Mexico´s power sector now offers a number of short-term business investment opportunities
In this regard, we’ve outlined
the highlights of the Mexico’s
new power sector:
1. Legal separation of each
activity (from generation
to retail).
2. A new competitive
Wholesale Electricity
Market conducted by the Mexican
System Independent Operator,
named National Power Control Center (CENACE). The main components, products and
characteristics of the WEM may be identified in the following
chart:
3. The Law sets forth the following categories
of Wholesale Market participants:
(I) Generators (>0.5 MW require a permit);
(II) Suppliers (Types: Basic, Qualified and for
Emergencies); (III) Marketers; and (IV) Qualified
Users (>1 MW of aggregate consumption
by August 12, 2016).
4. The electric grid remains under the
control of CFE, nevertheless, the Law
allows CFE to enter into “association” Private-
Public Partnership (PPP), Joint Ventures
(JV) among others, with investors in order to
build and operate transmission grid and distribution
networks.
5. The Law foresees Grandfather rights, thus,
those who held an “old regime” permit for
self-supply, cogeneration, small production, independent
power production or to import and export
power, may continue operating as in the old regime.
6. The Law sets forth new provisions that
regulate the social impact of power projects
(new legal regime), specifically in local and
indigenous communities.
7. CFE is transformed into a state productive
company, split in subsidiaries: Several power
companies one for each area: Transmission, Distribution,
Basic Supplier, Qualified Supplier, Fuels
and Gas (named “CFEnergia”) and CFE Internacional.
None of its assets shall be privatized.
With these reforms, Mexico’s power sector now
offers a number of short-term business investment
opportunities, namely:
1. The first long term power auction called by
CENACE, regarding the supply of capacity,
power and clean energy certificates for the “Basic
Supplier” (CFE), in order to sign Power Purchase
Agreements (PPA) with a term of 15 or 20 years.
The auction is currently taking place.*
2. During the second quarter of 2016 an international
tender shall take place regarding
to the building and operating of a 600 km transmission
power line with a value of USD$1.2 billion
in order to transport wind and hydroelectric
power from the south to the center of Mexico,
which shall be conducted by the CFE.
3. The WEM is open, thus new power transactions
are available, such as Generation selling
power to Qualified Supplier, Basic Supplier or
direct to the WEM; Qualified suppliers marketing
power to qualified users; among others.
4. New services, like energy management
for qualified users or energy management
for assets.