Mexico‘s energy reforms could have been the ideal opportunity to boost renewable power generation and bring down prices but are, instead, seen as a “lost opportunity” as the government focuses on importing more natural gas to replace oil-fired generation.
The reforms could provide a boost to cultivating a homegrown solar power industry, particularly in the country’s northern, sun-drenched states, such as Sonora, and contribute to reducing electricity prices, one of the justifications for the reform, according to Don Walter, CEO of Sonora Energy Group.
“Mexico could create a solar industry if it wanted to, in Sonora, but they won’t because there is a lack of coordinated policy between developers and the government,” Walter told Business News Americas.
“Invest in technology and the flies will come,” he said.
However, artificially lower prices subsidized by the government would result in an overpriced product that is not sellable once subsidies are withdrawn, he added.
He also pointed to the reforms representing a hindrance to the development of solar power in Mexico, due to the introduction of new fees for power firms levied by the newly created national energy control center (Cenace).
Walter said: “Cenace now charges maintenance fees and fees that they didn’t charge before July.
“But Cenace is now a business and they have to charge a fair market value for delivery and transmission. It’s an example of failing to take advantage of the reform while the iron was hot.
“It’s clear that they brought electricity along for the ride but they clearly didn’t want to make it a priority. Sonora’s state government or the federal government could have invested in order to make the state a leader in the Mexican photovoltaic industry.”
Mexico could have attracted the world’s largest battery makers, for example, with lower taxes and infrastructure support, as the next step in electricity generation is in its storage and injection, he added.
He lamented the fact that Mexico’s government, through its national infrastructure plan to build 22 natural gas pipelines over the next 15 years, is placing too much emphasis on the use of imported gas for power generation.
“I think putting a preference on natural gas is really a non-starter when you look at the natural gas price. The U.S. is flush with natural gas, but the price of electricity continues its march forward,” he said.
“Even if Mexico had all the pipeline and all the product it needed, despite the fact you’ll still need four or five or 10 years and a lot of investment to build all the infrastructure, you can’t rely on cheap gas as being the answer to cheaper electricity bills.”