Mexico lends itself to the development of renewable energies thanks to its favorable geographical conditions. The country enjoys around 300 days of sunlight each year, and with over 9000 km of coastline, there is significant growth potential in other forms of renewable energy. We also believe that more than 70,000 jobs could be created if Mexico reaches its full renewable energy potential.
Diverse renewable energy sources present opportunities
Mexico has already developed a diverse mix of renewable energy consisting of hydropower such as the complex “RENACE”, solar, wind and geothermal. The country’s solar energy sector is the second largest in Latin America, after Brazil, with an installed solar photovoltaic (PV) generation capacity of just over 7 GW in 2021. Mexico’s wind power capacity stood at 7.7 GW, while its geothermal output totaled 976 MW.
It also has bioenergy, geothermal and nuclear power facilities.The Mexican government welcomed renewable energy from the beginning with the construction of the Eurus wind farm in 2009. Located in the state of Oaxaca, it is one of the largest wind energy developments in Latin America. Meanwhile, Iberdrola established Mexico’s first solar park in Sonora in 2018. As a pioneer in the adoption of renewable energy, we believe Mexico has significant potential to develop the sector substantially over the next decade to become a renewable energy leader in Latin America.
Mexico’s renewable energy potential remains strong
The Mexican Government’s Energy Transition Act (GoM) sets a goal for 35% of its electricity generation to come from clean energy sources by 2024. Mexico is on track to meet this target, generating 26.7% of its electricity from renewable sources by 2021. However, it will have to continue to expand its renewable sector as electricity demand in Mexico is expected to grow by 12.7% by 2024.
As Mexico transitions to renewable energy, the sector’s expansion is expected to create more high-quality jobs, as well as help Mexico meet its goal of net zero carbon emissions by 2050. In addition, renewable energy provides a low-cost means of electrifying rural areas.
Regional trends drive project development
We expect southeastern Mexico to become a major renewable energy hub due to its favorable weather conditions and proximity to Central America. The region has the potential to increase renewable energy production to 5561 GW of solar PV, 744 GW of wind power and 272 MW of conventional geothermal power, in addition to housing the country’s largest hydroelectric facilities.
Baja California Sur, which has an isolated power grid, is currently powered mainly by fossil fuels. But as the renewable energy sector develops further in northern Mexico, in the future it could run entirely on renewable resources. The state has the potential to increase its renewable capacity to approximately 743 GW of solar PV, 516 GW of concentrated solar, 110 GW of wind power, and 154 MW of conventional geothermal power.
However, the Government of Mexico should continue to support the development of renewable energy projects to allow the country to move away from fossil fuels and help decarbonize the economy. The solar and wind energy industries have grown rapidly in recent years, which we believe demonstrates the potential for further expansion over the next decade.