The Mexico unit of SolarCity the rooftop
solar developer controlled by billionaire Elon Musk, aims to invest as much as
$1 billion over the next five years, the company said on Tuesday.
SolarCity Mexico President David Arelle told Reuters in an
interview the projected outlay will depend on Mexico keeping at current levels
an incentive known as net-metering that requires utilities to buy surplus power
generated by rooftop solar panels.
“We estimate that if things work out the way they should,
over the next five years our investment could reach about $1 billion,” he said,
noting that he sees sector-wide investment as high as $3 billion over the same
period.
While Mexico has abundant solar potential, it has been slow
to take advantage of it, opting instead for cheaper natural gas.
Net-metering in Mexico is capped for solar projects at up to
500 kilowatts of installed capacity. But Arelle expressed concern that due to
pressure on public finances, the government could push the threshold as low as
50 kilowatts.
“That would kill the business,” he said, noting that
net-metering was crucial to project finance, providing buyers certainty on the
cost of the electricity over many years.
Vania Guerrero, a spokeswoman for Mexico’s energy regulator,
known as CRE, said new regulations that cover the net-metering threshold will
be finalized before the end of the year. She declined to comment on whether the
current cap would be altered.
Mexico’s state-owned national electricity company CFE
supplies power to nearly all residential users and a 2013-14 energy reform
promises to gradually dismantle its monopoly.
Growth in rooftop solar projects could exacerbate steep
losses at CFE, which the finance ministry has to cover.
If the 500 kilowatt threshold is maintained, SolarCity could
add nearly 2,000 employees over the next two years while other developers
create another 8,000 jobs, Arelle said.
SolarCity plans 50 megawatts-worth of Mexican solar projects
next year, on top of 30 megawatts in 2016.
The firm’s Mexico unit, bought in a takeover last year for
about $15 million, was SolarCity’s first foreign acquisition.
Entrepreneur Musk, best known for his Tesla Motors TSLA -1.52% electric
car company and commercial space exploration firm SpaceX, on Tuesday was in
Guadalajara, Mexico’s second biggest city, where he outlined a plan to colonize
Mars.
SolarCity agreed to be bought by Tesla for $2.6 billion in
August. The deal has yet to be approved by SolarCity’s shareholders.
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