Mexico’s Secretary of Energy Pedro Joaquín Coldwell this morning announced the guidelines that will govern the country’s first electricity market auction. The auction will open the door for independent power producers (IPP) to develop large-scale power projects that deliver electricity to grids via contracts with national grid operator CFE (Federal Electricity Commission).
Coldwell said the government will publish its call for bids for the first auction on November 18. In addition to selling electricity to CFE, the guidelines include rules for earning clean energy certificates.
CFE is to announce its offers to purchase electricity from the auction in January. Project developers will have to submit final bids in March, and CFE is expected to announced project awards by the end of month, according to an Aztec News report.
President Enrique Peña Nieto announced a historic energy reform plan that included reopening Mexico’s oil, gas and electricity markets to foreign companies and investors in August 2013. While news reports tended to focus on the prospects for multinational oil and gas companies, some highlighted the energy reform plan to accelerate renewable energy and cleantech investment and project development.
Then President Lázaro Cárdenas nationalized Mexico’s oil industry on March 18, 1938. Though it resulted in large, and lasting bad will among multinational oil and companies, that action, and date, is still celebrated as a national holiday.
That said, calls for energy reform that would open up the Mexican energy market to foreign investment have gained momentum over the course of recent years. Mexico’s oil and gas production has been declining for many years, and Pemex, the national oil and gas company, has been unable to stem the tide.
Notably, in order to defuse opposition, Peña Nieto’s proposed energy reform plan called for allowing foreign oil and gas companies to share profits, but not production, with Pemex. Pemex revenues, in turn, account for around one-third of federal government tax revenues.
Turning to electricity, more than 97 percent of Mexicans have access to grid power. A high percentage – around 88 percent – is for residential use. CFE operates the National Electricity System (SEN), which interconnects at several points with grids in the U.S., Belize and Guatemala.
Though Mexico’s federal government has enacted ambitious climate change and renewable energy goals, nearly 70 percent of the country’s electricity comes from fossil fuel-fired thermal power generation. Installed generation capacity totaled about 62GW as of October 2013, according to a U.S. State Department fact sheet.