CRE and CENACE published the call for proposals for Mexico’s fourth long-term electricity auction. The first three editions have cumulated an aggregate 8.9GW of clean energy installed capacity and are expected to pour in US$9 billion in investments.
What to Expect
“CRE’s message to all interested parties is one of continuity and any eventual change will help make auctions more attractive to potential participants. Financial entities are growing accustomed to the auction’s new schemes and are developing project finance mechanisms. We want to maintain their interest in the auctions,” says Guillermo García, President Commissioner of CRE, in an exclusive interview with Mexico Energy Review 2018.
This fourth edition of long-term electricity auctions is set to be the first one executed by CRE, while CENACE will implement it and the Ministry of Energy will act as a technical adviser. It will also allow Basic Service Suppliers to establish long-term contracts of between 15 to 20 years to acquire energy, power and CELs packages under competitive conditions. Also, the Clearing House is set to see a larger share of private player purchases compared to the third long-term electricity auction, where CFE bought more than 90 percent of the Clearing House’s offer.
Fourth Long-Term Electricity Auction Timetable
The auction participation criteria and bases will be published in the Auction Procedures bases on March 28, 2018, available both in CRE’s and CENACE’s official websites. Projects awarded will be emitted on Nov. 2, 2018 and contract signings will be enacted on Feb. 15, 2019.
Throughout all three editions of Mexico’s long-term electricity auctions, average MWh+CELs package prices have experienced a dramatic decrease, from US$47.78 in 2016 down to US$20.57 in 2017. Project developers are facing increased pressure to design and deploy profitable business models to connect profitable clean power generation projects with ever decreasing prices while at the same time expecting a price stabilization point. Private players are also coming to grasp with 2017’s novelty, the Clearing House, gauging its performance during last year’s auction to make the most of this new instrument for 2018. Solar and wind power are set to steal the spotlight, but the auctions being a technology-agnostic process, underused yet promising energy sources could make an entrance in this fourth edition.