39 minute read
Solar
3
Solar
The International Energy Agency reported in 2020 that solar energy is considered the cheapest form of energy in history, especially for new world power plants. Considering Mexico’s solar irradiance potential, the levelized cost of energy associated with solar technologies continues to decrease. Since solar energy has provided energy at low costs on the utility-scale, it is no surprise that smaller projects and solar distributed generation continue to showcase solar’s credentials. Now that the viability of battery storage continues to grow, along with other beneficial technology such as inverters, behind-the-meter and smaller capacity solar solutions will see an increasing interest from commercial and industrial clientele as well. For companies feeling the slowdown in utility-scale development, these new developments offer interesting new avenues.
The following chapter addresses the challenges Mexico’s solar sector is facing and also highlights some of the key recent developments in the area. Crucial frontrunners in Mexico’s solar industry share their opinions and insights.
3Solar
45 Analysis
Opportunity Despite Challenges
46 View From the Top
Jaime Pérez de Laborda | President of ASOLMEX
47 View From the Top
Vicente Aparicio | Commercial Director Mexico of Iberdrola
48 View From the Top
Fernando Salinas | Managing Director Mexico and Central America at FRV
49 View From the Top
Sean McCoy | Director of Energy Services Mexico at Edison Energy
50 View From the Top
Diego Blumenkron | Director of Sales at Northland Power Energía
52 Analysis
New Tech Boosts Solar-Based Distributed Generation
53 Conference Highlights
54 View From the Top
Álvaro García-Maltrás | President of Latin America and the Caribbean of Trina Solar
55 View From the Top
Iván Reyes | Latam Utility Director of LONGi Green Energy Technology
56 Roundtable
What Inverter innovations are coming?
57 View From the Top
Pablo Rivero | Country Manager of ForeFront Power
59 Spotlight
Solar Panel Solution Meets C&I Demand | LONGi Solar
60 Content Links
Opportunity Despite Challenges
Read the complete article If Mexico’s potential for solar energy was not clear already, PRODESEN 2020 – 2034 emphasized that the country has a potential of 5-5KWh/m2. But solar, focused on photovoltaic technologies, still only plays a relatively small role in Mexico’s energy mix, making up 5.72 percent of installed capacity by the end of 2020. From 2020 to 2024, 29.73 percent of new installed capacity is expected to be solar energy. Only combined cycle technology would narrowly beat photovoltaic solar but that does not take into account distributed generation (DG) using solar technology, which would add another 7.9 percent to solar’s growth.
From 2025 to 2034, PRODESEN expects new photovoltaic solar installed capacity to grow by 30.65 percent, and DG solar by 21.94 percent. Furthermore, Mexico’s first-ever renewable initial public offering for a solar company on the stock exchange was a success, proving that investors have faith in the technology.
The future looks bright indeed. Although the solar sector is being affected by the same uncertainty that can be found in the rest of Mexico’s energy sector, the International Energy Agency (IEA) confirmed solar to be the “cheapest electricity in history.” Even though some examples of record-setting prices achieved in Abu Dhabi and Dubai are a bit misleading due to their access to free land and grid interconnections, the general trend looks promising, especially in Mexico with its excellent radiation.
The fourth long-term electricity auction was canceled in February 2019, but the renewable energy projects from the previous three auctions went ahead. Despite the impact COVID-19 had on project development and CENACE’s temporary suspension of pre-operational testing, many of these projects came online in 2020 and 2021. The circumstances under which these projects were constructed are less than ideal, due to the measures introduced by the federal government, notes Fernando Salinas, Managing Director Mexico and Central America of Fotowatio Renewable Ventures (FRV) in an MBN interview. “Overall, the government poses several challenges, such as restrictions to interconnection. Finding bankable off-takers to sign PPAs is another challenge. Apart from CFE, there are not many possibilities in the market,” he said. Despite the challenges, Salinas believes that dialogue and collaboration are key to the realization of Mexico’s renewable potential.
Distributed Generation is the area that is much more safe guarded against regulatory changes. Installations below 0.5MW do not require permitting from CRE or interconnection tests from CENACE, for instance. With falling prices, the segment’s success in the Mexican market comes as no surprise, even as the desired cap increase to 1MW remains unrealized. “Today, there are more than 129,000 solar roofs in operation, spread across homes, businesses and industries, with an installed capacity of 965MW, involving more than US$2.1 billion in direct investment and generating more than 10,000 jobs across the country,” said Hector Olea, former president of ASOLMEX.
