Renewable Energy Industry

Business Intelligence Unit 2016

Contents
1. The Industry in Mexico
1.2 Potential of power generation
1.3 Renewable power stations
1.4 Investment
1.5 Companies in Mexico
1.6 Forecast to 2028
2. Solar Industry
2.1 Solar potential
2.2 Solar projects
2.3 Solar equipment manufacturing companies
2.4 PV Market attractiveness ranking 2014
2.5 Supply chain
3. Wind Industry
3.1 Wind potential
3.2 Wind projects
3.3 Supply chain
4. Legal framework
4.1 Private Production
4.2 Electricity Industry Law
4.3 Incentives
4.4 Financing
1. The
Industry in
Mexico
 1. 1 Potential of power generation
According to the National Inventory of
Renewable Energies (Inventario Nacional ________________
de Energías Renovables, INER), Mexico has
plenty of natural resources for power
generation from renewable sources.
The goal of the federal
The country has a proven potential to
generate up to 45,703 GWh/year of government is to achieve the
electricity. However, these estimates are
increased if we consider the probable
reserves. share of 35% of clean
Potentialforelectricitygenerationfromrenewableenergies (GWh/year)
Geothermal

technologies in total power

Hydro
Wind

Solar

Total
Bio

generation by 2024.
Probable 391 45,207 23,028 68,626
Proven 2,396 19,805 2,355 4,796 16,351 45,703
_________________
Total 2,787 19,805 47,562 27,824 16,351 114,329
Source: Renewable Energy Prospects 2014-2028, Ministry of Energy,
 1. 2 Installed capacity
In late 2015, México had 16,665 MW of renewable energy installed capacity, including
major hydroelectric plants.
Renewable power in México 2015
Source MW GWh/year

Hydro 12,474 36,991

Wind 2,621 7,676

Geothermal 858 6,027

Bioenergy 647 1,414

Solar 65 62

Total 16,665 52,170

Source: National Inventory of Renewable Energy, Ministry of Energy
 1. 3 Renewable Power Stations
installed Capacity In Construction or About to Start
Operations MW

In 2015 the Energy

Hydro

Wind
Solar

Total
Geo
State

Bio
Regulatory Commission had Sonora 37 3 1,650 104 1,793
Chihuahua 10 5 1,656 30 1,701

listed 15,815 MW in projects Coahuila 3

491
1,151 1,645
Tamaulipas 0 120 1,021 1,141
SLP 1 430 479 910
which are in construction or Jalisco 31 28 380 825
50 336
Guanajuato 15 4 568 187 774
about to start operations. Veracruz 534 113 1 120 768
Zacatecas 0 335 433 767
Nuevo León 5 126 592 723
Oaxaca 77 50 585 712
Puebla 162 0 30 416 609
Durango 0 450 121 571
BC 28 4 105 403 540
Yucatán 1 86 322 408
Otros 269 194 55 1,301 110 1,929
Total 1,163 410.72 105 7,685 6,452 15,815
Source: Energy Regulatory Commission
Source: Energy Regulatory Commission
 1. 4 Foreign Direct Investment
Many transnational renewable energy equipment suppliers and project developers consider
Mexico an appealing investment destination. Furthermore, Mexican companies have diversified
their businesses towards this sector through participations in small scale projects for renewable
energy equipment manufacturing and sales.

ForeignDirectInvestment2012-January2015,MillionsofUSdollars

Country Between 2012 and January 2016, Mexico’s

Wind
Solar

Total
Bio

renewable energy industry received 44 FDI

España 15 1,554 2,553 4,123
Alemania 500 840 1,340
EE. UU. 435 700 1,135
projects that added up US$9,584 million.
Italia 250 546 796
R. Unido 10 656 666 The main investor countries were Spain,
Portugal 275 280 555
Bermuda 500 500 Germany and United States.
Taiwán 280 280
Francia 190 190
Canadá 0
Total 25 4,640 4,919 9,584 Source: FDI Markets, Financial Times, march 2015

**Data estimated on investment announcements.

 1. 4 Some companies in Mexico

Source: BNEF, AMDEE, ANES, Company websites.

