On Monday, March 5, 2018, CENACE published the official results of first mid-term electricity auction in Mexico. This process was designed for suppliers of basic services to acquire both power and electricity to be consumed by basic users. By acquiring these services in advance, suppliers of basic services are able to reduce or even eliminate the price volatility risk for up to three years.

The process

The auction was officially launched on Aug. 15, 2017, and it was expected to produce an official result on Feb. 13, 2018.

During the auction, generators and traders, which do not offer supply services, were allowed to participate as sellers. The former was allowed to offer energy and non-committed power, while the latter could only offer energy. Any other market participant was allowed to offer any exceeding power or energy quantity it may have.

For sellers to be able to offer power in the auction they must have proven that the power plant with which they will cover the offer was already built or was under initial production testing. For both cases, the power plants must have received commercial operation clearance at least 30 days before the first year in which the plant will be providing the offered power or energy. In the case of energy offers it was not necessary to identify the power plants with which the offer was provided.

All the auction participants must have provided a guarantee of seriousness. In the case of sellers, it was a US$100,000 obligation, plus US$100,000 per MW-year and US$75/MWh offered. The same quantities were used for the purchasers, but they did not have to cover an obligatory fee. The guarantees of seriousness will be given back to the participants that were not awarded sale or purchase offers. Those who were assigned offers will ratify their commitment before March 20.

During the auction process, CENACE received 41 energy and 10 power purchase offers from CFE Suministrador de Servicios Básicos, Vitol Electricidad de México and Enel Energía. Meanwhile, three energy and three power sale offers were presented by CFE Generación, GPG Energía México, Vitol Electricidad México and Energía Azteca.

The results

50MW-year were assigned for 2018 at a price of MX$746,072.0019 in the National Interconnected System. The MWs were offered by GPG Energía México and bought by Enel Energía. No power was assigned for 2019 nor 2020, and no energy was assigned for 2018, 2019 and 2020. To get to know more about the non-awarded offers, click here to see the official document published by CENACE (in Spanish).

Long and mid-term auctions

It is important to mention that, just like with the long-term electricity auctions, for the mid-term ones, the Ministry of Energy will be managing the processes of the first two and from the third mid-term auction onward will be managed by CRE , while for all of them CENACE will be the authority to execute the auctions. Likewise, for the mid-term auctions the creation of a Clearing House is also expected, but due to the novelty of the process it was not included during the first.

The mid-term electricity auctions do not provide the option of offering or acquiring CELs, as those are traded in the official CELs market, and the creation of power plants capable of producing CELs is secured through the long-term electricity auctions.

For more articles on Mexico’s energy industry, check out our blog.

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