Bringing parts and solar panel supply chains to Latin America will become increasingly important in the coming years, according to industry players.

Elie Villeda, the Mexico country manager of First Solar, said that countries such as Brazil and Mexico could benefit from more emphasis on panel producers to invest locally, reducing the high risk of offshoring production. as demonstrated by recent events such as the pandemic and the Russia-Ukraine war.

Government support is considered essential for Latin America’s largest economy to attract investment in local supply chains to build solar parks, reducing their dependence on Asian manufacturing.

“We want to have a manufacturing footprint wherever we are,” Villeda told the LatAm Future Energy Solar, Wind & Hydropower conference. “We announced a 3.5GW facility in the US thanks to the Inflation Reduction Act. In Europe, they want to reduce the dependence on a natural gas source. [Russia] and a supply chain for solar panels in China … I don’t think we have it in Latin America. At First Solar, we are always open to possibility,” he said.

According to Villeda, large countries with open economies, such as Brazil and Mexico, can use their excess capacity to export to smaller neighbors.

While Brazil is progressing in this direction with local requirements within it, in Mexico the utility-scale part of the industry is paralyzed by a hostile regulatory environment and government opposition.

“The Mexican market has unfortunately gone from slumber to a state of indefinite hibernation,” said Victoria Sandoval, sales manager of JA Solar. “Distributed generation is still alive in Mexico and continues to grow, albeit at a slower pace than the utility-scale before.”

Permitting obstacles and regulatory opposition throughout the pre-construction, construction and interconnection chain have led many renewable developers to halt their projects and wait for a potential new administration to ease the permitting process after the 2024 election. The issue has sparked a trade dispute with the United States and Canada under the USMCA agreement.

According to Villeda, delaying the energy transition to renewables will make it more expensive in the long term, in part because it needs to be done faster and countries do not have enough time to develop efficient supply chains.

“Still [oil] mayors [like Shell and Total] enter the market, they will change the dynamics of the supply chain, they will sign long-term contracts and use the existing supply [of parts and solar panels]. This tells us that we need to think more about our suppliers. Now, we accept that we can have panels available for a project that starts in three, six months. … Bringing supply chains local can be a way to protect ourselves in the future,” he said.

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