Next year is expected to bring optimism for the solar power market in Mexico, as a significantly large volume of solar power capacity is expected to be commissioned as the government prepares ground to implement new regulations.
The National Association of Solar Energy expects that 600 MW of new solar photovoltaic power capacity will be added in Mexico in 2016. The Association expects that around $900 million will be invested in Mexico’s solar power sector next year.
These fresh investments are likely to make Mexico the largest solar power market in Latin America, in terms of annual capacity additions. Over the next few years, as new regulations take affect, the investments and capacity additions are expected to increase rapidly.
Mexico recently approved the Energy Transition Law that aims to facilitate increasing the share of renewable energy in to 35% by 2024. Businesses will have an obligation to increase their share of renewable energy to 50% by 2020.
The Energy Transition Law will introduce two programs through which these renewable energy consumption targets can be achieved. One of these programs will include annual auctions of electricity generated from renewable energy projects. The auctions will create a market for renewable energy projects, thus attracting several millions in new investment.
The second program will be the Clean Energy Certificates. This program is expected to work in a way similar to renewable energy certificate programs operational around the world. Businesses and other entities that will face renewable energy consumption targets are expected to be allowed to purchase clean energy certificates.
Investments in renewable energy, and the latest regulations, are critical for Mexico to achieve its stated target to cut greenhouse gas emissions. Mexico has submitted to the United Nations that it will reduce greenhouse gas emissions by at least 25% by 2030 from business-as-usual.