By: Matt Mulrennan

Mexico is about to make more of the world’s machines: cars, planes, phones, and electric toothbrushes. Mexico’s manufacturing output for 2021 was $230.07B, an enormous 21.44% increase from 2020. But the solar energy market lags in the region compared to the rest of the world at only 3–4% of installed capacity. In order to achieve international climate goals of 1.5 degrees Celsius warming we simply cannot repeat the same path of the last two decades of coal-powered manufacturing in places like China. The good news — the outlook for solar energy in Mexico is…bright.

Mexico Has Abundant Solar Energy

Mexico has abundant solar resources, some of the best in the world in terms of solar radiation throughout the whole country, making it an ideal location for solar energy development. Like the U.S. over much of the past two decades Mexico’s government has been uneven and less aggressive than many want on promoting renewable energy, but overall has been actively implementing policies and regulations to promote renewable energy.

Mexico’s solar resources are among the best in the world, far superior to those of Germany and Spain, the countries currently recognized as the world leaders in installed photovoltaic systems. (Source: World Bank)

One key driver for the growth of the solar market in Mexico is the country’s increasing demand for electricity. As the population grows and industrialization continues, there is a rising need for reliable and sustainable sources of energy. The Mexican government has implemented various incentives and support mechanisms to promote investment in solar energy projects. These include net metering policies to sell excess electricity back to the grid, as well as long-term power purchase agreements (PPAs) that provide stable revenue streams for solar energy developers. These policies have helped attract investment.

Latin America could see exponential growth of solar energy in the next decade to catch up to the rest of the world. (Source: Solfium)

An additional 97,119 MW of solar capacity has been announced or in pre-construction phase in Lat Am, which is more than slated in the same categories in North America (Sources: Reuters, Global Energy Monitor)

And the Latin American market for solar also is expanding fast, only behind North America and Asia in terms of new installs as shown above. Several countries are now pursuing more government action on climate change (Chile, Colombia, Brazil) alongside stubbornly high electricity costs and lack of reliable energy causing significant economic problems. Savia Ventures recently hosted a webinar session with Jonah Greenberger from Bright — a leading installer of residential solar in Mexico which has raised over $50M. It has diverse investors including multi-lateral institutions like the IDB and actor Leonardo Dicaprio. There is reason to expect growth in the Latin American startups installing solar panels on businesses and homes, providing maintenance or software services to solar PV plants, and expanding solar access to remote off-grid rural regions.

Some Examples of Latin American Solar Startups

Bright — Mexico, residential

Solfium — Mexico, commercial and residential

Gecko Solar — Mexico, commercial and residential

Enlight — Mexico, residential

Ruuf — Chile, residential

Sunai — Chile and throughout Lat Am, software for solar PV plants

Suncast — Chile, solar forecasting