To more quickly meet their renewable energy objectives, world governments and private businesses are always looking for the best manufacturing locations.
When it comes to manufacturing solar panels, China has historically dominated. However, other countries across the globe are beginning to rise up as manufacturing giants, including Mexico. Here’s why you should consider moving your solar panel manufacturing to the United States’ southern neighbor.
An Overview: Solar Manufacturing in Mexico
Renewable energy as a whole is expanding in Mexico, but solar manufacturing has established itself as one of the largest and fastest-growing. As of July 2020, the country is home to more than 60 solar parks which together have an installed capacity of 4.8 GW.
While solar production is expanding throughout the country, Juarez currently dominates as both the country’s and Latin America’s largest solar manufacturing location. This is largely due to SunEdison Inc.’s investment in the market. The first company to start specializing in the manufacturing of photovoltaic (PV) modules in Mexico, SunEdison produces more than one million solar panels each year.
There are now dozens of international companies within Mexico’s solar sector, and this number will likely continue to grow as more foreign businesses recognize the ways in which Mexico outshines China as the ideal location for long-term solar panel production.
Why China Isn’t Ideal for Solar Panel Manufacturing
Companies manufacturing their solar panels in China can actually end up causing environmental damage—contrary to the purpose of solar energy. That’s because regulations surrounding solar waste are generally lacking, and many Chinese manufacturing firms rely on coal-powered electricity. Even if manufacturers use other sources of energy, the act of shipping overseas to U.S. markets increases their carbon footprint.
The Trump Administration imposed tariffs on the import of solar modules back in 2018, and these tariffs have recently been extended by President Joe Biden. While the goal of these tariffs is to boost local solar production, there is some skepticism over whether they do more harm than good when it comes to achieving widespread solar energy use. In any case, in the face of a historically unstable trade relationship between the U.S. and China, U.S. solar manufacturers with operations abroad may need to begin looking at moving their operations elsewhere in order to remain competitive.
Human rights concerns
Over the last year, concerns have been raised over the methods of many solar manufacturing firms in China. There have been allegations that Xinjiang-based manufacturers have utilized forced labor, which has resulted in bans on the imports of key solar panel materials. By relocating their operations to Mexico, U.S. manufacturers can ensure their own supply chain is more socially responsible while taking advantage of the other benefits of manufacturing in Mexico.
Benefits of Solar Manufacturing in Mexico
Mexico’s solar industry isn’t simply a next-best option for manufacturers looking to leave China.
Solar panel manufacturing in Mexico is, in its own right, an ideal place for manufacturing, offering manufacturers numerous important advantages.
Weather & terrain
Mexico’s large, flat, and available land makes it the perfect spot for solar manufacturing companies to establish their operations. In addition, Mexico receives high levels of solar radiation throughout most of its territories. The generally sunny climate makes it an ideal location for solar panel use and manufacturing and has contributed to the growth of the industry.
Mexico is a world leader in electronics, automotive, and aerospace manufacturing, so the country has invested heavily in universities and technical training programs. With hundreds of thousands of graduates in engineering, manufacturing, and construction each year, Mexico gives manufacturers access to a skilled, and affordable, workforce ready to contribute to the country’s expanding solar capacity.
Proximity to U.S. markets
Most solar installations in the United States rely on imported solar panels. Because of this, Mexico’s proximity to the U.S. has become one of the biggest attractions for foreign manufacturers. The short distance between manufacturing sites and U.S. consumer markets helps businesses cut down significantly on transportation costs. Plus, these shorter distances mean a smaller environmental footprint.
Free trade agreements
Mexico and Canada are not exempt from the tariffs imposed by the Trump and Biden Administrations on the most common type of solar panel, crystalline silicon. However, both Mexican and Canadian governments are pushing for negotiations, arguing that the tariffs go against the USMCA. In the event those tariffs are overturned, manufacturers will be able to export solar panels at a significantly lower cost to U.S. markets, especially when combined with the cost savings of being located near the U.S. border.
In any case, Mexico has more free trade agreements than any other country, presenting solar panel manufacturing companies significant opportunities to expand into global markets
How to Find Success in Mexico for Your Solar Company
The rules and regulations around clean energy manufacturing are always changing, and you need to be able to keep up with them to be successful. That’s why we developed our Administrative and Compliance Management program. While you focus on production and quality control, we’ll handle everything from human resources to environmental compliance.
Contact NAPS today to learn how we can help you make the most out of what Mexico has to offer the solar power industry.