Mexico City (CDMX) is leading the country, and the LATAM region, in renewable energy as it develops a resilient solar market and introduces several climate policies as part of its green transition. Having made notable strides in renewable energy over the last decade and gaining international recognition for its efforts, we expect CDMX to become the example of a renewable-energy-driven city in Mexico.
Renewable Energy Fundamentals Remain Strong
There are currently six cities in Mexico that have introduced renewable energy targets and policies, as well as aims for net-zero carbon emissions by 2050, covering 13.5 million people or roughly 13% of the urban population in Mexico.
CDMX is leading the renewable city movement, allocating $17.1 million a year to distributed solar capacity and aiming to add 350 MW by 2024. It also hopes to produce 2.1 million liters of biodiesel per year from residual cooking oil, starting in 2024. The city has so far introduced climate-related policies for power, heating and cooling, and transport. In 2020, it won the WWF’s One City Planet Challenge, demonstrating its successful response to Paris Agreement targets.
CDMX’s most innovative renewable energy program is the Solar City (Ciudad Solar) initiative, introduced in 2019, which offers grants to businesses and residential buildings looking to install solar thermal heating. The Solar City project is aimed at introducing numerous small- to medium-scale solar developments, including photovoltaic (PV) roofs in public buildings, initiatives for small and medium-sized companies, and training on solar technologies. The program is expected to run until 2024, as part of the Energy Sustainability Strategy, providing around $4 million in grants to roughly 400 businesses annually and a further $8.5 million to fund 135,000 systems in residential properties.
The initiative introduces a new local standard that defines the technical specifications for the use of solar energy in residential and commercial water heaters. The standard requires residential buildings of four floors or fewer to install solar thermal technology. The scheme will also provide training and certifications for solar system installers to spur the establishment of more certified solar companies in the city.
Solar City is expected to encourage the uptake of solar technologies across core Mexican industries. For example, the initiative will fund 30% of the initial cost of the installation of solar systems for corn nixtamalization mills (plants that soak, cook, wash, and hull corn – a staple in the Mexican diet). This could then be extended to other industries if initially successful in corn mills.
Renewable Energy Opportunities in Transportation and Buildings
To reduce greenhouse gas emissions in its extensive public transport system, CDMX expects to produce 500 liters of biodiesel per day from waste cooking oil, to fuel around 200 public transport vehicles. The city government is working with the National Polytechnic Institute to convert cooking oil into biodiesel at the organization’s production plant. CDMX will also see greater transport electrification over the next decade with the introduction of electric buses.
Mexico City was the first in Latin America to award a municipal green bond, in 2016, for $50 million. Green bonds, or climate bonds, are a relatively new financing option, offering companies funding to develop climate-friendly projects such as carbon-neutral buildings and transport systems. The CDMX bond was used to finance climate-resilient infrastructure and mobility projects, including potable water, wastewater, energy efficiency in public lighting, and subway infrastructure.
We Have a Positive Long-Term Outlook
Having gained international attention for its renewable energy developments and efforts at cutting carbon emissions, we expect CDMX to lead the country in developing effective green energy projects in a city setting. If successful, we believe the Solar City initiative could be easily replicated in other major urban hubs across Mexico, using lessons learned from CDMX. Contact us to learn more about energy monitoring and green building initiatives in Mexico.