Breaking barriers : an examination and recommendations regarding the role of clean distributed electricity generation in Mexico

Abstract

Through the 2013 Energy Reform, the Law of Energy Transition, and the General Law of Climate Change, the policy makers in Mexico have aimed to lower electricity tariffs, generate 35% of electricity from clean energy sources by 2024, and reduce greenhouse gas emissions by 30% in 2020 and 50% in 2050 compared to greenhouse gas emissions in 2000. Furthermore, the 2013 Energy Reform aims to promote economic development and reduce electricity subsidies. In an effort to achieve these goals, policy makers have tried to diversify the country's electricity generation profile, including the promotion of clean distributed generation (DG) technologies. A broad cross section of governmental and non-governmental stakeholders has publicly supported these objectives; however, low domestic electricity prices, high system acquisition costs, and a lack of financing have and will continue to limit the deployment of clean DG systems in Mexico. Furthermore, deep penetration of clean distributed generation under current net metering policies and electricity tariff structures may actually undercut the effective operation of Mexico's electricity market by increasing operation costs and adding technical complexities to the electricity network. In this thesis, I make three short-term and one long-term recommendations to the Ministry of Energy and the Energy Regulatory Commission to promote the deployment of clean DG technologies beyond current barriers to entry and without adding economic and technical strain to the electricity industry. I recommend that these organizations (1) add clean DG to grid planning and develop a distributed energy resources strategy, (2) execute community-scale clean DG capacity auctions, (3) increase investment and financing opportunities for the public, and (4) modify electricity tariff structures and net metering policies. I hope these recommendations to the Ministry of Energy and the Energy Regulatory Commission will help the State achieve its energy policy and greenhouse gas emission reduction goals.