Mexico moves up to third in IHS Emerging Market Report

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A strong start to 2014 for Mexico’s PV industry has seen the country promoted to third-place on the IHS Emerging Solar PV Markets Tracker report – just behind leaders South Africa and Turkey.

With an estimated 300 MW of PV capacity currently under construction throughout the Central American country, IHS has revised its ranking score from 40 to 43, pushing Mexico above Israel, which now sits fourth with a score of 42.

South Africa leads the way with a score of 67, followed a little way back by Turkey, which boasts a score of 45. After Israel comes Switzerland in fifth on 40 points, while last year’s number three emerging market – Romania – has now dropped out of the top five down to ninth place following a debilitating cut to its solar subsidies in January of this year.

It is good news for the Philippines, however, which is now in the top 10 for the first time ever thanks to its 117 MW solar PV pipeline – an impressive increase on the 9 MW that was added in 2013. With 25 MW of PV capacity currently under construction, the Philippines earns a score of 38.6.

"IHS sees signs of an increasingly dynamic PV environment that is boosting the attractiveness index of both Mexico and the Philippines," said IHS senior analyst for solar, Josefin Berg.

Managing emergent risk

The analysts at IHS report that years of development in Chile have resulted in a vast number of PV projects now coming online, creating tough competition brought about by PPAs that is forcing many developers to sell at spot market prices.

"IHS is flagging it as risky that a too-high concentration of PV projects under merchant schemes will suppress future power prices in Chile," added Berg. "Close to 1 GW of PV projects are looking for financing in Chile, and revenues could face risks even if only a third of those are connected to the same nodes and linked to spot prices."

When considering the attractiveness of emerging markets, attention must also be paid to regulatory risk, warned Berg, pointing to previous instability caused in mature solar markets when other variables – such as the abolition of subsidies – are introduced.

The report gives mention to a handful of new faces, too, citing Puerto Rico’s recent renegotiation of signed PPAs for 1 GW of solar capacity, and urges caution in the Ecuadorian solar market, where licenses were revoked in December after contract breaches for 112 MW of PV projects that had earlier been granted via the country’s FIT. IHS also highlights the risks posed if transmission grids are not of a suitable size or robustness to handle any proposed large-scale increases in capacity, highlighting how Pakistan’s bulging pipeline may not totally reach fruition due to inherent grid infrastructure limitations.

IHS assesses the emerging solar markets on a quarterly basis, rating the attractiveness of emerging PV markets for the benefits of investors, developers and manufacturers. Each country is rated across four categories: macroeconomic climate, potential market size, project profitability and pipeline maturity.

The ranking takes into account 17 parameters within these four categories, with positions in the table liable to fluctuate in response to the introduction of policy schemes that either support or harm a nation’s solar potential.