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Thread: Mexican Sun Lures Cash to Solar as Panel Prices Plunge

  1. #1
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    Mexican Sun Lures Cash to Solar as Panel Prices Plunge

    http://www.bloomberg.com/news/2013-1...ls-plunge.html


    Three things occurred to me when I read this article:

    A.
    Mexico derives 33% of it's energy from burning oil. Geez. If in the future they get their electricity from something else that could make a dent in oil prices.

    2
    Maybe there is a market (a new industry) for Mexico to sell electricity to the USA. Canada Sells electricity to us. IMHO, the only real solution to Mexican's not immigrating to the USA is jobs in Mexico.

    3
    The electrical energy industry is currently complaining about rooftop solar energy production and 'net metering' or energy buyback. But I think in the future a large minority of cars will be plug in electric and if that happens will need all of our electrical capacity if not more.

    4
    Solar electrical generation at it's current cost is a no-brainer. The market has spoken.




    Mexico, poised to allow foreign oil extraction for the first time in 75 years, is finding its abundant natural resources also appeal to investors in a much cleaner energy: sunshine.

    First Solar Inc. (FSLR) of the U.S. has bought its first projects in Mexico, while more than a dozen other developers including Germany’s Saferay GmbH and Spain’s Grupotec Tecnologia Solar SL own licenses there. Local investor Gauss Energia opened Latin America’s largest photovoltaic plant in the country last month.

    The project “will open the way for the development of the photovoltaic sector,” Gauss Chief Executive Officer Hector Olea said in an e-mail. “There have been multiple announcements but very little real development work so far even though the regulatory system is sound and conducive to bankable projects.”

    Mexico, a top 10 oil producer, plans to generate 35 percent of its power from clean sources by 2026, up from less than 15 percent now, to curb emissions and diversify its energy mix. A global surplus of solar panels has made them cheaper, while the costly oil-fired plants common in areas such as Durango, Sonora and southern Baja California make solar a competitive option.

    Gauss and Portugal’s Martifer SGPS SA opened a 30-megawatt plant in La Paz, Baja California, on Sept. 12 with funding from International Finance Corp. and Nacional Financiera SNC bank. While Mexico doesn’t subsidize large solar, the $100 million project offered an economic alternative to fossil-fueled power in the area, where solar radiation exceeds the national average.

    Hydro-Heavy

    Most of the country’s clean energy comes from hydroelectric stations. Wind and solar, making up less than 1.5 percent of power output, have been slow to take off as developers struggle to reach deals with electricity purchasers, banks and regulators unfamiliar with the nascent industries. Yet the tide is turning.

    Local and foreign companies have amassed initial permits for 215 megawatts of solar plants, mainly in Mexico’s sunnier northern regions, figures from industry regulator CRE show. That’s enough to power more than 40,000 homes, and would increase the country’s solar capacity more than fivefold.

    The government set up a renewables council in June to draft an energy program including the nation’s first capacity targets. The Energy Ministry forecasts solar capacity of as much as 2,170 megawatts and a 10-fold growth in wind to more than 14,000 megawatts by the end of the decade.

    Oil Overhaul

    Oil still generates about a third of Mexico’s power output. Changes are afoot across the industry, with President Enrique Pena Nieto proposing a carbon levy on fossil fuels and increased tax collection to help cut reliance on oil income, which funds about a third of the budget. A bill filed in August would allow non-state companies to pump crude for the first time since 1938.

    While the solar industry is minute by comparison, the country may complete large-scale projects totaling as much as 70 megawatts this year, about 125 megawatts in 2014 and 120 megawatts in 2015, Bloomberg New Energy Finance has forecast. In Latin America, only Chile and Ecuador will build more solar parks next year, according to the researcher.

    “We expect a small boom in utility-scale installations in the north and western regions due to high solar radiation, falling system costs and foreign developers and manufacturers in search of new markets,” said Maria Gabriela da Rocha, a former BNEF analyst in Sao Paulo. “Longer term, residential and commercial-size projects are set to drive growth in the country because solar now makes economic sense for many customers.”

    CFE Deals

    Developers such as Gauss can take advantage of the Small Electricity Producers’ Program, under which the Comision Federal de Electricidad, the state utility known as the CFE, buys power from solar projects of as much as 30 megawatts. The utility offers 20-year deals fixed at 98 percent of its average cost of generating power in the area over the previous year.

