Mexico auction suggests positive renewables outlook

Subject

Mexico's second renewable energy auction.

Significance

Mexico's energy regulator, the National Centre for Energy Control (CENACE), on September 28 published the definitive results of the second, long-term power purchase agreements for clean energy production. Twenty-three firms were assigned 57 contracts for wind, solar photovoltaic, hydropower and geothermal projects, which fulfilled more than 83% of the energy required by the state-owned Federal Electricity Commission (CFE), the sole purchaser in the auction.

Impacts

• A third long-term power auction will be held by April 2017 at the latest.
• The renewables sector's development will be limited as long as it faces stiff competition from cheap US natural gas imports.
• As residential electricity rates will not fall much in the short term, energy reform will be a sensitive issue ahead of the 2018 election.