solar market potential in mexico

Solar Market Potential in Mexico

Intersolar Europe 2016, Export forum: Energy Solutions Made in Germany Munich, June 23, 2016

c Gauss Energia

Alberto Valdés President

Mexican Solar Association

Joscha Rosenbusch Principal Advisor GIZ

Programa Energia Solar a Gran

Escala en México (DKTI-Solar)

Program “Energía Solar a Gran Escala en México”

German Climate and Technology Initiative - DKTI

Präsentationstitel hier eintragen 30.06.2016

Objective:

Improve the technological, financial and organisational conditions for

large scale solar energy applications in Mexico

Areas of work:

Market introduction of innovative solar

technologies

Solar financing capacities

Mecanisms for policy coordination between

public and private sector

Solar Process

Heat

PV

Power Plants

Program “Energía Solar a Gran Escala en México”

German Climate and Technology Initiative - DKTI

Public Private

Academia and Innovation

Financing

On behalf of:

BMZ - Federal Ministry for

Economic Cooperation and

Development

11/2015 - 10/2019

Power sector clean generation goals


Clean generation

• Fossil fuel based plant

with CCS

• Hydro

• Nuclear

• Any renewable energy

source (wind, solar,

bioenergy, others).

• Efficient cogeneration

(definition by CRE)

20% 25% 30% 35% 40% 50%

2015 2018 2021 2024 2033 2053

clean conventional

Fuente: KPMG, Mexico Energy Conference

The new model of the electricity market

Reform implementation timeline (selection)


08/14 10/14 03/15 05/15 09/15 12/15 01/16 03/16 07/16 10/16 2018

Electricity

Industry

Law

Creation

of

CENACE

Clean

energy

certificates

(CEL)

guidelines

5% clean

energy

oblication by

2018

1st

PRODESEN

Energy

transition law

& legal

unbundling

CFE

Results 1st

long term

auction

Principles

power

market

framework

Pase 1

day ahead

and real

time market

Medium

Term

Auction

Rules

Real operation

day ahead,

real time an

CEL market General

Provisions

Distributed

Generation

Incentives & support for Solar

30.06.2016

Accelerated

depreciation

100% of investments in machinery and equipment used for renewable energy

generation. Include fixed assets, expenses and deferred charges. Min 5 years

operation

Clean Energy

Certificates

(CELs)

Mandate to generate 5% of overall consumption by clean energy in 2018. All market

participants that consume electricity in the system must comply with the mandate and

can use CELs to meet obligations. Solar is a sources eligible for CELs.(1CEL=1MWh)

Net Metering Billing credit for excess electricity generated by RE facilities of retail electricity

consumer

Sustainable

Energy Fund

R&D Renewable energy and energy efficiency.

Projects and calls managed by SENER and CONACYT

Source: GIZ, BNEF, Ley del Impuesto sobre la Renta, SENER, Ley Federal de Derechos

Auctions Regulated Austions for Electricity suppliers (eg CFE) for clean energy, capaity and CELs

other Non-discriminatory network access; reation of wholesale markets, Improved

information provision; simplified approval processes

Avarage end user electricity prices 2006-2015

30.06.2016

• Subventioned prices

for Households and

Agriculture below

Industry, Business

and Service-sector

• Average price higher

than in the USA

Source: CFE

Household

Business

Industry

Services

Agriculture

Photovoltaic prices drop

1,8

1,5

1,1

0,9

0,7 0,6

0,5

2009 2010 2011 2012 2013 2014 2015

COST PER WATT PV MODULE

US$

/Wp

Año

359

248

157 125

97,5 84 64

47

2009 2010 2011 2012 2013 2014 2015 2016

LEVELIZED COST ELECTRICITY FOR PHOTOVOLTAIC SYSTEMS

US$

/MW

h

Año

Fuente: Bloomberg

Large Scale Solar Power

Market opportunities

Spot market • Merchant solar projects: selling electricity and clean energy

certificates (CELs) on the spot.

Bilateral contracts • Medium- to long-term PPA contracts with large consumers or

qualified suppliers.

Auctions

• 15-year energy and 20-year CEL PPA contract with CFE.

• Depending on the technology, 15-year capacity contract may be

applicable.