Jaime Pérez de Laborda
President of ASOLMEX
Solar Consolidates Potential Despite Challenging Year
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More about this person Q: As the new president of ASOLMEX, what is your assessment of Mexico’s solar sector?
A: The past 12 months have been challenging for all markets. The renewables sector in particular has continued its development thanks to the constant effort and commitment from all of us who are part of it. In Mexico, we are experiencing a high level of uncertainty derived from the regulatory changes that have been implemented in recent months. This has limited the growth capacity of private renewable energy projects. Despite this situation, solar energy continued to consolidate its potential, reaching a total installed photovoltaic capacity of 6,574MW at the end of 2020. This represents an increase of 31 percent compared to 2019. Currently, there are 72 large-scale solar plants in operation across 17 states in Mexico, which is nine more than at the end of 2019. Among these is the largest power plant in Latin America, located in Viesca, Coahuila. The state of Puebla also now has a solar power plant in full operation called Cuyoaco, which has 200MW of capacity.
The development of clean energy and the solar sector in Mexico has created more than 70,000 jobs throughout the entire value chain, with more than US$9.1 billion in investments.
Q: How is Mexico’s solar sector reorienting itself to make better use of the opportunities in DG?
A: All 32 states in the country have DSG facilities, with more than 165,000 contracts nationwide and an installed capacity of 1,197MW. This highlights the multiple advantages GSD offers users by converting them into “prosumers,” allowing them to produce and consume energy through relatively simple facilities that have minimal operating costs and equipment that has an increasingly longer useful life.
ASOLMEX has been actively involved in nationwide efforts that encourage the use of renewable energy across Mexico. An example of these efforts is the association’s constant dialog with members of the Chambers of Deputies and Senators in 2020 to promote initiatives that allow the generation capacity exempted for DSG contracts to be increased from 0.5 to 1.0MW.
Q: What are the main challenges solar players need to overcome to attract the investment needed to complete their projects?
A: According to the Coalition for Action of the International Renewable Energy Agency (IRENA), Mexico has one of the world’s most important development potentials in the sector. This positioned the country among the main players in the energy transition efforts in the last decade. To continue this positive trend, and allow more players in the sector to contribute to the development of the renewable segment in the near future, actions must focus on prioritizing the competitiveness of the energy system and promote certainty and long-term stability in sector-related policies, as well as promote a market that supports the integration of renewables in the energy sector. It is also a priority to resume investments in Mexico’s transmission and distribution systems.
Vicente Aparicio
Commercial Director Mexico of Iberdrola
Iberdrola, Ideal Ally for Mexico’s Automotive Sector
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More about this person Q: What is Iberdrola’s history in Mexico and how has the company worked to help the country’s industry meet its clean energy needs?
A: Iberdrola focuses on the energy sector. The company was founded 140 years ago in Spain. We have been in Mexico for the past 20 years and have a strong presence in numerous countries, including the UK, the US and Brazil. The company bases its strategy on power production, transmission and commercialization of energy. In the case of Mexico, our presence is mainly focused on power production and commercialization because transmission and distribution are exclusively tied to the state. The commercialization of Iberdrola’s energy is aimed at the industrial sector, since CFE holds a monopoly in the domestic segment as well.
Q: What aggregate value does Iberdrola offer to the energy-intensive manufacturing industry?
A: Due to Iberdrola’s size and scope, we can offer solutions tailored to every client’s unique needs. Many energy users in Mexico are tied to the usual tariff structure. Iberdrola breaks with this paradigm and works to come up with a measured solution. This also depends on the type of energy our clients require, such as 100 percent renewable energy. We also offer schemes that take the client’s risk factors into account. By eliminating these risks, we greatly boost their competitiveness.
Q: How can companies benefit from the Smart Solar solution?
A: The idea is to have a solar system installed at the client’s operation. This could be mounted on a rooftop or on the ground. We assess the feasibility of the project and then take on the costs of installing the system ourselves. This means that the client does not need to invest at all on this front. We then sign a long-term power purchasing agreement (PPA), during which the client benefits from 100 percent renewable energy. If a company were to turn to other forms of energy, they could become a victim of volatile energy prices. Through Smart Solar, the client is assured that they will benefit from consistently cheap prices. The solution, therefore, meets the automotive industry’s two major energy concerns: renewable energy and a fixed, low price. This allows clients to focus on their core business. A recent example is a major logistics company, for which we are working to implementing this solution at its facility in the State of Mexico.
Q: What goals is Iberdrola working toward in the short term?
