Guest post by Robert Sternthal and Eric van Arsdale on Forbes.com
Strong winds blow through its southern region and in the north the sun is strong and consistent, providing Mexico with the ideal natural conditions for renewable energy production. Thanks to recent reforms, our neighbors south of the border may soon be able to take better advantage of their renewable energy potential, which could offer new benefits and opportunities for the industry on both sides of the border.
U.S. renewable energy companies have been eager to enter the Mexican market, and are uniquely positioned to help develop, supply, build, and finance projects in Mexico’s evolving energy market due to geographical proximity and years of experience at home. However, almost two years after Mexico’s constitutional energy reforms, the Mexican renewable energy sector continues to face a number of uncertainties – with the prospect of a fully established and mature industry still several years out, at a minimum.
Fortunately, preparations for Mexico’s first energy auction in 2016 have begun to give us some indication of what the future renewable industry may look like. So far it looks intriguing…but challenging to navigate.
To understand where the Mexican energy sector is heading, look first to its past. The state-owned electric company, the Comisión Federal de Electricidad (CFE) has acted as the dominant electric utility in Mexico for three-quarters of a century, while most of Latin America deregulated in the 1990s. Mexico’s 2013 constitutional energy reforms aimed to end the state monopoly in the energy sector – with the goal of attracting private investment to Mexico and spurring economic growth through competitive energy prices.