Mexico leads regional RE charge

Investment in clean energy in Mexico reached $1.2bn in the first six months of 2014, while in Central American countries – Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama – it hit $317m the same period, according to new research.

Bloomberg New Energy Finance (BNEF) said the figures point to investments in Mexico in 2014 surpassing the $1.6bn invested in the whole in of 2013.

The BNEF analysts said this year's total could top the record $2.4bn invested in 2010.

Meanwhile, in Central America, the speed of investments so far points to yearly figures below the 2013 total of $1bn.

Wind power capacity in Mexico and Central America should rise by 1GW this year while, according to detailed pipeline analysis, 1.3GW could be installed in 2015 and 2016.

Solar power capacity should grow by 193MW, but should then speed up to 255MW in 2015 and 456MW in 2016, BNEF suggested.

Driving the investments are the increase in power demand, good solar, wind and geothermal resources, and local regulatory and legislative changes that  promote renewables and private investments.

El Salvador, Panama and Guatemala, for example, are preparing tenders that are seen by BNEF analysts as key to providing opportunities for wind and solar project developers. Mexico, Costa Rica and Honduras are implementing changes to promote private-sector investments in power.

But renewable energy is not alone in meeting higher demand for electricity, as gas-fired generation and generation from other fossil fuel sources are also increasing.

Renewables are not having everything their own way in these countries. Mexico continues to see strong investment in gas-fired generation, taking advantage of both its domestic resources and its proximity to US shale plays, said BNEF.

Hydropower has run into some difficulties in Costa Rica and Panama, because of drought.

And across the Central American region, financing for renewables does not come easily, making the role of development banks and export-import banks vital for projects to get off the ground.

But policy is being amended in most countries to encourage stronger investment in wind, solar and geothermal, said Michel Di Capua, BNEF's head of Americas analysis.