Corporate PPA

30.06.2016

34 28 - 9 8 -

27 -

42 25

277

125 172

301 266

801

275

0

100

200

300

400

500

600

700

800

900

1999

2000

2001

2002

2003

2004

2005

2006

2007

20

08

2009

2010

2011

2012

2013

2014

2015

Wind Biomass & Waste Small hydro Geothermal Solar

Source: CRE, Bloomberg New Energy Finance

Total clean energy capacity installed by

technology (MW) and commissioning date

(1999-2015)

• 2.4GW clean energy PPAs with

corporates

• 2009 increase: wind

• Uncertainty by energy reform: 2015

• Almost 1GW projects to be

commissioned until 2018

• Industrials waiting for price development

• Partner shy away from signing long term

PPA

• Consumer to comply with 5% clean

energy by 2018 : significant cost of non

compliance

Long Term Auction


• 15-year contracts on offer

• Bids in $/MW

• Firm capacity, able to

generate at the system’s

100 most-critical hours

• Projects sign a contract to

have a given amount of

capacity available at a

determined zone and

dispatch electricity to the

spot market when required

.

Capacity


• Bids in $/MWh

• Only clean energy

technologies to participate

in the auction (both

baseload and intermittent)

• If the source is intermittent,

hourly benchmarks

references (factores de

ajuste horário) will be

applied to determine final

revenue

• Non-intermittent source

pricing is much simpler with

contracts paying at a

straight $/MWh rate.


• Bids in $/CEL

• Clean energy-only

• Projects may be located in

any part of the grid system

Energy Clean energy

certificates

Solar 85%

Wind 15%

Renewable power on first auction in Mexico

Renewables distribution on 1st Auction

Solar 74%

Wind 26%

Renewable Energy on first Auction in Mexico

Total 5.402 TWh

30.0

40.0

50.0

60.0

70.0

80.0

0.0

0.5

1.0

1.5

2.0

2.5

Ene

l

Sun

pow

er

Acc

iona E

nerg

y

Jinko

Sola

rIn

vest

me

nt

Ala

rde

Envi

sion &

Viv

e E

nerg

ía

Ald

esa

Recu

rre

nt E

nerg

y

Therm

ion E

nerg

y

Alte

r E

ners

un

Energy (TWh) CEL(m) Price $/MWh

Mexico’s 1st power auction winners by energy (TWh),

CELs (m) and price ($/MWh)

30.06.2016 USD1 = MXN 17.32

Source: CENACE, Bloomberg New Energy Finance

• A total of 5.4TWh of

power and 5.4m CELs

was contracted

• The auction’s average

contract price was

$47.6/MWh

• The lowest bid of

$35.5/MWh came from

a solar project being

developed by Enel

Green Power

30.0

40.0

50.0

60.0

70.0

80.0

0.0

0.5

1.0

1.5

2.0

2.5

Ene

l

Sun

pow

er

Acc

iona E

nerg

y

Jinko

Sola

rIn

vest

me

nt

Ala

rde

Envi

sion &

Viv

e E

nerg

ía

Ald

esa

Recu

rre

nt E

nerg

y

Therm

ion E

nerg

y

Alte

r E

ners

un

Energy (TWh) CEL(m) Price $/MWh

Potential market for DG

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

Instalaciones potenciales

Market Size for DG

Usuarios DAC Instalaciones Comercios Instalaciones Industriales

With a penetration level of 5% renewable

energies gets installed capacity

of 3 GW

Fuente: CFE

source: CFE-CRE

2,7 6,7

16,1

31,7

55,7

85,0

0

10

20

30

40

50

60

70

80

90

MW installed per year

PV Distributed Generation - Market Evolution

source: ANES / CFE-CRE

Fuente: Informe sobre la Participación de Energías Renovables en la Generación de Electricidad en México, al 30 de junio del 2015.

2015

Solar

41 MW

2028

Solar

1,2 GW

MW

Guideline Solar Distributed Generation (02/2016)

DG Products Definition of DG Compensation

model

Tarif regulation Business model CEL obligation

Source: GIZ, PwC

30.06.2016

Source: IRENA Global Atlas

Deutsche Gesellschaft für Internationale

Zusammenarbeit (GIZ) GmbH

DKTI - Programa de Energía Solar a Gran Escala

en México (DKTI Solar)

Joscha Rosenbusch

Asesor Principal / Programmkomponentenleiter

T +52 (55) 5536 0330

M +52 (1) (55) 4354 3898

E [email protected]

I www.giz.de/mexiko

http://www.giz.de/mexiko

solar market potential in mexico

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