Lifting the Lid on Mexico’s Off-Grid Alternative

Engie’s acquisition of Mobisol this month and a $50 million funding in BBOXX in August have highlighted the huge potential of Africa’s off-grid energy market. However rural electrification can also be a big alternative in Latin America.

In Mexico, for instance, a handful of firms are dashing to deliver solar energy to the estimated 450,000 households, or round 2 % of the inhabitants, dwelling in areas too distant to warrant a grid connection.

Nearly as many individuals have such poor grid entry that they might go weeks or months with out energy, stated Ana Lucia Coll Guzmán, chief info officer and innovation and technique supervisor at Iluméxico, one of many main rural electrification gamers within the nation.

For these households, photo voltaic is a vital supply of power, she stated.

Since its basis in 2009, Iluméxico has put in greater than 20,000 photo voltaic house kits serving round 90,000 individuals within the states of Campeche, Chiapas, Chihuahua, Coahuila, Durango, Guerrero, Nayarit, Nuevo León, San Luis Potosí and Yucatán.

The corporate manages round 2.5 megawatts of off-grid photo voltaic capability on behalf of consumers who earn a mean of simply 2,450 pesos (round $125) a month and who in 90 % of instances don’t have a grid connection for a minimum of a kilometer.

The shift to solar-as-a-service

Iluméxico began out providing 25-watt kits, assembled in Mexico, below a lease-to-own mannequin. Households got PV programs on credit score and clients in the end purchased the tools by making common small repayments. However the mannequin had quite a few flaws, stated Coll.

One was that whereas Iluméxico offered free corrective and preventive upkeep in the course of the compensation interval, as soon as the PV programs have been absolutely owned most clients stopped contacting the corporate for maintenance.

A second drawback was that regardless that the PV programs might proceed working for a few years, households usually discovered it onerous to save lots of for the lead-acid batteries which can be an integral a part of the off-grid system and that wanted changing regularly.

Lastly, stated Coll, as soon as households had paid for a fundamental 25-watt system there was little incentive for them to put money into bigger programs that would ship better worth, for instance by powering fridges and different units. 

Consequently, in 2017 Iluméxico switched to a solar-as-a-service mannequin. The corporate retains possession of the PV programs and sells the electrical energy to rural communities at tiered charges relying on the facility required by the neighborhood.

The charges, which vary from 150 to 250 pesos ($eight to $13) monthly, cowl upkeep and battery upgrades and may be elevated if the neighborhood wants extra energy. “It additionally permits us to supply a significantly better electrical set up,” stated Coll.

To this point, eight,000 clients have been enrolled within the solar-as-a-service scheme and Iluméxico expects to hit 10,000 by the top of the 12 months.

Constructing a neighborhood workforce

Iluméxico has customer support places of work and depots in every of the 10 states that it operates in and depends closely on native staff and contractors for set up and upkeep work. Coll stated 25 % of Iluméxico’s discipline engineers are former clients.

“That is vital for us as a result of lots of our clients don’t communicate Spanish,” she stated. “We’d like a workforce that may communicate to them of their native language.”

Iluméxico has historically gained clients by way of this community of discipline brokers.

Nevertheless it has additionally benefited, together with different off-grid suppliers, from a government-backed rural electrification financing program referred to as the Common Electrical Service Fund (Fondo de Servicio Common Eléctrico or FSUE in Spanish).

Launched by Mexico’s Federal Electrical energy Fee in 2017, FSUE was as a result of fund photo voltaic installations for greater than 135,000 individuals throughout Mexico final 12 months.

The AMLO impact

Nonetheless, Coll stated there have been no new tenders below this system since left-wing populist Andrés Manuel López Obrador was elected President in December 2018. López Obrador’s administration stunned observers by cancelling renewables auctions in February this 12 months.

Given López Obrador’s dedication to rural communities, it stays unclear if the halt on FSUE exercise represents a short lived pause or a everlasting cease. “This system matches in with López Obrador’s politics,” stated Coll.

“It’s in step with the targets being pursued by the present administration. I believe it’s simply taking some time to refocus on this problem.”

Be part of GTM in London on 2 October for our Off-Grid Power Entry Discussion board. We’ll hear from ENGIE, EDF, Complete, Acumen and extra on the solely convention assessing world funding, market alternatives and expertise developments for off-grid power entry on the final mile.

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