Mexico is considered to be one of the hottest renewable energy markets in the world as the federal government moves forward with its ambitious energy reform agenda, whose goal is to produce 35% of its energy from renewable sources by 2024.
For the first time in its history, the Mexican power sector is open for private foreign investment and is moving aggressively to expand its electrical infrastructure to meet growing demand. Mexico’s power sector has recently undergone broad reforms to unbundle the state-owned utility, the Federal Electricity Commission (CFE), in an effort to promote competition, reduce energy prices and attract investment.
2016 was a ground-breaking year for Mexico’s clean energy sector. A new wholesale electricity market was launched, allowing private companies to sell their electricity into a real-time market. They can also enter into power purchase agreements (PPAs) and sell their power directly to large electrical consumers.
Mexico also held two successful power auctions last year, where developers bid record low prices to win lucrative long-term PPAs from the CFE. A total of 34 companies committed to building 52 green power plants with a total generation capacity of 4.7 gigawatts (60% solar, 40% wind).
Over the next two years, these companies will invest US $6.6 billion, creating thousands of green jobs in the process.
2017 is anticipated to be another record-setting year, as the government is set to announce the launch of its third renewable energy auction on April 28. Furthermore, the CFE continues to raise electricity prices for residential and commercial customers, further expanding the pool of customers for clean energy developers.
An exciting company leading Mexico’s clean energy revolution is Guadalajara-based Fortius. On April 25, the governor of Jalisco and Fortius director Sergio Alcalde officially inaugurated the first industrial-scale solar farm built in the state of Jalisco.
The 8-megawatt, $14-million project, known as Jalisco Solar #1, will produce enough energy to electrify 16,000 households. The project included the installation of more than 25,000 solar panels, which created 100 construction jobs and 45 full-time positions.
It is also strategically located south of Guadalajara, adjacent to the state’s largest industrial park. The project was developed and co-financed by Fortius and completed with their strategic partners (Trina Solar, Alion Energy and ABB). It is the first project of its size to be 100% Mexican financed.
At the inauguration, Fortius announced that it has entered into a partnership with Tesla Motors’ SolarCity and will begin construction of a second 8 MW solar farm adjacent to Jalisco Solar #1.
The new Tesla-Fortius partnership and the relationship between the company’s founders, Alcalde and billionaire Elon Musk, underscores the emergence of Guadalajara as a growing hub and magnet for clean energy and high-tech companies.
The two men met last September at the International Astronautical Congress in Guadalajara, where Musk chose to deliver a keynote speech entitled “Making Humans a Multiplanetary Species.” During his brief time in Guadalajara he asked to meet with Alcalde, the first person in Latin America to purchase a Tesla electric vehicle.
SolarCity entered the Mexican market in 2015 with the acquisition of Ilioss, a Mexico City-based solar developer. And, one day before Musk’s keynote speech in Guadalajara, SolarCity’s Mexico president, David Arelle, told Reuters “that if things work out the way they should, over the next five years our investment could reach about US $1 billion.”
SolarCity’s expansion into the Mexican solar market is happening alongside Tesla’s vehicle business. The electric automaker opened its first store in Mexico City last year and will open two more stores in Guadalajara and Monterrey later this year.
Guadalajara is the second largest city in Mexico and a region of strategic economic importance. Historically, Guadalajara and the state of Jalisco have been better known for mariachis and tequila, but the region has quietly become a burgeoning technology hub and is now known as the Silicon Valley of Mexico.
Jalisco’s high-tech sector includes thousands of IT companies, ranging in size from start-ups to blue-chip giants, such as IBM, Flex, Oracle and Intel. The tequila state also has no shortage of brains, with 12 universities, including the prestigious Tecnológico de Monterrey, a funnel of 18,000 IT, science and engineering graduates that tech companies get to choose from each year.
Tech entrepreneurs from across Mexico come to Guadalajara’s Software Center, an “incubator” for tech start-ups. The Software Center was opened in 2006 to provide entrepreneurs with a collaborative environment to develop and promote their companies within a supportive and stable business ecosystem.
The end goal, of course, is for the entrepreneurs to compete globally, raise venture capital and create new jobs.
To this end, Jalisco annually exports $21 billion in tech products and services, according to the state’s Innovation, Science and Technology Secretariat. In fact, Jalisco is the first state in Mexico to have such a government department.
Intel and iTexico are examples of two companies that have invested in Guadalajara and are thriving.
iTexico, a software development and nearshore outsourcing company, chose Guadalajara for the home of its software development and delivery center. This is where the majority of the company’s 140+ mobile app and cloud developers work.
Since 2011, iTexico has experienced 500% growth and won numerous awards thanks in large part to the highly skilled and affordable talent available in Guadalajara.
In 2014, Intel invested US $177 million to expand its Guadalajara Design Center (GDC), the largest corporate campus and engineering research center in Latin America. The GDC’s stated mission is to “help transform prototypes into products.”
Since its foundation, the GDC has contributed to the development of more than 40 leading processor and chipset products distributed around the world. Intel contributes to the development of the Mexican technological ecosystem by partnering with local universities on research and talent development projects. Intel has also set up a multi-core technology lab at the Information Technology Institute of Jalisco and regularly hires interns who spend six to 12 months in GDC’s labs learning about state-of-the-art technologies and engineering processes.
With the growth and momentum in Mexico’s clean-energy and high-tech sectors the future looks bright. Especially for Fortius and other technology companies based in Guadalajara!
Jarrett Leinweber, M.Sc., is an entrepreneur and sustainable energy specialist. He provides consulting services and is a developer of solar energy and electrical infrastructure projects in Mexico. He can be reached at [email protected] or 521-669-147-6965.