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Mexico: Latin America's Renewable Energy Crown Jewel

Karla Salinas | 04.02.2015

In contrast to unpredictable renewable energy policies in the United States and the European Union, Mexico has emerged as a lightning rod for renewable energy investment. As renewable energy investors assess changing global opportunities, Mexico continues to offer numerous stable investment prospects.

In contrast to unpredictable renewable energy policies in the United States and the European Union, Mexico has emerged as a lightning rod for renewable energy investment. As renewable energy investors assess changing global opportunities, Mexico continues to offer numerous stable investment prospects.

Mexico’s investment-grade credit rating provides potential investors one of the few high-grade investment environments in Latin America.

Additionally, the sharp reduction in contracted large-scale renewable energy opportunities in the U.S. and Europe has catalyzed recent interest in Mexico.

THE OPPORTUNITY 

The Mexican economy has been bolstered by strong international demand for its commodities and a competitive labor force favored by numerous U.S. industries following a reevaluation of a low-cost production chain previously outsourced to China.

As a result, continued economic growth has reenergized interest from foreign investors into Mexico’s power generation and transmission systems.

Because the long-term relative stability of Mexico’s economy provides investors with safe, profitable power sector development opportunities, savvy political technocrats in the country are using the investment window to attract additional foreign investors and are taking advantage of downturns in other international renewable energy markets to thrust the Mexican renewable energy sector to the forefront of the global market.

Given President Enrique Peña Nieto's favorable energy policies and a push by the federal government to further modernize the country's power sector, Mexico's renewable energy sector will continue to provide opportunities for private equity investors, development companies, construction companies, and lending institutions.

The Mexican energy market is poised to attract the majority of new renewable energy investment in the Americas if Mexican policymakers continue to view renewable energy as a critical part of the country's overall power generation portfolio and enact policies to promote increased wind, solar, and geothermal development.

Mexico's natural renewable resources and its thriving economy have provided it with an opportunity to become a world leader in renewable energy development at a time when developers the world over are searching for investment opportunities.

Source: ACORE

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