Financing Schemes for Residential, Grid-Connected PV Solar Systems in BCS, Mexico

This article presents two proposals to spur the extensive adoption of grid-connected, residential, solar photovoltaic systems in the Mexican state of Baja California Sur. To this aim, electricity generation costs and subsidies were estimated first, together with time-of-generation avoided costs that could result from the implementation of such solar systems. An overview of financing mechanisms for solar and other renewable energies around the world is also presented followed by current mechanisms available in Mexico. The first proposal is centered around the operation of a solar energy service company that would receive the avoided cost of generation as compensation in return for sourcing, installing, and maintaining solar PV systems on residential users’ roofs. This would free up the residential user from any future electricity payments. The second proposal consists in the implementation of a feed-in tariff (FiT), currently unavailable in Mexico for residential users. The FiT could be funded from the avoided generation cost in conventional plants plus the corresponding savings from self-generation of electricity. Alternatively, the option of funding the FiT from small increases in electricity prices to all customers was also explored. Present value analyses suggest that both proposals are worthwhile pursuing in Baja California Sur.