For the past seven decades, the Mexican electricity utility (CFE) has been the only company entitled to generate and sell electricity in Mexico.
Following the amendment to Mexico's constitution in 2013, CFE has been restructured into monopoly network and competing generation and retail entities operating alongside private sector participants. On 30 March 2016, CFE was unbundled into six generating companies, one transmission company, one distribution company and one basic energy service supplier. Alongside this historic reform, the first long term auctions for capacity, electricity and clean energy certificates have concluded with 18 offers awarded to 11 power and renewables companies.
Long-Term Auctions results
On 29 March 2016, the Energy Secretary (SENER) and the system operator (CENACE) announced the initial results of the first Long-Term Auctions for Electricity. However, Gestamp Wind Mexico, which submitted a manifestly erroneous low offer, was allowed to withdraw its bid. SENER re-evaluated the winners in light of the error and corrected the data to take into account the projects’ locations. The revised results were announced on 30 March 2016.
Out of the 227 offers from 69 prequalified bidders, 18 offers were granted to 11 companies: Enel Green Power, Jinkosolar, SunPower Systems México, Energía Renovable de la Península, Recurrent Energy Mexico Development (a subsidiary of Canadian Solar), Aldesa Group, Vega Solar, Photoemeris Sustentable, Energía Renovable del Istmo, Sol de Insurgentes and Consorcio Energía Limpia 2010. The total value of the contracts is 4,456,817,815.28 Mexican pesos (c.250 million US dollars). These companies will be authorised as the first private enterprises to produce and sell electricity in Mexico, with the contracts to be signed by 12 July 2016 and the projects to enter into operation in 2018.
An important part of Mexico’s energy reforms is the country’s commitment to cleaner energy. As well as energy, the auction participants bid for Clean Energy Certificates (CELs), tradeable certificates which represent units of energy produced without carbon emissions. Twelve of the bids relate to solar photovoltaic energy projects in Aguascalientes, Baja California, Coahuila, Guanajuato, Jalisco and Yucatan (accounting for 74.38% of the electricity to be supplied), and the remaining six for wind energy in Tamaulipas and Yucatan (accounting for 25.62%).The total capacity of all projects is 2,753 MW.
The auction assigned 5,402,880.5 MWh of the 6.3 million MWh CFE was looking to acquire (85.76%), as well as 5,380,911 of the 6.3 million CELs CFE sought (85.41%). The contracts will last 15 years for energy, and 20 years for CELs. There were no allocations for the 500 MW of capacity requested, which will be included in a further auction later this year.
The next auctions will take place in April of this year, with similar rules but with improvements and adjustments to reflect the lessons of the first auction. In its press release, SENER stated that to improve transparency in the process, future participants will be given access to the optimisation model which allows the buyer to maximise economic surplus and determine the winning bids.