While Mexico’s energy sector is a highly restricted place for private players, it is a reality that nearshoring will demand more generation capacity, especially from clean sources.
For the first time since nearshoring, or the relocation of supply chains, became popular in the country, the energy sector emerged at the top of the foreign investment commitments highlighted by the latest edition of Santander México’s Nearshoring Data Monitor, which stated that 32% of the 120 nearshoring investment announcements totaling US$44bn this year correspond to the electric power sector.
The study, which covers the January-October period, also said that the automotive industry came in second, with 30%, although it has been leading in nearshoring opportunities for months with the arrival of players such as US electric-vehicle manufacturer Tesla.
Among the new energy investment announcements is one by German technology conglomerate Siemens, which last week said it was investing more than 900mn pesos (US$52mn) in the expansion and optimization of its productions at Parque Industrial Kaizen in Querétaro state to provide power distribution solutions for the automotive, aerospace, residential, food and beverage industries, among others.
The relocation of companies is demanding more power distribution, with a heavy focus on clean energies to comply with international standards and environmental commitments they’ve subscribed to. And, given that energy regulator CRE has not granted many renewable permits this year, firms have identified an area of opportunity.
Bernardo García, director of renewable and storage projects at US-Mexican company RER Energy Group, told BNamericas on November 17 that his firm found a niche in Mexico’s industrial distributed generation segment that has allowed it to double operations this year. The company also expects to double operations next year thanks to nearshoring, environmental commitments and electromobility.
“The opportunities are there and will be because the demand is huge. We’re very far from the necessary environmental goals. There are private clients who are still very far from their goals. Added to this is the pressure of nearshoring, the pressure of electric mobility and other lines of business that are entering the country,” he said.
“So, there are opportunities. From my point of view, we also need large-scale generation permits and we also need the regulation to allow this in an agile manner because it’s a reality that obtaining permits, both in isolated supply and for utility-scale, can take years,” he said.
The government said on October 24 that it had recorded 174 nearshoring investments totaling US$74bn, but it did not specify the period in which these announcements were made.
More announcements are expected soon, however, as the administration of President Andrés Manuel López Obrador has launched two fiscal incentives in 10 industries to encourage relocation to Mexico, in addition to four other incentives related to the Tehuantepec isthmus rail corridor between Salina Cruz port in Oaxaca state and Coatzacoalcos port in Veracruz state.
The government launched tenders for 10 industrial parks to complement the local logistics platform, which will compete with the Panama Canal to facilitate container transport between the Pacific Ocean and the Atlantic.
The winners are still unknown, but authorities unveiled interest from two major natural gas and green hydrogen players.
López Obrador said Danish investment fund Copenhagen Infrastructure Partners (CIP) will invest US$10bn in a new green hydrogen plant in Mexico’s Oaxaca state and take charge of building one of 10 planned industrial parks along the interoceanic corridor.
As originally published on bnamericas.com
About RER Energy Group
RER Energy Group is an industry leader in providing cost-effective, high-quality solar systems throughout the United States and Latin America. The company has developed more than 55 megawatts of solar energy, obtaining over $30 million in grant proceeds for commercial, industrial, agricultural, municipal, and non-profit customers. For more information, visit www.rerenergygroup.com.