Mexico Targets Over 40GW Wind & Solar Capacity By 2030

Recently, Mexico announced at the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) to expand its deployment of renewable energy, which plans to combine wind, solar, geothermal and hydropower assets with a capacity of more than 30GW by 2030, promoting the deployment of wind and solar energy in Mexico to exceed 40GW at the end of this decade.

On March 9, 2021, modifications to Mexico's Electricity Industry Law were signed into law. The changes offer priority to the supply of traditional power generation fleet by the state-owned electricity company CFE, while renewable energy has not so far been strongly supported. One day after the new law came into force, thourt suspended its implementation, and some developers started a new wave of litigation. In the past two years, the Mexican government has not been able to enact long-lasting new policies, which has also increased the uncertainty of renewable energy investments.

According to ASOLMEX, to date, Mexico's cumulative solar installed capacity has reached 8.8GW, including 6.5GW for utility-scale solar and 2.3GW for distributed solar installations. With the cancellation of the fourth energy auction and the bottleneck faced by the renewable energy sector in the country, the PV installation of utility-scale projects has declined significantly, while the distributed PV installation has continued to grow, as it is basically unaffected by changes in national policies.

According to the data of IRENA, Mexico is expected to install 30GW of solar energy by 2030, of which the utility-scale project accounts for 60% and 40% from distributed projects. With the growth of demand and electricity price, we believe that the share of Mexico's distributed PV market will gradually expand, while the uncertainty of government policies will continue to hinder the investment and construction of utility-scale projects. Meanwhile, the new target proposed at the COP27 conference is expected to promote the development of Mexico's PV market to a certain extent. We believe the PV installed capacity in Mexico will be 1.5-2GW in 2022.