A: Iberdrola has 24 power plants in operation in the country: 16 combined-cycle and cogeneration plants, six wind farms and two solar parks. For the short-term, we are working to construct several power plants in various stages of development. One wind farm, located in Guanajuato, will start operations in October. Another 200MW solar plant is under construction in Puebla and tied to two other power plants we have in operation there. There is also a combined-cycle power plant being constructed in San Luis Potosi, which we hope to bring online in 2022.
Iberdrola is a Spanish public multinational electricity utility based in Bilbao. It is present in dozens of countries on four continents serving around 100 million customers. In Mexico, it has 24 power plants in operation.
Fernando Salinas
The Making of Potrero Solar’s Success
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More about this person Q: How is FRV involved in the Mexican market?
A: We see Mexico as an attractive long-term market, despite the problems we faced last year. FRV has around 642MW dc of operational solar projects divided in two farms. One is a 342MW dc project called Potosi Solar and the second project is a 296MW dc project, called Potrero Solar. Potosi has a long term PPA with CFE that was awarded under the second tender launched with CENACE, Potrero was on a full merchant basis, meaning that we did not have an off-taker to finance it and did so outside of the auctions. We have finished all construction work and both plants are operational. Potrero is already selling its electricity on the spot market. The project is based on a mixed strategy, where we are looking to hedge some part of the project’s energy generation. Another part will be operational for the spot market. We could refinance Potrero Solar after we have signed a PPA.
Q: What are the main differences between Potosi and Potrero Solar?
A: At Potosi, we used central inverters. At Potrero, we are using technology from Huawei, made up of many small inverters that you can plug in and out, making it easier to manage. At Potrero, we also use bifacial panels. These panels were not as big when we started working on Potosi, where we used dual-glass solar panels, which were considered high-end technology back then. One year later, we financed Potrero to use bifacial panels and we expect to yield a higher gain and performance.
Q: How has the company adapted its strategy recently?
A: We have seen all the changes that have come about. Our strategy is to persevere and protect our investments. Although the overall situation is far from ideal, we believe in Mexico in the long term given its fundamentals. We need to build bridges and try to understand what the government really plans to do. If it wants to talk about the future, the sector, and FRV in particular, is open to discussions because it helps with outlining regulation. FRV has invested a great deal of money in Mexico. We need to make sure that the rules under which this investment was made are respected, so that we can obtain the profitability that we planned for with our projects. We are also open to talk about the future so that we can help Mexico comply with its renewable energy target. We need to convince the government of the target’s importance so that it can create policies that will enable new investments.
Q: How does FRV design its social approach?
A: We have gone beyond the requirements of our social impact studies that were approved by SENER. In the communities where we are present, we have had a real impact. When we started the Potrero Solar construction a year and a half ago, we opened a modest facility to attend the medical needs of the people. We also purchased all the necessary medicine and had a doctor on site. In the Potosi community, we have a different program because we adapt our approach and budget to local needs. In this case, the people wanted a baseball field and we decided to build them one. We also established programs to teach local women about doing business. Having diverse social programs is important for any business investing in Mexico, which is why we take it so seriously.
Sean McCoy
Director of Energy Services Mexico at Edison Energy
Carving Out a Path to Sustainability
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More about this person Q: What attracted you to the Mexican market?
A: Due to the multiple regulatory changes taking place, clients are looking to safeguard their energy supply, knowing that at some point CFE will increase its rates. They are also looking for alternatives in terms of what they can install onsite to generate their own isolated supply. These are all areas where we can provide them with valuable assistance. At some point, companies will be affected by the government’s inability to further subsidize low energy costs.
Q: What global trends are you seeing regarding companies looking to decarbonize their activities in Mexico?
A: More international companies are pursuing a reduction in carbon emissions. This includes companies that have production facilities in Mexico, consuming energy and emitting CO2. Our country is, therefore, a significant part of this trend. We are engaging multiple companies and assisting them by looking for alternatives. In Mexico, there are big challenges slowing down companies in their emission reduction plans but generally, more and more clients are approaching us to ask what they can do to reduce their carbon footprint.
Many companies have decarbonization goals, either imposed by regulation or set by themselves. The current pipeline of projects, as seen in CFE’s business plan, does not involve any concrete plans for renewable energy. This will be a concern for the competitiveness of Mexico’s industry. This plan needs to be changed as soon as possible in order to keep Mexico’s competitiveness.
Q: How could SMEs help to make Mexico’s economy more sustainable?
