At last week’s RETECH 2012 session on Renewable Energy in Mexico, Miguel Vazquez from the U.S. Commercial Service in Mexico City presented a detailed look at the challenges and opportunities for U.S. businesses wanting to market renewable solutions in Mexico. With its own presidential election looming, Vazquez says that Mexico’s renewable energy policies would likely get a boost, but warned its regulatory framework would continue to be a challenge as American businesses expand across the border.
He said things will likely be compounded by the fact that Mexico ‘s largest utility, CFE, has a mandate to buy the cheapest energy available. That’s a policy decision that helps zero out solar all the way into the year 2026. U.S. companies are also limited in terms of how they can work with CFE, said Vazquez. Today, only power generation projects are considered, not distribution or transmission.
But all that aside, the market for exports to Mexico can’t be ignored, especially in wind and biofuels, where Mexico ranks in the top three globally, according to Dept. of Commerce data. And from a U.S. perspective, Mexico ranks ninth for potential renewable energy exports.
Vazquez also touched on some of the current renewable incentives in Mexico . One is aimed at taxpayers, and provides a 100% deduction incentive for investing in renewable energy equipment as long as the equipment is operational for at least five years. And in 2009, the Fund for Energy Transition and Sustainable Exploit of Energy was established. In less than two years, it had a capitalization of $260 million that could be spent on sustainability projects.
Mexico is also bringing its educational institutions into the mix, making funds available for renewable R&D from the Ministry of Energy and CFE. Lastly, U.S. business could also get some help from Mexico ‘s “Green Mortgage” program, which provides a lower APR if homeowners purchase renewable energy equipment.
Even with all the incentives, Mexico ‘s renewable portfolio will still only approach 25% by 2026. Because of that, Vazquez said U.S. companies really need to do their “homework” and streamline the way they approach the market. Legal challenges, permitting and land ownership were cited as some of the biggest obstacles. He mentioned it can still take a few years for permits related to power generation projects.