On February 26, Mexico-based America Movil, one of the world’s largest telecom companies, announced the launch of a solar product in Mexico, becoming the first leading telecom company to fully embrace distributed energy resources (DER). America Movil currently serves 363.5 million access lines, including 280.6 million mobile subscribers in Latin America and Central and Southeast Europe.
Its fixed-line subsidiary, Telmex, will provide the service to customers who own a roof. Telmex will install the modules and file all its customers’ paperwork. A 3.3 kW system will cost MXN 166,844 (US$8,957 or US$2.7/W) paid in cash or up to MXN 236,000 (US$12,600 or US$3.8/W) when financed. Payments will be made through an existing Telmex invoice.
Telmex will target high consumption residential customers currently paying the regulated domestic high consumption (DAC) tariff, which in February 2018 was US$0.24/kWh. A user pays this tariff if they consume more than 250 kWh per month in temperate regions or up to 2,500 kWh in the hottest areas.
A Need to Diversify
America Movil already offers mobile, fixed-line, broadband, Internet of Things, and television services in Mexico, but its 61% market share is at the limit of what regulators allow. In addition, after regulatory reform in 2014, Mexican mobile competition increased significantly, cutting margins at America Movil’s cash cow. In April 2017, Mexico’s telecoms regulator put America Movil on notice to legally separate its Telmex fixed-line division from its cellular and retail divisions, putting even more pressure on the company’s finances.
DER: A Tool to Capture the Energy Market
With no room to expand in the telecoms sector, America Movil needs new markets where it can leverage its infrastructure and large customer base. Residential solar fits this description perfectly. Telmex must create new solar installation teams, but other infrastructure already exists: sales, retail partners (Carlos Slim, America Movil’s majority shareholder, owns a large Mexican retail empire), finance (Slim also owns a local bank), customer service centres, billing, etc.
Both Telmex and customers will benefit. Solar improves customer stickiness (finance contracts run for up to 6 years), while reducing electricity costs for its customers.
The America Movil Case Is Unique, but Some Drivers Are Global
America Movil’s situation is unique. Few telecoms are permitted a 61% market share, or have an owner that also owns a bank and a retail empire, or are entering a market with one player not used to competing. But other drivers are global. All telecoms have a large customer base and the infrastructure to serve and bill them once DER is installed. Many also operate in regions with regulated electricity tariffs and abundant sunshine.
Other telecoms are already exploring DER. Last year in the US, Sunrun and Comcast partnered to offer Comcast customers Sunrun’s DER services. In Europe, O2 Telefonica has tip-toed into DER through smart home energy devices like smart thermostats, albeit with mixed results.
Tags: Distributed Energy Resources, Energy Technologies, Solar Power, Telecommunications
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