A: These mid-tier companies, which do not have the negotiating power of a very large energy consumer, will have to get creative. They need to investigate alternatives. First, they should examine energy optimization in terms of their consumption. Second, they need to look at what they can do to further reduce their grid energy consumption. Third, they could examine how to procure energy when possible. If they cannot, they can look toward larger shared installations for onsite generation.
There are several options available, but also limitations. For example, for anyone owning a large rooftop in Mexico, a solar system below 0.5MW should be a no-brainer. Nevertheless, it helps to have someone on your side who knows these rules and is aware of the potential ramifications.
A: The Power Industry Act allows the gathering of loads through a specific industry sector or economic interest group, in order to be subject to the qualified supply, which is an excellent opportunity that has not been applied yet and will definitely support the Mexican economy to recover on a much faster phase. Unfortunately, the Ministry of Energy has not taken any action in that regard. By providing a broader interpretation as to what an economic interest group would entail, various sectors of the Mexican economy could be subject to qualified suppliers and be able to be supplied with competitive rates.
Diego Blumenkron
Director of Sales at Northland Power Energía
Qualified Supply Ability Contributes to Long-term Growth
Q: How did Northland Power come to operate as a qualified supplier in the Mexican Wholesale Electricity Market (WEM)?
A: As many know, Mexican legislation does not allow power producers to directly sell energy to final users. Northland Power, whose core is to develop power generation projects, own and operate facilities for the long run, saw the need to market its products in the WEM.
In order to be present along the entire energy value chain, Northland Power decided to have its own qualified supplier (QS), Northland Power Energía, which started operations in March 2020. Until August, the company was mainly working to build the right team with the right people, establishing governance, selecting the energy trading risk management (ETRM) software and preparing its teams. In September, we started marketing for the 130MW La Lucha solar farm. However, as a QS we need more products such as: power, energy and clean energy certificates. Our mandate, therefore, is to arrange this; to build a strong portfolio that has in it all the mandatory products that are competitive enough in the long run to help Northland grow in the Mexican market.
Even though Northland Energía is a new company, the people who operate it are not new to the energy market. Combined, we have over 20 years of experience with the Electric Industry Law (LIE) and have had the opportunity to participate in negotiations representing more than 1.6GW. Most of this comes from combined cycle technology. We also negotiated more than 1.1GW worth of supply contracts and some of us worked on CFE’s power producing and QS arms.
We have been involved in Mexico’s electricity market from the very start, which means the company has the experience to understand what is really happening in the sector.
Q: What were the biggest challenges Northland Power Energía had to overcome to become operational as a QS?
A: There were three main challenges. The first, as the other qualified suppliers that operate within the WEM, we are facing a lack of liquidity in the market, also that the WEM is still new and people are still learning about it. Second, the disruption to planning from COVID-19. We planned to enter into operation in May 2020, but the regulatory entities were in trouble and off schedule due to the pandemic. Third, migrating clients. This is a very difficult challenge because many of them do not comply with the grid code. This should be addressed first and sometimes this takes a lot of time and needs to be done thoroughly. Even though this is a requirement for everybody which injects or extracts energy from the national grid and that it was enacted in April 2018, we still find loads that are not yet in compliance. Nevertheless, if you want to migrate a client to the new market, it might take from eight months to a year because you need to start from scratch.
Q: What characterizes the company’s strategy as a new player in Mexico’s WEM?
A: We offer monthly rates that are based on individual requirements, which vary per customer due to their different
load profiles and needs. We do not have, and we don’t intend to have a shelf product. Everything we sell is tailor-made.
You might think that two companies that belong to the same industry would have similar requirements, but their needs change based on behavior, location, market context and appetite for risk, among other factors. For example: right now, we are seeing low local marginal pricing (LMP) take effect. Furthermore, we are expecting a rather low power market clearance because there is a great deal of idle capacity that is not being used, the national interconnected system is around 20GW long. This allows for the best prices from the customer’s perspective. You can hardly claim there is something out there that could produce energy, power and CELs at around US $30MW/h which is the expected bundled price for 2020 and recover the internal rate of return at the same time. The levelized cost of energy (LCOE) of the different actual generation technologies is simply not there at the moment for that to happen, so taking advantage of these market prices becomes very attractive for building competitive-low-risk-tariffs.
The market is telling us it does not need more capacity additions right now, which is among the reasons we have low prices today. We will see this situation prevail for at least the next three years. Demand is not growing that fast, after all. So, Northland Power Energía has decided to use this, at least some percentage of the market, knowing that we will not regret to make this recommendation to our clients later. Currently, volatility is super low. Prices are depressed and you can take advantage of that. This is one of the advantages of our company: we create supply strategies and want our customers to actually benefit from our knowledge while solving their particular problems.
