On March 28, the Ministry of Energy announced that CENACE, the independent grid operator, had finalized the reception period of economic proposals for the first long-term electricity tender, closing the process with 227 proposals from 69 participating companies. During the pre-registration period, 81 companies presented their technical proposals to CENACE, but 12 decided not to submit the economic proposals that were also mandatory to enter the tender. On March 29, at 10 am, the 227 accepted proposals were incorporated into an optimization model in order to find the optimal combination bringing the maximum economic benefit for CFE, the only off-taker of the tender. To increase transparency, the whole process was broadcasted live in CENACE’s website.

CENACE’s live broadcast of the first long-term electricity tender process (CENACE’s website)

CENACE’s live broadcast of the first long-term electricity tender process (CENACE’s website)

This first electricity tender had the objective of providing CFE, the supplier of basic services, with the best sale offers to cover its demand of capacity, energy, and Clean Energy Certificates (CELs).  In this round, CFE was requesting 500MW of capacity with a maximum price of MX$10,000 per megawatt-year, 6.3 million megawatt-hours of energy with a maximum price of MX$884 per megawatt-hour, and 6.3 million of CELs with a maximum price of MXN$444 per CEL. In this way, the 227 proposals were addressed in order to satisfy these requirements, which had to be met at the minimum economic surplus established by the Mexican authorities. The Ministry of Energy’s guidelines indicate that the economic surplus must exceed 8.52% in order to declare a tender successful, otherwise, companies would have to readjust their economic proposals and the process would be repeated until the desired results are obtained.

The Winners: Eleven Economic Proposals from Seven Participating Companies

The first electricity tender started with a summary of the guidelines that would be followed during the auction, as well as a presentation of the number of proposals received and approved by CENACE. Prior to the event, the 227 participating proposals were incorporated into the optimization model that was later run before the assistants and live broadcasted to the general public. The first process iteration was found successful as it showed an economic surplus of 39.43%, which was above the threshold set by the Ministry of Energy.

Table: Preliminary Results of Assigned Products

Source: MESR with information from CENACE

Source: MESR with information from CENACE

Once the process was declared successful, CENACE proceeded to present the preliminary results of the tender, which showed that above 80% of the energy and CELs requested were covered in an optimal combination, while in the case of capacity, none of the submitted proposals was selected. According to CENACE, capacity products will be tendered again in the next electricity bidding round that will take place at the end of the year. The definitive results showed that 11 economic proposals from the 227 participants had been selected according to the model to satisfy CFE’s demand. CENACE announced that the 11 proposals belonged to seven companies whose names will be soon published on the system operator’s website.

Table: Definitive Results of Winner Sales Offers

Source: MESR with information from CENACE

Source: MESR with information from CENACE

The optimization software also gave the names of the power plants that will be supplying the amount of energy and CELs selected by the algorithm, which was quickly showed by CENACE. The list included wind farms like Tres Mesas III and IV, and solar parks like Bajío Solar, which was not surprising considering that 73% of the technical proposals belonged to solar energy and 21.7% to wind. A complete breakdown of selected power plants, as well as a briefing of the seven winner companies, will be analyzed in an upcoming blog post as soon as CENACE publishes this information.

Sources: CENACE, Ministry of Energy, El Financiero

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