 1. 6 Forecast to 2029
It is estimated that by 2029 the installed capacity of renewable energy power will increase
28,482.6 MW, these will be led by wind.
Forecast of additional renewable power capacity 2029 (MW)

Tecnología MW % Share
Bio 107.6 0.4%
Wind 11,952.3 42.0%
Geo 1,617.6 5.7%
Hydro 5,449.6 19.1%
Solar 1,822.5 6.4%

Cogeneration 7,533 26.4%

Total 28,482.6
Source: Renewable Energy Prospects 2014-2028, Ministry of Energy,
2. Solar
Industry
 2.1 Solar Potential
The geographic location of Mexico positions it as If the high levels of radiation in Mexico are
the third most attractive country in the world for leveraged, solar energy could be one of the
investing in solar photovoltaic energy projects, country’s primary supply sources. The
behind only China and Singapore. north and northeastern regions have the
highest average sunshine in the country.
The average daily solar radiation during the year is
5.5 kWh/m2, and can reach values in excess of 8.5
kWh/m2. According to the INER, solar energy has a
Solar Radiation in Mexico
generation potential of 6,500,000 GWh.

Source: Renewable Energy Prospects 2014-2028, Ministry of Energy,

 2.2 Solar projects
Solar power Authorized Projects

In 2015, installed capacity of solar

About to start
Construction

operations
Under

Total
State
photovoltaic energy in operation reached 65

MW, however, up to December 2015 the

Chihuahua 408 1,248 1,656
Sonora 538 1,112 1,650
Energy Regulatory Commission had Guanajuato 94 473 568
Coahuila 185 306 491
registered 7,685 MW in projects that are Durango 206 244 450
San Luis Potosí 200 230 430
either under construction or about to start Baja California Sur 197 127 324
Jalisco 171 165 336
operations. Zacatecas 140 195 335
Sinaloa 240 30 270
OtrosEnergy Regulatory Commission
Source: 728 447 1175
Total 3,107 4,577 7,685
 2.3 Solar equipment manufacturing
Mexico has the largest manufacturing base of
companies
Among the leading developers of PV solar
photovoltaic modules in Latin America, with an projects include: Gauss Energía, Grupo
annual production capacity of over 1,667.5 MW. Dragón, Sonora Energy Group, Enercity
Alfa, y Eosol Energy.
Solar equipment manufacturing companies in Mexico, 2015
Capacidad de
Empresa País de origen Ubicación
producción MW

Baja Sun Energy Srl de CV México 100 Baja California

ERDM Solar SA de CV México 60 Veracruz
IUSASOL SA de CV México 125 Estado de México
Jabil Circuit Inc EE. UU. 45 Chihuahua
Kyocera Corp Japón 150 Baja California
Sanyo Japón 65 Nuevo León
Solartec SA de CV México 172.5 Guanajuato
SunPower Corp EE. UU. 500 Baja California

SunEdison y Flextronics EE. UU. y Singapur 450 Chihuahua

Total 1,667.50

Source: Bloomberg New Energy Finance,, 2015.

2.4 PV Market Attractiveness Ranking
PV projects currently under construction in Mexico reached a value above
3,000 MW, this fact placed the country in third place for attractiveness to
investors, developers and manufacturers of the industry.

IHS PV MarketAttractiveness Ranking: Top 5 Markets

Project Development
Macroecono Market Profitabilit Environment
Rank Country mic Size y Maturity Total Score

1 Sudáfrica 56 64 62 75 67
2 Turquía 55 49 53 20 45
3 México 59 35 34 60 43
4 Israel 62 14 58 35 42
5 Suiza 80 13 32 60 40

Fuente:: IHS Technology Marzo 2014.

 2.5 Supply chain
Thin Film PV Solar supply chain in Mexico (# Of companies)

Cells Balance of plant

Sanyo
ERDM Solar/ ABB
Kyocera
Desmex Solar/
Granite Chief

Installation

Project development Enerray Mex/

Solarscape/ Iberdrola/
Soluciones EcoSolares/
Ilioss/ Thermion Renewable/ Solar Pro/ Heliocol/
Grupo EGS/ Eosol Energy/ Grupo Simosol/ Bauer
Grupo Dragon/ Emerald Power/ Electronica/ Enium/
CEM Corp Aura/ Gauss Energía/ Conermex
Ditec Automation Enercity Alfa/ Next Energy/
Sonora Energy/ Green Corner/
Microm/ DelSol Systems

Source: Bloomberg New Energy Finance, June 2015.

