CENACE announced the cancellation of the fourth-long term electricity auction this Thursday, Jan. 31. The press release was signed by Alfonso Morcos, the new Director General of CENACE. After three successful editions, the fourth long-term electricity auction promised more renewable power at low prices into the grid. It was originally scheduled to take place on Nov. 14, 2018. But as the entering administration was preparing itself to take on its new responsibilities, the auction was postponed and later suspended on Dec. 3, 2018.
According to the Ministry of Energy, the cancellation of the auction was based on the current legal framework and considering technical, economic and energy planning issues. Earlier that day, the Corporate Coordinating Council (CCE) urged the Federal Government to continue with the auction agenda. “The auctions allowed CFE and other participants to purchase electricity at very low prices,” said Juan Pablo Castañón, President of CCE. “In fact, these have been the lowest prices at an international level and the scheme has been recognized by its success and transparency.”
Earlier this week the Ixtepec-Yautepec Transmission Line Tender was also cancelled.
But what does industry experts think about this issue? Our interviewees share their insights:
“The new administration should follow the market rules as established. Executing a long-term electricity auction per year. Three long-term electricity auctions have been developed and each has shown an improvement. In the first two auctions, CFE had a 100 percent participation. In the third auction, private participation totaled 9 percent, which subsequently in the fourth auction rose to 34 percent on purchase volume. Of the 65 new plants derived from these processes, four are already operating, five are undergoing testing protocols, 21 more are in advanced construction and the remainder already have the required permits and are about to start construction,” says Fernando Zendejas, Former Deputy Minister of Electricity at the Ministry of Energy.
“In the same way we saw a significant lack of gasoline due to an operational issue, in the case of electricity, inadequate planning can lead to blackouts. The risk that we are facing of not renewing the auctions, from our perspective, is the risk of having blackouts in 2021. What we do not build today will translate into a lack of electricity flow in three years. We are running late and we have to implement the necessary measures to ensure there are enough plants in three years to keep up with the pace of demand,” says Guillermo García, President Commissioner at CRE.
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