Q: How is the company working to support electricity end-users?
A: Even though we have substantial energy generation capacity, transmission has stayed almost the same. We are also seeing transmission problems among the end users we work with. In some areas of the country, CFE is no longer able to offer connection capacity to the loads. We are working hard with Northland’s development arm to offer solutions to end users to address this lack of connection capacity.
We are working on products to help them overcome these burdens. We are not an average QS. We deliver supply solutions through the development of strategies, while providing turnkey projects so that companies can continue their work.
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More about this person
New Tech Boosts Solar-Based Distributed Generation
Read the complete article Mexico’s existing solar resource is enviable, with the county boasting one of the world’s leading irradiation profiles. The question is how to take advantage to address its energy needs. One way is through distributed generation (DG). The threshold for interconnection and all the permitting involved implies a set capacity above 0.5MW. This means that any installation below this figure, such as solar panels on a rooftop, can safely remain “behind the meter.” The definition of DG, often tied to the 0.5MW threshold in Mexico, is therefore unique to the country.
Utility-scale projects are slowing down and this could indirectly push more consumers in the commercial and industrial (C&I) sphere to DG, said Pablo Rivero, Country Manager of ForeFront Power, in an MBN interview: “While it may not have increased demand per se, these factors impacted the flow of money that companies were contemplating to invest in renewable projects or other external updates to improve their company’s efficiency and reliability. Instead, companies are now realigning these budgets toward their own energy production, which has opened up the opportunity for external investors to provide the entire solution, including investment, construction and O&M over the long term.”
The economics of solar DG make the option an almost obvious one for those able to invest in it. “For anyone owning a large rooftop in Mexico, a solar system below 0.5MW should be a no-brainer,” said Gilberto García-Ruiz, Business Development Director of Edison Energy to MBN.
PRODESEN highlights that in 2019, Mexico reported 1,023MW of solar DG capacity installed. CRE reports this capacity increased over 40 percent during that year. Thirty-one percent of this capacity can be found in the country’s western region. Lower percentages are encountered in Baja California and Baja California Sur, with 3.6 and 1.8 percent respectively. It is precisely in these areas where industry experts stress the possibility for growth.
Advancements in DG technology research and development are boosting this trend further. These innovations help to make solar more technically viable for companies, and decrease costs as well.
One issue that might keep companies from installing DG is their lack of knowledge regarding the technology and benefits it provides. “As energy associations, we have not supported companies that promote these modern technologies and we have not ‘educated’ business chambers in leveraging them. I daresay that 90 percent of users do not know that, with the installation of a very simple and economical battery, their panels would continue to operate in case of increasingly common blackouts and help replace voltage stabilizers, regulators and UPSs,” said Hans Kohlsdorf, Managing Partner of Energy to Market.
Lowering LCOE: Ultimate Goal for Solar Technology
Carla Ortiz
County Manager Mexico at RER Energy Group
Alejo López
Vice President Latin America at Nextracker
Alberto Cuter
General Manager LATAM & Italy at Jinko Solar
Kevin Gutiérrez
Sales VP of Inverter Business at Huawei Mexico
There are few industries where technology is growing as steadily as in solar energy. The panel, “Innovation is Key: Progress and Opportunity in Solar Technology,” featured key leaders from some of the sector’s most important companies. Moderated by
RER Energy’s Country Manager Carla Ortiz, the panelists agreed that bringing down costs for operations remains the most important aspect for the industry.
In Mexico, the solar sector is undergoing significant changes. With governmental policy changes dominating the environment, the trend of developing large utility-scale projects is fading away. Nevertheless, distributed generation (DG) does not suffer as much from regulatory changes because below the 0.5MW threshold, no permits are needed. Taking into account this developing trend, Ortiz asked panelists what this shift toward DG meant for solar technology in the country.
Alberto Cuter, General Manager Latam and Italy of Jinko Solar, explained that photovoltaic technology trends have already changed. Now, bifacial panels dominate the utility-scale environment but they are unlikely to be applied in C&I-focused DG projects. “Because of spatial limitations, optimizing panels on a slightly smaller scale makes more sense in this area.” Cuter said that mono perc panels with P-type or N-type cells would likely become the most popular.