 2.5 Supply chain
Crystalline PV Solar supply chain in Mexico (# Of Companies)

Raw Modules
Balance of
feedstock ERDM Solar plant
Desmex Solar ABB

Ingots

Installation

Wafers Project development Enerray Mex/

Solarscape / Iberdrola
ERDM Solar / Enerclima / ILIOSS/ Ingeniera/ Soluciones
MTS Solar/ Grupo Maiz/ EcoSolares/ Solar Pro/
Thermion Renewable/ Grupo Heliocol/ Grupo
Cells EGS/ Eosol Energy/ Grupo Simosol/ Bauer
ERDM Solar/ Dragon/ Granite Chief/ Emerald Electronica/ Enium/
Iusasol/ Jabil/ Power/ Positive Energy/ Corp
Conermex
Solartec/ Aura/ Gauss Energia/ Enercity
SunPower Alfa/ Next Energy/ Sonora
Energy/ Green Corner/
Comercializadora Capo/ Baja Sun/
Microm S/ DelSol Systems

Source: Bloomberg New Energy Finance, June 2015.

3. Wind
Industry
 3.1 Wind potential
Wind potential in Mexico is estimated at about 40,000 MW, with capacity factors between
20 and 25%.
Potential regions for developing wind power projects

Wind Intensity

Source: AMDEE.
 3.2 Wind projects
The installed capacity of wind power reached 2,621MW in 2015, of which 91% is operated by
private companies. Moreover, there are projects under construction and about to start operations that
added up 6,452 MW.
About to start
State Under construction Total
operations
Oaxaca 583 2 585
Coahuila 500 651 1,151
Tamaulipas 281 740 1,021
SLP 479 479
Nuevo León 552 40 592
BC 373 30 403
Zacatecas 180 253 433
Jalisco 64 316 380
Puebla 66 350 416
Yucatán 162 160 322
Otros 271 400 670
Total 3,032 3,421 6,452

Source: Energy Regulatory Commission

 3.3 Supply chain
Wind supply chain in Mexico

Bearings and gearboxes

Power generator
Installation
Generators and Acciona Energía/
turbines Eoliatec del Istmo/
Dynamik Kontroll EA Energía/ EDF
Sempra/ Gamesa

Project development
Acciona Energía/ Eoliatec/ EA Energía/
Blades Turbopower Services/ Sempra/ Gamesa/ Fuerza
VienTek LLC Eolica/ Thermion/ Zuma Energía/ Intavan
México/ Ecowind/ Grupo Dragon/ Emerald
Power/ Iberdrola/ Mase Energy/ Energeo Los
Molinos/ Zapoteca de Energía/ Chunca del
Itsmo/ Preneal Energías/ Generadores Eólicos/
Grupo Maritimo/ Gauss Energía/ Vive Energía/
Next Energy/ EDF/ Mit Renewables/ Marersa/ O&M
Enel Green/ Microm/ Mexico Power/ Grupo Alstom/ Holcim
ACS/ Renovalia/ Cisae

Fuente: Bloomberg New Energy Finance

4. Legal
Framework
 4.1 Private production
In order to promote investment in renewable • Reform to the Law for the Public Power Service
1992 (Reforma a la Ley del Servicio Público de Energía
energy, Mexico has worked to create and Eléctrica or LSPEE)
amend laws that help to boost their use and • Publication of the Regulations of the LSPEE
1993
reduce energy dependency on fossil fuels.
• Approval of the Law of the Energy Regulating
Programs and laws have been created or Commission (Ley de la Comisión Reguladora de
1995
modified with the aim of establishing an Energía or CRE)
specific legal framework for the power 2006
• Interconnection contract for RE sources (capacity
credit)
generation through renewable sources.
• Interconnection contract for small scale solar
2007 energy sources
• The Law for the Use of RE and Funding of Energy
Transition (Ley para el Aprovechamiento de las
2008 Energías Renovables y el Financiamiento de la
Transición Energética or LAERFTE)

2009 • LAERFTE Regulations

2013 • Energy Reform

• Energy Reform's Secondary Legislation

2014 (Electricity and Geothermal)
 4.2 Electricity Industry
Pre-Energy Reform vs. Current Law
Law
Before After
Private investment in electricity generation is
Private sector participation in the activities of the electricity industry increases.
limited.