    First Solar, the largest solar company in the U.S., has acquired several projects in Sonora state as part of an agreement with Element Power US LLC, it said in August.

    “The pipeline strategically positions First Solar for our entry into the market,” Tim Rebhorn, senior vice president for business development, said at the time. “We are excited by the opportunity to explore new relationships with CFE, commercial and industrial customers, and the Mexican government.”

    The sunshine in Mexico, where average solar radiation is almost 60 percent higher than in Germany, the world’s largest market, has also engendered a growing market in rooftop solar.

    Economic Sense

    Solar energy makes economic sense for about 3.5 million commercial customers and 500,000 high-use residential consumers who pay “extremely high” electricity rates, according to BNEF. Installations of under 500 kilowatts benefit from net metering, a system that credits generators for the power they can’t use.

    Gauss is also considering an alternative funding model for future projects known as self-supply. Under the arrangement, already used to fund wind farms in Mexico, developers can sign long-term power-purchase agreements with non-state companies, which commit to buying electricity at a fixed price.

    Such a model has attracted Ford Motor Co. (F), which in June agreed to buy 3 megawatts from a 20-megawatt solar plant planned in Sonora. The project also has purchase agreements with seven local authorities for the remaining capacity.

    Solar power from megawatt-scale plants remains uncompetitive in most regions of Mexico because the country’s average cost of power generation is only about 12 cents a kilowatt-hour, according to Gauss’s Olea. That compares with about 30 cents in the southern tip of Baja California.

    For large projects, more funding and power-purchase deals are needed for the market to “take off,” said Stuart Smits, CEO of the U.S.’s New Energy Ventures LLC. The company plans to develop 2-megawatt to 3-megawatt projects for Mexican municipal authorities, many of which pay higher-than-average power prices.

    “A few solar deals are needed to mark price points and give confidence,” he said. “Once this happens, the market will boom.”

    To contact the reporter on this story: Marc Roca in London at mroca6@bloomberg.net

    To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


  2. #2
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    China and India need to jump on this bandwagon.

  3. #3
    Quote Originally Posted by Buster View Post
    4
    Solar electrical generation at it's current cost is a no-brainer. The market has spoken.
    Where on earth are you getting this from?

    Quotes from your own article.

    A global surplus of solar panels has made them cheaper, while the costly oil-fired plants common in areas such as Durango, Sonora and southern Baja California make solar a competitive option.
    Solar energy makes economic sense for about 3.5 million commercial customers and 500,000 high-use residential consumers who pay “extremely high” electricity rates, according to BNEF.
    Solar power from megawatt-scale plants remains uncompetitive in most regions of Mexico because the country’s average cost of power generation is only about 12 cents a kilowatt-hour, according to Gauss’s Olea. That compares with about 30 cents in the southern tip of Baja California.
    So even in Mexico, where energy costs are very high in general, Solar is only viable under very specific circumstances, and only then has has been pursued because there is currently a world wide surplus of panels.

    And what you got out of this is the "market has spoken", Solar Panels are an economic option.


    SMH.
    Last edited by Axil; 10-08-2013 at 01:47 PM. Reason: broken quote

  4. #4
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    I think you're missing the pig picture Axil.

    First, oil not used for power generation at home can be sold internationally where Mexico will get better prices.
    After you get over the initial outlay for solar, the long term savings add up.
    Solar panel prices are dropping and Mexico is good geographically for lots of solar radiation. Unlike oil, once the panels are producing electricity, there are continuing costs like there is for oil (pumping, refining, etc).

    It does make a lot of sense.

  5. #5
    The market has not spoken at all.

    Solar still accounts for a tiny, almost insignifigant fraction of U.S. power generation.

    Solar today is still direct subsidized to a great % of it's costs (as opposed to Oil and other older forms, who are "subsidized" not by direct subsidy, but by tax breaks, a vital difference).

    I live in one of the wealthiest areas in the United States. Solar Panels on homes here are almost as rare as Jets Super Bowl wins.

    And lets be clear, Solar's biggest cheerleader here......doesn't use any Solar himself.

    I think Solar has a potentially bright future long-term, albeit perhaps done differently than today as tech advances, but to proclaim "the market has spoken" re: solar right now, is just laughable propaganda, not fact.