Inverters are the core business of Huawei, said Kevin Gutiérrez, Sales Vice President of the company’s Inverter Business. One of the main developments the Chinese technology giant has been focusing on for the past few years is AI. “We have implemented AI in all our products for a few years now,” Gutiérrez explained. Through AI, operations and maintenance (O&M) become much easier and safer to boot. Especially in smaller, scattered C&I installations, this provides advantages. “Here, we often see many small installations. Therefore, monitoring becomes crucial for efficient operations,” he said, highlighting that AI can detect faults, which in turn reduces costs and improves overall efficiency.
Alejo López, Vice President Latin America of NEXTracker, said the trend to move away from the utility scale poses a challenge for the company’s solar trackers. “Our product is designed for larger scale projects,” he acknowledged, “although smaller projects have also found its characteristics attractive and beneficial.” Vertical panels are also quickly gaining ground in the market. Nevertheless, López points out, with the current situation this is not developing as fast in Mexico.
Álvaro García-Maltrás
President of Latin America and the Caribbean of Trina Solar
Prospects Move to Distributed Generation
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More about this person Q: How has Trina Solar experienced business lately?
A: The company recently listed on the Chinese stock exchange, facilitating access to new financing toward ambitious future plans. Since Trina’s listing, the company has reinforced its intention to return as the global leader in photovoltaic panels. Shipments of modules in 2020 exceeded 15 GW. We are expecting to see a further rise in 2021. Furthermore, decided it will focus its new manufacturing investment on the newest and latest 210mm cell size that the market is deploying in solar modules, which is featured in our Vertex platform. Trina believes it is the correct size for the coming years because we can achieve higher power and efficiency at similar or cheaper costs. It is a long-term invest and Trina is the first big manufacturer to make a bet on this technology. The Vertex modules come in different sizes and power. Vertex S is specifically designed for distribution in the residential segment, with a power range of 400W. It has the right weight and size to maximize yield in the limited space available to customers in the segment. We have a product range from 500W peak up to 600W peak. In 2H21, we will manufacture and offer our new 660W Vertex modules. Trina Solar also completed the acquisition of a European tracker manufacturer in 2020. The company now offers its own tracker, designed to be compatible with our modules.
Q: How should Mexico could make the best use of its distributed generation (DG) resources?
A: We think that there has been a great deal of growth as well as opportunities for development in DG. Smart technologies and storage will become a part of it. It is a matter of bringing costs down, especially when Mexican consumers have to pay higher electricity prices. This makes sense, especially in areas like Baja California. Because this area is not connected to the main grid, battery storage is already viable. However, there are other efforts that can be taken to promote this segment, such as raising the cap for extensive permitting requirements. There is no real justification to set it at 0.5MW and there are already talks about increasing it to 1MW. If this can be achieved, it would open up many opportunities for the C&I segment. Another issue would be to get rid of the importation duties for solar modules, which are still the costliest part of a solar installation. The tax is aimed at protecting the local industry but it cannot sufficiently supply the local market. Our goal is to prioritize the security and quality of our products by bringing costs down and increasing project viability, as well as increasing the possibility to spend on storage.
Q: How is the company’s utility-scale project progressing?
A: The project, located in Zacatecas, has been developing and is nearly finished. We are also working on other projects of varying sizes. There are not many recent projects available and considering that 2020 was not a good year for utility-scale projects in Mexico, we were fortunate to supply our modules to three big Mexican projects in 2020: Calera Solar, together with Mitsui; Cañada Honda, together with Next Energy: and La Lucha (located in Torreon, Coahuila), owned by Northland Power. We consider that the number of projects in 2021 will be even lower. We are aiming to participate in one of the few that could be built this year. For this reason, we are increasing our efforts in the DG segment. It is the best use of our technology and is certainly a worthy cause.
Iván Reyes
LATAM Utility Director of LONGi Green Energy Technology
HI-MO4 Module Ideally Positioned for C&I
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More about this person Q: What was LONGi’s experience in 2020 in terms of demand and what specific goals has it set for 2021?
A: We have had a great deal of demand, especially in Latin America. The impact of COVID-19 was, therefore, not that profound. Of course, some projects were pushed out to 2021 but, overall, 2020 was a good year for us. For instance, we provided modules for the Pachamama solar project in Aguascalientes, which has been a success so far. We already had some contracts negotiated in 2019 as well, which helped fill in the gaps.
For 2021, we had to make some adjustments in our projections, considering the situation for utility scale projects. However, we see a big opportunity to increase our market share in the C&I segment. Our target for this year is to have at least a 25 percent market share in the distributed generation (DG) environment. We are negotiating with key distributors and already have a good-looking pipeline with C&I developers.
Q: What advantages does the HI-MO4 module bring in the area of DG for the C&I segment?