Independent power producers can

Private generators may sell electricity on a spot market : Wholesale Electricity
secure contracts of sale with the CFE
Market .
through tenders (PPAs).
CFE continues generating and selling electricity to residential and small and
medium industry consumers (basic service)
Generation

Small producers ( less than 30 MW ) sell

CFE will be another competitor in the wholesale electricity market .
power to CFE through auctions .
The legal framework under which the private sector can participate as
geothermal energy generator is established.
- Generators under the self-supply
scheme can generate electricity and sell
it to consumers partners.
Current permits for self-sufficiency , cogeneration, small production, independent
production and exports will maintain their status quo or request modification
according to the new parameters of the law.
The electricity market shall consist of the wholesale electricity market for large
The market is monopolized by CFE in the
users and the retail market for basic service users (residential and small and
purchase and in the generation of electricity. medium enterprises).
Electricity Market

The wholesale electricity market will be operated by the CENACE and regulated by
the CRE .
The rules of the wholesale electricity market will establish: transactions of
Limited participation of private sector purchase and sale of electricity , Financial Transmission Rights [1 ] and Certificates
through self-supply schemes
of Clean Energy , among others.
This market is integrated by generators , traders of electricity, qualified users and
the market of clean energy certificates .
 4.2 Electricity Industry Law

Before After

CENACE will be responsible for coordinating the transmission and distribution

The transmission and distribution services are
of electricity, while the general conditions for the provision of such services
operated by CFE.
shall be issued by the CRE .

The State may form partnerships with privates to perform installation,

Transmission and distribution

Limited participation of individuals through the maintenance , management , operation, and expansion of the necessary
Open Season Process [2 ] . infrastructure to provide services for transmission and distribution of
electricity.

Individuals may build at their own expense the required projects of

infrastructure, or may request to CENACE to include them in the program of
expansion and modernization of the National Network of Transmission and
Distribution , provided that there is a net profit to the National Electricity
System (SEN) [3 ].

It is allowed private investment in generation of There will be established the obligations to acquire energy certificate by the
renewable energy . qualified users

The certificates will be tradable through the wholesale electricity market and
The main generation scheme is self-supply
Renewable energy

they will encourage long term electricity contracts.

It doesn’t exist regulatory framework that allows It has been established the specific regulatory framework for recognition,
private investment in geothermal plants, the CFE exploration and exploitation of geothermal resources ( Geothermal Energy Act
is in charge of the construction and generation ). The permits will be issued by the SENER and will last according to the
of electricity through these resources . actitivy:

Recognition : 8 months
Exploration : 3 years
Exploitation: 30 years
 4.2 Incentives
Accelerated depreciation:
Allows depreciation of 100% of investments in equipment and machinery to generate energy from renewable
sources.

Zero tariff:
Exempts antipollution equipment and its parts from general imports or exports duties. Covers machinery,
equipment, instruments, materials, animals, plants and other items used in technology research and development.

Fuente: CRE.
 4.2 Financing
Financing International Credits
• Bank of North America (BNA)
Ministry of Energy (SENER) Funds • Inter-American Development Bank (IBD)
• Fund for Energy Transition and the Sustainable • Global Environment Fund (GEF)
use of Energy • European Investment Bank (EIB)
• Sectorial Fund for Energy Sustainability • World Bank Group / International Finance
SENER-CONACYT Corporation
• German Ministry of Cooperation and Economic
Financial Institutions Development / Credit Bank for Reconstruction
• Nacional Financiera, S.N.C. (NAFIN) and Development (KfW)
• BANOBRAS (Banco Nacional de Obras y
Servicios Públicos, S.N.C.)
• BANCOMEXT (Banco Nacional de Comercio
Exterior)

Trust Funds
• FIRCO (Shared Risk Trust Fund, Fideicomiso de
Riesgo Compartido)
• FIDE (Trust Fund for Electricity Savings,
Fideicomiso para el Ahorro de Energía Eléctrica)

Fuente: CRE.
 Thank
youBusiness Intelligence Unit
Camino a Santa Teresa No. 1679
Col. Jardines del Pedregal
Del. Álvaro Obregón
CP 01900, México, D.F.
Tel.: +52 (55) 5447-7000

Fuente: CRE.