Mexico Power Auctions
Mexico has just entered a new energy phase. On January 1, 2016, a new legislative framework came into force, from which the very first long-term clean energy auction was held.
On August 12, 2013, President Enrique Peña Nieto presented theconstitutional energy reform. Shortly afterwards, this initiative received the necessary approval from the different government bodies, and following several months of the enactment of the law and amendments, on January1, 2016, the Mercado Eléctrico Mayorista (Electric Wholesale Market) became operational.
The energy reform offers a new framework for all the stakeholders involved in the sector. Notably, the public State Production Company, Comisión Federal de Electricidad (Federal Electricity Commission) no longer holds the monopoly on energy production, although it continues to manage its transmission. This will enable an increase in the competitiveness in the country to be enjoyed, resulting from a greater investment which already affords the chance for other companies from all over the world to set up in Mexico in order to offer the supply of electricity generation.
” The first long term energy auction was held, in which only clean energy was sold.
In this regard, the first long-term clean energy auction ever held was one of the first milestones reached. It was carried out by theCentro Nacional de Control de Energía (National Center of Energy Control), a public MEM agency. Only companies that produce clean energy have been able to participate in this auction and at this time CFE is the only buyer.
The auction resulted in 227 economic offers presented by 69 companies, both at a national and international level. From these the National Center of Energy Control assigned 18 offers to eleven companies totaling a capacity of 2,085 MW. The winning technology was solar photovoltaic energy which made up81% of the allocated capacity. The remaining 19% corresponds to wind generation. All of these projects should be in operation in 2018. It is worth noting that the Mexican government has set the goal of making sure that 25% of its energy production is clean by 2024.
The outcome of the second power auction, which has been recently announced as well as being attended by the rest of conventional technologies, will be known in September 2016. This will prove to be especially important for the combined cycle production which is a technology that employs natural gas and whose costs are competitive.
Power auctions offer companies a new framework in the development of projects which in turn offer new opportunities to companies in the sector. Abengoa has a long history and technical experience in Mexico, in fact, celebrating 35 years of work in the country. This therefore allows the company to be well positioned to win new projects in the sectors concerned, such as the transmission, distribution and the generation of both conventional and renewable energy.