A: For utility scale projects, we see a different size of module being applied, from 500W up to 700W. The main problem is that these modules increase in size and weight but not necessarily in efficiency. This is not a problem for utility scale but the DG market often uses rooftops, such as at industrial parks. Such a hefty module might not be suitable for a rooftop installation. Our HI-MO4 module is smaller in size and lighter, making it more suitable in this regard. This is why we believe that the technical characteristics of this module fit the C&I segment perfectly. Furthermore, the biggest size provides a high amount of current. Inverters designed for DG projects are sometimes not suited for this. Efficient, smaller modules that comply with all the technical market conditions are much easier to work with.
Q: How is LONGi planning to increase its manufacturing capabilities to meet such demand?
A: We have a rather aggressive expansion plan for the next couple of years. Global demand is very high. We have noted reports stating it is over 130GW. By the end of this year, our goal is to surpass 50GW manufacturing capacity for our modules. For wafers, we want to increase this to over 80GW. We truly believe that demand for solar will continue to rise, so we want to be prepared.
Q: How is the company adapting its strategy in regard to utility scale projects?
A: We understand the challenges that the sector faces in Mexico under the government. However, there are still some ready-tobuild projects that comply with its regulations where we could supply the modules.We are also promoting our HI-MO4 modules aimed at distributed generation (DG) in Mexico for the C&I segment. This is a market where we see a great deal of demand, so we have adapted our strategy to these market conditions. In this case, we developed a proper module to provide to this market. We would love to deploy our cutting-edge utility-oriented module, the HI-MO5, in Mexico but looking for new projects might be a challenge under the government’s policy direction. In Mexico, it seems like we will have to focus more on the C&I market.
What Inverter innovations are coming?
César Alor
Country Manager Mexico of FIMER
Solar inverters are crucial for every solar application, from rooftops to utility scale. They are important because they turn DC power coming from PV panels into AC power, able to be distributed in the grid or go directly to homes and businesses. To get the best out of solar energy and mitigate any potential issues with intermittency, companies providing solar inverters are rapidly innovating and advancing their technological solutions. Mexico Energy Review asked key players about their most relevant innovations and technologies.
Our product lines for the residential segment range from 1.2KW to 6KW. In the Mexican market, we comply with UL certification. It is concerning to see other companies coming to Mexico without complying with official standards. The government should enforce these standards to ensure that only professional installers and equipment can operate in the country. In the C&I segment, our inverters range from 20KW up to 60KW for rooftop installations. We also have a 120KW product, which can be used in ground-mounted installations. For larger scale projects, we were recognized for “Most Innovative Product” at 2018’s Intersolar event in Munich for our PVS-175. This is a powerful string inverter that we used in several PV plants across the world, including Mexico.
Kevin Gutiérrez
We have been increasing our portfolio for this market. Originally, we only had 480v AC solutions for utility-scale projects but we are expanding with new products, such as residential inverters, which we started delivering in 4Q20. We will also introduce a 220v inverter for small, commercial installations in 1Q21. Huawei has followed the same strategy almost from the very beginning, focusing on string inverter technology. This has allowed us to position ourselves well within this technological framework. Over time, our strategy has proven to be the right one: string inverters have demonstrated to have more advantages than central inverters for large projects.
We are the largest 3-phase string inverter supplier in the North American market, and No. 1 in the US with 800MW shipped last year. Even during the pandemic, we experienced significant growth in this market. Our smart inverters support the grid. These are supported by the US UL 1741 SA. These inverters still inject energy into the grid, even if there are unexpected variances in the energy supply. New policies and requirements demand that inverters be smart enough to handle such issues. Chint Power Systems has this capacity available for commercial and industrial applications.
Pablo Rivero
Country Manager of ForeFront Power
Ability to Persist Through Crisis Gives Strength to Bounce Back
Q: How did the company adapt its operations in the last year?
A: Last year was indeed tumultuous, despite our ability to adapt to different circumstances. 2020 was a year of many changes but it also brought new opportunities. We were able to apply a variety of strategies during the pandemic that benefited us. An example is our focus on investment into projects that use to be turnkey oriented. This has become a main business line for ForeFront in Mexico. Distributed generation in general has become a much wider market for the company here.
Q: How have the pandemic and regulatory uncertainty accelerated the sector’s move toward distributed generation?
A: While it may not have increased demand per se, these factors impacted the flow of money that companies were contemplating to invest in renewable projects or other external updates to improve their efficiency and reliability. Instead, companies are now realigning these budgets towards their own energy production, which has opened up the opportunity for external investors to provide the entire solution, including investment, construction, and O&M over the long term.
