Ignore the incendiary rhetoric coming out of Washington D.C., the new political climate south of the border has never been more favorable, especially toward green energy providers. And the U.S., Mexico and ultimately Texas, have a lot to gain through greater and mutually-beneficial collaboration.
As the largest producer of alternative energy in the United States, Texas is defying stereotypes. But we shouldn’t stop there. The appetite for renewable energy in Mexico has never been stronger, putting anyone with expertise in wind and solar energy in a position to capitalize on the potential benefits of entering such a huge market.
The recent elections in Mexico ushered in energy-focused leadership at the highest levels. On Saturday, both the new Mexican President, Andrés Manuel López Obrador, and the new Mayor of Mexico City, Claudia Sheinbaum Pardo, officially take office.
Both ran on platforms vowing to tackle Mexico’s worsening environmental problems.
Mexico City is one of the most polluted urban centers on the planet. Each day its 21 million inhabitants battle with inadequate public transport, epic traffic jams, air pollution and frequent water shortages.
Many worry López Obrador’s left-leaning rhetoric is likely to scare off foreign investment. But being able to provide more affordable energy to Mexicans will probably lessen any protectionist sentiment within his ruling coalition.
And it’s not just the new, more favorable political climate in Mexico that makes now a good time for green energy providers in the U.S. to enter the market. The law is on their side too. Efforts to reform the Mexican energy market have been ongoing since 2012, and many of the initiatives agreed upon six years ago are coming on line now.
The Market for Clean Energy Certificates initiative, for example, is a key tenet of a broader Mexican effort to provide more diverse energy sources. This state-led initiative created an open, competitive market for alternative energy. Private companies bid for market share and whichever offers the most competitive rate is awarded a Clean Energy Certificate. The new system only became fully operational this year.
Authorities already aim to increase the amount of electricity generated from clean energy sources to 35 percent of total national output in five years and to 50 percent by 2050.
In Texas, the vast majority of alternative energy being generated comes from wind farms. In order for Mexico to achieve its own proposed targets for energy diversification, the country has three years to complete the same wind farm capacity that took Canada more than two decades to develop.
Texas and California have a great deal of experience in deploying solar systems on the micro scale that are efficient, cost-effective, and long-lasting. Any affordable solar power system that could be deployed into individual households — thereby affording Mexicans the ability to sell their surplus energy back to the grid — would be, to put it mildly, very popular.
Any collaboration, however, must be on equal terms. The new Mexican leadership may be more open to diversifying their energy portfolio but not at the expense of the people who elected them.
Successful collaboration between Mexico and the United States, and ultimately Texas, will hinge upon American companies not only hiring personnel locally but also training Mexicans to a level that furnishes the local community with the requisite expertise to take over operations at some point down the road. Given the existing political climate, U.S. companies should try to engage directly with the new Mexican leadership instead of using more conventional diplomatic channels. This is not simply an exercise in political expediency. American companies will need to gain the trust of their Mexican counterparts who have had ample reason to be skeptical of the motivations of U.S. enterprise in the past.
Entering the Mexican green energy market is not without challenges. Nothing worth doing is ever easy. However, the conditions have never been more favorable for greater energy-related cooperation, and managed carefully, it could be a win-win situation for both sides: something the U.S. and Mexico desperately need right now.