Masogo – Penetrating the Mexican Renewable Energy Market

Agencies
·2-min read

When the CEO of a European multinational specialized in the development and management of infrastructure and renewable energy contacted us in 2017, he had a clear goal: to quickly and cost-efficiently penetrate the South American market.

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But where to start? For the past 20 years, their main markets had been Europe and North America.

After a thorough analysis of the company, its operational model, investment capability and goals, our renewable energy experts started looking into prospective markets in the LATAM region.

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Our advanced market research and analysis allowed us to learn that in Mexico, the primary law regulating the renewable energy sector was the Law for the Development of Renewable Energy and Energy Transition Financing (LAERFTE) enacted in 2008.

Under this law, Mexico had implemented the Estrategia Nacional de Energía 2013–2027, which established that 35% of energy should derive from renewable sources by 2024.

Furthermore, the 2013 Energy reform had revolutionized the local energy market by breaking the monopoly of state-owned institutions (Petroleos Mexicanos - Pemex and CFE) and opening the market to private foreign investors by 2016.

In December 2017, and following our advice, a decision was made: the project was to take place in Mexico.

If the lack of reliable power transmission and distribution infrastructures seemed to be a challenge at first, the energy reform law allowing private sector participation in the development and construction of transmission lines presented a real advantage.

After leveraging additional funding, our client’s company also decided to participate in in developing the distribution grid, with the CFE, the Federal Electricity Commission, as the main grid planner.

The company broke ground in February 2018 in the Mexican desert.

In December 2018, barely ten months later, it completed its 404 MW photovoltaic project and was contracted to sell part of the power generated to the CFE and on the wholesale electricity market.

The renewable energy market seems to have a bright future in the Mexican peninsula and, Masogo Advisors is proud to have contributed to its development.