- Fitch Solutions
Mexico Renewables SWOT
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
|Strengths ||Weaknesses |
- Favourable geographic conditions for the development of wind, solar and geothermal renewables technologies and established wind and solar industries.
- High tariffs for industrial consumers have helped boost the cost competitiveness of renewables generation.
- Reforms that liberalised the energy market have resulted in conditions for greater private investment in the power generation and transmission sectors, creating established wind and solar power sectors.
- Transmission and distribution losses remain high and the grid is underdeveloped in regions highly suitable for wind and solar projects which hinders the integration of new renewables capacity.
- Some projects have been subject to extensive delays as a result of barriers such as environmental opposition, skilled labour shortages, or more recently, changes in policy to hinder new interconnections (the change was suspended through judicial challenges known as amparos) and denials of required regulatory permits.
|Opportunities ||Threats |
- Mexico has abundant untapped wind and solar resources and could also expand biomass in conjunction with agricultural development.
- Prospects for investment in Mexico's geothermal power sector present opportunities.
- Positive long-term economic and demographic fundamentals will drive robust growth in power consumption and create scope for the development of new capacity.
- Growing interests by industries and corporations in the development of a green hydrogen industry could create opportunities within the wind and solar sectors.
- Mexican President Andrés Manuel López Obrador’s push for electricity market reform continues to pose downside risks to non-hydro renewables growth
- Negative impacts to supply chains within the renewables sector resulting from the effects of the COVID-19 pandemic and high levels of inflation have led to delays in project construction and impacts to project financials, posing downside risks to our forecasts.
- Greater investment in gas-fired power capacity through government efforts to strengthen the state-owned utility and to capitalise on cheap natural gas from the US could dampen demand in the renewables sector.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.