farm in Apaseo el Grande, Guanajuato that will incorporate 113 SolFocus SF-1100S CPV systems to power to Granite Chief’s solar thermal and photovoltaic factory. Construction on the plant will begin in late 2011, with completion early next year. “We anticipate deploying up to 20 MW of SolFocus CPV over the next 24 months – these projects are just the start for solar energy in our country,” said Granite Chief CEO Fernando Arriaga, in a written statement.
Founded in 2005, SolFocus has been operating smaller solar projects in Mexico for over a year, as well as 11 other countries on six continents. In September 2010, SolFocus installed a 16.8 Kw CPV system at the offices of the Border Environment Cooperation Commission (BECC) in the United States-Mexico border city of Juarez. It was the first CPV installation in the Northern Mexico border region and included installation of two of SolFocus’ PV arrays that were designed to power roughly one-third of the office building's needs.
Pilot PV Plant in Chihuahua
On October 19, 2011, San Antonio-based North American Development Bank(NADBank) and the BECC concluded an agreement with the Mexican State of Chihuahua to build a pilot solar energy project in the city of Chihuahua. The $900,000 project consists of installing a 250 kW PV plant to supply electricity to a new children’s hospital in the city of Chihuahua, which is expected to see “a savings of about 20 percent in electricity costs,” according to Javier Garfio Pacheco, Secretary of Communications and Public Works for the State of Chihuahua.
The project will also serve to promote Chihuahua’s capacity to aid in the development of the renewable energy sector in the state. NADB will provide a $300,000 grant for “design, development, training, oversight, planning, and implementation services,” while BECC will provide an additional $50,000 grant to complement the development.
The State of Chihuahua also secured a commitment from Suntech Power to donate the PV panels for the project, as well as a commitment from French company Schneider Electric to provide the inverters. SunEdison Spain Construction has also agreed to provide a variety of services towards the project. Universidad Tecnológica de Chihuahua will operate the facility through its renewable energy certification program while using it for research to provide further data on the state’s solar resources.
Conclusion
Today, solar power in Mexico amounts to less than 1 percent of Mexico's total energy production, meaning utility-scale solar power is not only in its infancy, it is a huge opportunity.
But entry into the Mexican solar industry market has specific hurdles. Mexican utilities are state-owned, making it difficult for independent power providers (IPPs) to enter the market, which includes power generation, transmission and distribution controlled by the government’s Federal Commission of Electricity (CFE). This means any development of the solar industry requires government backing. But the last few years has seen some progress: IPPs are now permitted to sell power to CFE for the industrial use, and corporations can produce electricity up to 30 MW for their own use. Though any surplus power can be sold to the state-owned national grid, the lucrative residential solar power market remains totally under state control.
The U.S.-Mexico border region has the most solar potential and some U.S solar companies are well positioned to take advantage of this emerging market and the opportunities to work with Mexican companies in the development of utility-scale solar power plants. Mexico’s proximity for exporting electricity to energy-starved states in the U.S. southwest holds out huge opportunity since utilities in many of these states are mandated to increase the percentage of clean energy sources they use to produce electricity.
In fact, the idea of building an “energy corridor” to produce solar (and wind) energy to export to California and Arizona has been floated since 2009. The "U.S.-Mexico Bilateral Framework on Clean Energy and Climate Change," agreed to by Mexican President Calderon and U.S. President Obama in April 2009, promotes co-operation in the border region for reducing greenhouse-gas emissions and strengthening the flow of cross-border electricity grids to enable border states to strengthen energy trade. In addition, the Border Environment Cooperation Commission (BECC) was created in 1993 as part of the North American Free Trade Agreement (NAFTA) for enhancing the US-Mexico border region’s ability to develop and finance self-sustaining projects.
For those companies that wish to build solar power installations in Mexico, BECC works closely with federal, state, and local agencies, as well as the private-sector and the North American Development Bank to develop and implement infrastructure projects on both sides of the US-Mexico border. BECC’s jurisdiction stretches 100 kilometers north of the border into Arizona, California, New Mexico and Texas, as well as 300 kilometers south of the border in the six Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas.