Mexico, the next big smart grid opportunity
By: SGN Staff
Quick Take: Smart grid research firm Zpryme believes Mexico may be the next hot smart grid market, due to an increase in participation from the private sector. - By Jesse Berst
Zpryme’s research indicates that Mexico’s smart grid technology market will grow from $1.23 billion in 2012 to $7.42 billion in 2020. This translates to a projected compound annual growth rate (CAGR) of 25%. While starting from a small base, this represents an attractive regional opportunity in a large market that is poised for aggressive investment to modernize their power grid.
Like many Latin American countries, Mexico faces problems such as power outages, electrical theft, and poor energy infrastructure. Therefore, smart grid technology provides an unprecedented opportunity for Mexico to improve both functionally and economically. At present, the electricity market in Mexico is federally owned, with the Federal Electricity Commission (ComisiÃ³n Federal de Electricidad or CFE) essentially controlling the whole sector.
To date, this level of control has stifled innovation, but we believe things will change with broader participation coming from the private sector. Private power generation in Mexico is done on a self-supply basis, where these players can only generate electricity for their own consumption, and can only sell excess electricity back to CFE. As modernization advances, private power producers will have new opportunities, thus bringing more secondary buyers into the market for smart grid technologies.
Our research leads us to conclude that these and other positive opportunities will drive overall growth for Mexico due to the confluence of several trends. Key among these would be forward-thinking energy policies designed to raise the country’s international competitiveness. These entail the integration of renewable energy, energy efficiency and sustainability goals into broader programs that smart grid initiatives would drive. Another example would be the implementation of strategic pilot programs used to evaluate new technologies for their technical, operational, and cost effectiveness..