Q: How does the company approach these projects?
A: In general, our business has two types of projects: on-site and off-site. We develop both types from the greenfield stage until they are operational. As a third party, we operate and maintain the projects.
One important benefit is that our clients do not have to invest in the solution themselves; instead, they just sign a power purchasing agreement (PPA) with ForeFront. Second, the regulated energy prices available to users are very high, and will remain that way for some time. We know that energy generation in Mexico is more focused on sources such as fuel oil and other fossil fuels. This does not allow reduction in energy prices so customers could find more competitive opportunities with our solar solutions. Since adaptability is a strength of ForeFront, we can offer tailored solutions, addressing our clients’ needs and finding a solution that works best for both parties.
Q: Are local energy users shifting toward sustainability?
A: In all honesty, we have noticed that Mexican companies are more interested in energy savings, which is normal for a developing economy. I do see that international companies, especially large corporations, have a higher interest in environmentally friendly solutions, even though they are also looking to save costs rather than just cut down on emissions. Whether this trend affects Mexican companies more deeply will depend on changes in regulation. If there is not a clear regulation that demands companies to decrease CO2 emissions and become greener or that provides incentives for these actions, I do not think it will be a priority for companies, especially right now, in an economy hit by the pandemic and marked by lower sales. Companies will prefer to decrease costs and focus on their own economics rather than the environment. Hopefully, there will be room for both.
A: Such projects can be of value because they are not big enough to cause problems for the grid and can be better positioned in specific areas. Smaller and on-site projects are the future of renewable energy. Unfortunately, updating and improving electrical infrastructure is not a priority in many countries, including Mexico. Smaller projects that are closer to customers and boosted by storage is the future for power generation.
Q: How do you assess the viability of adding battery storage in Mexico’s energy sector?
A: While there are few situations in which you could add storage to a project, there are still opportunities, in my view. There is no additional support for companies to motivate them to add storage into the mix. However, I think that storage can no longer be ignored by the market. Many companies operating outside of the grid are supported by diesel generators, which is too expensive and could be replaced by batteries. In some areas of the country that are outside the reach of the national grid, it is already a possibility.
Q: What are the main challenges the company faces?
A: Everyone is facing similar challenges. Mexico is dealing with an economic situation that has never been seen before. The country will need to experience greater economic stability before companies feel confident to move ahead with projects regarding their energy use and supply. At the moment, companies are looking to reduce costs and switching their energy supply might not be on the top of their list. In addition, market uncertainty is an issue in the energy sector. Since we do not know what will happen next, any reported rumor causes a great deal of turbulence and uncertainty. This incites potential clients to hold off any business decisions they might have wanted to take.
Q: What are ForeFront’s objectives for the year?
A: Any crisis also opens up opportunities. If you are able to persist during the crisis, you can come back and rise again because your company will be at the forefront of a new opportunity. In my opinion, players that stay in the market until this crisis is over will be better positioned. We simply have to move past these challenges, there is no other way around it. Despite potential obstacles, renewables are the future. We will keep fighting for this and look for opportunities wherever they may be. Eventually, the market will stabilize and open up. We should all believe in its potential.
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Solar Panel Solution Meets C&I Demand
Even though module sizes for utility-scale projects continue to expand, ranging from 500W up to a whopping 700W, this also means size and weight increase as well. This is no issue for giant solar parks but Mexico’s fast-developing distributed generation (DG) market often relies on rooftops and other limited spaces. LONGi Solar’s Hi-MO 4m modules are smaller, lighter and comply with all the technical market conditions as well, making them ideally suitable for environments found in the C&I environment.
The Hi-MO 4m series offers three different module types: 60C, 66C and 72C, covering power ranges of 370-385W, 410-420W and 450-460W, with maximum efficiency of up to 21 percent. At maximum power, the current of the Hi-MO4m module remains below 11A, perfectly matching string inverters, power optimizers and micro inverters of any brand.
LONGi’s modules are renowned for their performance, yield and sustainability. In addition, PV Magazine tests have shown that their outdoor energy yield significantly outperformed similar products. LONGi has also won awards in tests done by TÜV Rheinland’s “All Quality Matters” and the Renewable Energy Test Center (RETC) PV Module Index report.
LONGi has also introduced gallium-doping on its wafers, which decreases first-year degradation of the module and increases its useful life. To serve its global customers more efficiently, LONGi is expanding the capacity of its dedicated DG production line to 10GW in 2021.
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