Mexico Solar Energy Market Size, Growth & Forecast 2031

Report Description

The Mexico solar energy market size was valued at around USD 5.19 billion in 2022 and is estimated to reach USD 6.45 billion by 2031, expanding at a CAGR of around 2.45% during the forecast period, 2023 – 2031. The growth of the market is attributed to decreasing cost of solar technologies are becoming cost competitive with fossil fuels and other subsidies on solar systems.

Solar energy is the radiant energy released by the sun that may be captured using a variety of technologies such as solar heating, photovoltaic cells, and other methods. It is a cost-effective unconventional energy source and a practical renewable response to rising greenhouse gas emissions and global warming.

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Increased environmental degradation, government incentives, and tax refunds to install solar panels are driving the market. Furthermore, the reduced water footprint of solar energy systems has boosted their demand in the power generating industry. The demand for solar cells has grown significantly with an increase in rooftop installations, followed by growth in architectural applications.

Mexico offers some of the world's most appealing sun irradiation characteristics. The country's complete territory is located between the latitudes of 14°N and 33°N, and the longitudes of 86°W and 119°W, making it one of the few nations on the earth to be located within the most favorable sunbelt. Furthermore, due to its fast deployment of solar PV plants won in the first three long-term auctions (LTAs) between 2015 and 2018, Mexico has emerged as one of the top markets for solar PV in recent years.

In 2018, the country passed the GW milestone for the first time, with 2.7 GW of additional capacity built in the same year. Furthermore, as solar technologies become more affordable, they are becoming competitive with fossil fuels, and increasing solar system subsidies are propelling the solar power sector even further. Lack of new initiatives, restricted land, and factors such as the current government's withdrawal of the fourth auction round, Mexico's undeveloped power system is likely to stifle the solar PV market's growth in the future years.

The Covid-19 pandemic affected the demand and supply of Mexico solar energy market. Lockdown across the globe, supply chain disorders, and oscillating supply of raw materials forced manufacturers to shut down production leading to unfortunate decline in market growth. Launch of vaccines to combat the Covid-19 pandemic is expected to contribute to the market growth over the forecast period.

Market Trends, Drivers, Restraints, and Opportunities

• Decreasing price of raw material in solar model is estimated to fuel market during the forecast period.

• Rapid growth of the solar energy industry is major factor propelling the market in the coming years.

• General climatic conditions and geographical latitudes, particularly in areas prone to winter and rainfall is expected to restrict the market expansion.

• Factors such as lack of new initiatives, restricted land, and factors like the new government’s rejection of fourth auction round, Mexico’s undeveloped power system act as major challenges that can hamper the market growth in the coming years.

• Rise in demand for PV installations and fueling demand for lithium ion-powered batteries for solar energy storage is expected to offer lucrative opportunities for the market players.

Scope of the Report

The report on the Mexico solar energy market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Market Segment Insights

The utility-scale segment is projected to represent a large market share

Based on deployment, the Mexico solar energy market is segregated into residential, commercial, and utility-scale. The utility scale segment is anticipated to expand at a robust CAGR during the forecast period. Mexico is now one of the world's leading markets for renewable energy.

The country is located in the world's most favorable sunbelt, with around 2,190 hours of sunlight each year. The states of Baja California, Coahuila, Chihuahua, and Sonora are among the country's biggest solar energy hotspots.

Solar energy has established itself as the renewable energy source with the biggest presence in the country in recent years. In 2018, the solar PV market for the first time surpassed the GW milestone, with 2.7 GW of new capacity added. In June of this year, the total installed PV capacity climbed by 32% to 4.057 GW. In addition, between December 2018 and May 2019, 44 large-scale solar parks with a total installed capacity of 3.36 GW were operational in 14 states.

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The Photovoltaic technology is expected to hold major market share

On the basis of technology, the Mexico energy market is bifurcated into photovoltaic and CSP. The photovoltaic segment is estimated to expand at a CAGR of around 8.90% during the forecast period. Factors such as government initiatives to promote and increase solar PV market in the country and extension of permit procedures for solar PV projects are estimated to boost the market.

The small-scale solar systems were first installed in rural areas without access to the national grid. Residential and commercial buildings in metropolitan areas, on the other hand, progressively began to install solar PV panels. Despite the fact that distributed solar energy is still in its infancy in Mexico, it has grown quickly in recent years.

The cost of solar PV systems has decreased, which is one of the key drivers driving the expansion of distributed solar energy. As of August 2019, the average cost of solar energy systems in Mexico was USD 3.02 per watt, which is lower than the US average of USD 3.34 per watt. More than 100,000 rooftops on commercial, industrial, and residential structures had distributed solar PV systems as of 2018. By 2023, this number is expected to rise to about 650,000.