On December 9, 2015, Mexico finalized its Energy Transition Law (LTE), which establishes a target of 35-percent clean energy in electric generation by 2024 through a series of benchmarks, with a 25-percent target by 2018 and a 30-percent target by 2021. The law includes a flexibility mechanism that allows for the targets to be lowered during the first four years in the case of either significant scarcity or price inflation.

The law also contains the details of Mexico’s Clean Energy Certificate (CEL) program. Under the program, CELs will be tracked and are tradable, with one CEL equal to one megawatt hour of clean energy generation. Twenty-year CELs, as well as 15-year clean energy power purchase agreements, will be auctioned during the first quarter of each year. The first auction will take place in March 2016, with four to six million CELs expected to be available. This auction will serve as a trial run, with state utility Comisión Federal de Electricidad (CFE) the only buyer of electricity from generators awarded CELs. CFE is required to meet 5 percent of its electricity demand with clean energy by 2018. Future auctions will be open to commercial wholesale electricity suppliers with the number of CELs available each year dependent on several considerations as Mexico aims to develop a robust CEL market.