Onsite versus Offsite Renewable Energy: Making the Right Choice for Your Business

Onsite vs. Offsite Renewable Energy Solutions

As Mexico's renewable energy landscape evolves, businesses, investors, and other stakeholders are increasingly confronted with a critical decision: whether to invest in onsite renewable energy solutions such as rooftop solar panels and small-scale wind turbines or to participate in larger utility-scale projects like solar farms and wind parks. We help clients to compare these two approaches, highlighting their advantages and disadvantages to better inform decision-making processes.

Onsite Renewable Energy

Onsite renewable energy solutions refer to systems installed at the site of energy consumption, such as a business’s premises. Examples include rooftop solar panels, solar parking structures, and small-scale wind turbines.

Advantages of Onsite Renewable Energy:

1. Energy Independence and Security: Onsite solutions provide direct control over energy sources, reducing reliance on the grid. This enhances energy security and independence, particularly valuable in areas with unreliable grid infrastructure.

2. Reduced Transmission Losses: By generating energy close to the point of consumption, onsite systems minimize transmission and distribution losses, leading to more efficient energy use.

3. Financial Incentives and Savings: Mexico offers onsite renewable energy installation incentives. These include tax breaks related to accelerated depreciation, feed-in tariffs, and net metering schemes. Net metering allows for the sale of excess energy back to the grid and involves securing a service permit with CFE.

4. Environmental Impact and Corporate Responsibility: Onsite solutions visibly demonstrate a commitment to sustainability, enhancing a company’s green credentials and meeting corporate social responsibility goals.

Disadvantages of Onsite Renewable Energy:

1. Higher Initial Capital Costs: The upfront investment for onsite systems can be significant, particularly for technologies like solar panels and wind turbines. However, we structure power purchase agreements for our clients which enable the design, engineering, and installation of the solar system at no cost. The costs for the EPC are included in the final tariff in the PPA proposal.

2. Space and Scale Limitations: Onsite solutions are often limited by the available space. Many companies have a shortage of parking or are located in dense industrial zones that don't have any available excess land.

3. Maintenance and Technical Expertise: These systems require regular maintenance and specific technical expertise, which can be challenging for some organizations. However, we recommend signing an operations and maintenance (O&M) agreement for your renewable energy project.

Offsite Renewable Energy

Offsite renewable energy solutions involve participation in large-scale renewable energy projects located away from the site of energy consumption. This often includes investments in solar farms, wind parks, or purchasing renewable energy certificates (RECs).

Benefits of Offsite Renewable Energy:

1. Economies of Scale: Large-scale projects benefit from economies of scale, often resulting in lower costs per unit of energy produced.

2. No Physical Space Requirement: Offsite solutions do not require physical space at the business location, making them ideal for organizations with limited space.

3. Expert Management: These projects are managed by Mexico Energy Partners, reducing the need for in-house technical expertise and maintenance.

4. Stable and Predictable Energy Supply: Large-scale projects can provide a more stable and predictable energy supply, as they are less dependent on local weather conditions and can leverage geographical diversification.

Challenges of Offsite Renewable Energy:

1. Less Control Over Energy Source: Businesses have less control over offsite projects than onsite installations, as they are usually one of many participants.

2. Complex Contracts and Agreements: Participation in offsite projects often involves complex power purchase agreements (PPAs) or other contractual arrangements that require careful negotiation and understanding. As a one-stop-shop solution provider, we integrate local and regulatory expertise into our offerings. Our partnership with one of the country's top renewable energy lawyers, enables our clients to benefit from the legal backing of one of the world’s top law firms.

3. Regulatory and Permitting Risks: Offsite projects are subject to regulatory changes and market risks, which can affect the cost and timeline of the project. There are environmental studies and permits needed to connect the project to the grid, which involves a complex process with CENACE, Mexico's grid operator.

Making the Right Choice for Your Business

The choice between onsite and offsite renewable energy solutions in Mexico hinges on several factors, including the scale of energy needs, available space, financial considerations, and sustainability goals. Businesses and stakeholders must weigh these factors carefully to make informed decisions that align with their energy strategies and sustainability objectives.