Do Mexico’s New Power Sector Rules Favor the State?
The Mexican government on May 15 issued new rules for the operation of the country’s power grid, affecting dozens of renewable energy projects and drawing criticism for what energy companies and local industry groups say are measures that favor Mexican state-owned electric utility CFE over private developers. What do the new rules entail, and what is the government’s reasoning for implementing them? Why have the measures sparked controversy? To what extent will the decision affect foreign direct investment in Mexico’s power sector, and particularly ongoing and future renewable energy projects in the country?
Jeremy Martin, member of the Energy Advisor board and vice president for energy and sustainability at the Institute of the Americas: “The growing war on renewables in Mexico has taken center stage. It has moved to an all-out attack on renewable energy players and the role of clean energy for the nation’s energy matrix and economy. The charge of intermittency is but a stalking horse. In late October and again in April, AMLO’s government threw many of Mexico’s clean energy goals into doubt when it announced it was changing the market rules, first for clean energy certificates and more recently for renewable generators not yet online and to prioritize CFE. The latter was couched in the context of Covid-19, and using the euphemism of reliability, allowed CENACE to postpone renewable project pre-operation testing and essentially halt implementation of several projects; the effort directly favors CFE and the desire to increase Pemex-supplied fuel oil for power generation. There is, of course, great irony in the horrific damage to Mexico’s emission footprint at the time of a respiratory illness pandemic. The good news is that institutions are functioning and responding. Mexico’s judiciary and the independence of its legal system are providing a key avenue for reviewing the orders. The legal challenges being considered will…”Read More
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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewable energies, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at email@example.com.