Mexico Renewables Report Q2 2016
BMI View: Mexico is making considerable progress in its renewables expansion and we are maintainingour largely positive 10-year forecasts for the growth in renewables capacity owing to the positivefundamentals across the industry. That said, we believe that the expansion in the country's solar sector willremain below its considerable potential until the government takes steps to mitigate regulatory uncertaintyand improve the sector's operating environment.
Latest Updates and Structural Trends
Growth in Mexico's non-hydro renewables industry continued to accelerate in 2015, registering 25.5%year-on-year (y-o-y) expansion in capacity and 22.4% rise in generation. We anticipate non-hydrorenewables capacity to grow by annual average rate of 13.5% between 2016 and 2025, more than triplingthe total installed capacity base to 16.4GW in 2025. However, this will still account for just 16.9% of thecountry's total generation capacity.
Expansion in the Mexican solar power sector will remain below its considerable potential until thegovernment takes steps to mitigate regulatory uncertainty and improve the sector's operatingenvironment, which is clouded by a 15% import tariff on solar panels and the country's currencydepreciation. In light of these hurdles, our growth forecast for Mexico's solar power capacity through2020 is conservative relative to the pipeline of projects holding power generation permits.
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