Mexico: IMCO proposes to change electricity subsidy for solar panels

From 2004 to 2014, the government has disbursed 1.3 billion pesos in subsidies, enough to install solar panels in all homes in Mexico.

The Mexican Institute for Competitiveness (IMCO) proposed substituting subsidies for household electricity rates for an investment subsidy to solar panels.

The deputy general director of Mexican think-thank, Manuel J. Molano, said in a press conference that this mechanism reaches 99% of the Mexican population but does not precisely benefit those who need it most, since richer households are more efficient with their electrical consumption

Although the high consumption users do not receive a subsidy, the clients of average consumption (600 kv monthly in summer) and low (85 kv monthly in summer)

“The government would save 2,031 pesos for each household with solar panels,” said Molano, because the electricity generated is cheaper than the electricity market.

The independent consultant, Javier Gala Palacios, explained to Forbes Mexico that in the last year, the Mexican government channeled 150,000 million pesos (mdp) in electric subsidies, while investment in solar panels for 10% of the poorest population would cost to the government 50,000 million pesos per year.

From 2004 to 2014, the government has disbursed 1.3 billion pesos, an amount sufficient to install solar panels in all homes in Mexico, according to IMCO estimates.

“If now the 10-year exercise is posed the other way around, if they do not do something with the electric subsidies this will come out in the years of the current presidency in more than 500,000 million pesos, easy,” added the consultant.

The executive said that operation rules would have to be elaborated, whose gradual implementation would first benefit the country’s poorest population.

Molano said that CFE is not going to like this program for two reasons.

The first is that said electricity would not use its transmission and distribution networks, because that is its monopoly and the company wants to charge for that asset.

In addition, part of the subsidy, channeled by CFE, finances certain inefficiencies of the company, despite the fact that it argues that it goes to households.

IMCO proposed that Hacienda and Sener make the decision to follow this direction

It would also be necessary to design a financing scheme with a program with the welfare bank, infonavit, even private banking with rates similar to mortgage loans because they are long-term assets, said the IMCO representative.

Source: Forbes

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