Deutsche Bank MD expects Grid Parity Ahead for Mexican Solar PV Market

Deutsche Bank MD expects Grid Parity Ahead for Mexican Solar PV Market

Solar PV has recently been handed a huge responsibility, and solar proponents may now

rejoice as the world finally expects solar power to fill the role of the global electricity

providing powerhouse. While the global PV market rang in around 42 GW at the end of

2014, the worldwide market is now gaining even more momentum with emerging

markets boasting impressive projects coming down the pipeline during 2015. Vishal

Shah, Managing Director at Deutsche Bank, former Director of Barclays Capital, and

Vice President of Lehman Brothers, shares his insight about the current situation of the

global PV market in Mexico and what to expect for this growing market in the years

ahead.

The Mexican solar market is very dynamic, with various smaller markets that exist in

terms of variable pricing models. For Mr. Shah, who will participate as a speaker in the

Solar Finance Tour Mexico (9-13 March 2015), the Mexican market is particularly of

interest due to the opportunities that reside within. “There are the electricity consumers

that basically consume above the 150 kWh range, and that segment of the market is very

attractive for solar. That grade of 22 cents per kWh, once the consumption increases

above 150 kWh, makes solar very competitive. With the cost of solar production at

present in Mexico, and given the amount of sun resources located there, we are looking

at grid parity for all consumers above the 150 kWh consumption range.”

In the longer term, the potential for growth is large, considering electricity prices have

grown at an average rate of 8-10% per annum in Mexico and energy demand is growing

rapidly. Asserts Mr. Shah, “I don’t see that [the electricity prices] changing, so the grid

parity situation in Mexico is only going to get better.”

Mr. Shah believes that the Mexican market will cross the 1 GW mark in 2016, with the

forecasted growth potentially reaching 3GW by 2020. “2016-17 will be a transitional year

where we may see really strong growth, but it will be at the low base. The Mexican

market is going to be very active for developers in 2015, and in 2016 Mexico will break

the 1 GW barrier, so I would not be surprised if the market reaches 3 to 4 GW by 2020

the way the market is headed.”

To the skeptical developers and investors deliberating whether or not now is the time to

get involved with the massive Mexican solar pipeline, Mr. Shah offers, “Project

development is a risky business; that being said, you need to hedge your bets and take

on some development risk. The policy environment is only going to improve from our

standpoint, and there is a real opportunity for developers who have some sort of a

personal advantage. Understanding the market, preparing the right financing options

once the policies are streamlined, this is the best approach in our opinion.”

Mr. Shah will participate as a speaker at the Solar Project Development and Finance

Tour Mexico (www.solarfinancetourmexico.com) organized by Solarplaza from March 9-

13, 2015, where he will further explicate the expectations for solar growth within Mexico,

and what the recent changes in regulation mean for solar developers waiting to get

involved in the market.

The Solar Finance Tour is the all-inclusive trade mission for international business

developers and investors eager to expand their solar business into Latin America´s most

attractive solar market. The Tour will be a unique opportunity to meet the decision

makers of all the relevant Mexican stakeholders: government, banks, investors, advisors,

utilities, solar companies, and more.

maxico

Registration is open on: www.solarfinancetourmexico.com/registration