  6. #6
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    Quote Originally Posted by Churchill View Post

    I live in one of the wealthiest areas in the United States. Solar Panels on homes here are almost as rare as Jets Super Bowl wins.
    Are there solar companies offering solutions in your area? If not, maybe that's why you don't see any, not because of efficiency or lack of interest.

    I was told its being rolledout according to high local rates, abundance of radiation, and acceptance factor (tree-hugging index?).

  7. #7
    Quote Originally Posted by quantum View Post
    I think you're missing the pig picture Axil.
    No. I wasn't responding to the "big picture", just Buster's assinine comment about the market having spoken.

    Quote Originally Posted by quantum View Post
    First, oil not used for power generation at home can be sold internationally where Mexico will get better prices.
    I don't see why that would be. I don't believe they are discounting the oil domestically. So you're going to lower demand for oil, then sell it for more than you are now how exactly? Either way, oil for in so far as electrical power is concerned isn't part of the "big picture"

    I found this chart:
    USenergy2009.jpg

    First pic is for the US, second is for the world.

    The first thing you'll notice is Oil is the biggest source of energy in the world. Then you'll think i'm crazy.
    Look closely however and you'll see that in the generation of electricity specifically it only equals 1% of the market.
    Even if it were always cheaper to use solar than oil for the generation of electricity, you wouldn't shift either of those diagrams very much.
    After you get over the initial outlay for solar, the long term savings add up.
    Solar panel prices are dropping and Mexico is good geographically for lots of solar radiation. Unlike oil, once the panels are producing electricity, there are continuing costs like there is for oil (pumping, refining, etc).

    It does make a lot of sense.
    Your forgetting though, that solar panels deteriorate. I haven't looked into this in a while, but a brief glance at wikapedia says that "most" solar panels are expected to retain 80% of their power output for 20 years. After that you're going to have to replace them or face rapidly declining performance. Don't forget you have to dispose of them properly and there are all sorts of nasty chemicals and compounds within them that are bad for the environment.

  8. #8
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    Not as bad as 80%. Don't recall actual numbers, but my provider will pay me penalties for it to fall below I believe 90% in the 20 yr lease. Also, all that stuff is fully recyclable.

    I'm assuming that Mexico doesn't charge itself market prices for its own oil; hence they can get more on the open international market.

  9. #9
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    Buster is there a reason you don't use solar in your home?

  10. #10
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    http://www.livegreen.cc/2012/12/29/t...er-in-the-usa/


    Market Growth

    2012 has been a bumper year for utility scale (over 10MW installations) solar power in many states across the USA with total installed capacity of new solar power installations over 10MW totaling 3GW of capacity in a year for the first time. This was up from 2.3GW of new utility scale solar power installations in 2011. The total installed utility scale solar power in the USA is now 8.5GW, or a 35.6% growth, according to a recent PV TECH article. This figure, while impressive and growing rapidly still leaves the US trailing the world leader, Germany by a considerable distance. Germany already has 31.62GW of solar power installed as of October 2012 which is 3% of their generating capacity and they expect to reach 25% solar powered electricity generation by 2050.
    From what I have read most solar panels have a 25 year guarantee. I believe the life of the inverter is shorter.

    As for environmental concerns there are heavy metals used in the construction of these devices. So when they are removed the owner should be responsible and have them recycled. The owner should not leave them at the curb or toss them into the long island sound.

    For those interested here is an article with stats on solar power generation per state

    http://www.livegreen.cc/2013/01/12/s...-per-us-state/

  11. #11
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    Quote Originally Posted by adb280z View Post
    Buster is there a reason you don't use solar in your home?

    I worship Artume

  12. #12
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    Quote Originally Posted by Buster View Post



    From what I have read most solar panels have a 25 year guarantee. I believe the life of the inverter is shorter.

    As for environmental concerns there are heavy metals used in the construction of these devices. So when they are removed the owner should be responsible and have them recycled. The owner should not leave them at the curb or toss them into the long island sound.

    For those interested here is an article with stats on solar power generation per state
    I've been told the panels are estimated to last 35 (newer ones?); the inverter, maybe 12 yrs. My provider will replace the inverter after 10 yrs, free.

    While I"m disturbed to be on the same side of an argument as you, Busterbot, you have brought this on yourself.

    Your chickenhawk rants during the Bush administration guaranteed blowback every time you lecture us on something you don't use yourself, regardless of the topic.

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