Mexico’s state energy sector opened to private investment following an end to the state electricity monopoly in 2013 with its first power auction of private investment. Clean energy was a stunning winner being awarded 1720MW of wind and solar energy. Mexico has an ambitious goal of sourcing 35% from clean energy sources by 2024, shy in comparison with its 45% target for 2036 and a further annual increase of 4,000MW to 6,000MW. The global energy industry has seen the potential in Mexico with its low labour costs, excellent irradiation, stable economy and strong PPA. Both local and experienced international companies have set out to stake their claim on a piece of the solar and clean energy market.
The outcome of this auction will drive it towards that objective. A total of seven wind and solar organisations won electricity contracts and clean energy certificates. Among the bidders were a list of international companies; Enel Green Power (EGP), Recurrent Energy, SunPower, Gestamp Wind and Alten Renewable Energy.
Through its subsidiary, Enel Green Power México, EGP has been awarded the right to sign 15-year energy supply contracts and 20-year clean certificates with three solar projects in Mexico. The company has been granted more capacity than any other participant in the tender and as a result secured its position as the largest renewables operator in the country. Francesco Venturini, CEO of EGP, announced: “Mexico is a pivotal market for all serious players in this field due to its huge potential in clean energy and stable regulatory framework.” “We have worked hard to become one of the most competitive companies in many clean technologies and the positive outcome of this tender is another clear indication of the success of our growth strategy.”
The auction represented a significant move towards a newly competitive energy market in Mexico, with a total of $62.5 billion forecast in private investment by 2018. Participation in the auction was higher than expected. A total of 227 bids were placed by 69 participants, the highest placed at 1.2 billion pesos (US$69/MWh) by Zuma Energía. Wind and solar packages and certificates were sold at an average price of US$41.80/MWh.
Developers are due to commence construction soon, with the pressure of completion deadlines set for early 2018. With a plan of 3.4 gigawatts between now and then, the challenge is set to deliver all projects on time. Some suspect that an amount of 300 megawatts from the auction will be delayed to late 2018, however while Mexico, solar and renewables, in general, came out clear winners in the auction, the implementation will be the ultimate proof of success