CRE Approves New Permits for Renewable Power Projects

The Energy Regulatory Commission (CRE) has approved three permits for renewable energy projects. However, the commission continues to reject or stall most applications, as it has done since the start of the López Obrador administration. Experts warned that despite the change in tune, the looming uncertainty in the industry continues to force companies to stop betting on self-supply models and green energy.

CRE announced that it has approved renewable energy generation permits for a subsidiary of CFE, Tampico Renewable Energy and Piasa Ingenio Plan de San Luis. The commission also approved the modifications requested by ESJ Renovables, Dolores Wind and Parque Amistad II. In addition, the CRE also gave the green light to 23 new applications for self-supply consortia and cogeneration projects, many of them for Spanish energy giant Iberdrola, which has been the subject of stringent government scrutiny.

Although experts say that the approval of new permits in the sector is good news since the CRE has denied several applications in 2022, these approved permits remain few and far between. "The lack of clear rules by Mexican authorities has led to a loss of private investment for the development of renewable energy projects. All private power producers have been displaced from the market due to CFE’s monopoly on renewable energy," said Iñigo Segura, CEO, ZGR Mexico.

For instance, CRE reported that it rejected permits for Energía Aljaval’s subsidiary México Lindo Solar, which developed Yermo solar park in Durango. In addition, it rejected the expansion request permits for Compañía de Energía Mexicana and Iberdrola Energía Monterrey.

The challenges in the sector are forcing private companies to shelve their energy development and supply plans, which not only affects the sustainability efforts of private companies but also those of the country, experts said. In June, SENER published two versions of the National Electrical System (SEN) development program. The first version argued it was impossible to meet the goals set in the Energy Transition Law and the General Law on Climate Change, which project to produce 35 percent of the country’s electricity from non-polluting sources by 2024. According to that document, it would not be until 2036 that the goal could be reached, reported MBN. The later version, however, negated this statement.

Experts emphasize that the government is favoring CFE over private companies in the energy sector. Several projects by major energy developers such as the German BayWa, the Italian Enel and Iberdrola are detained by the regulator CRE. According to Gonzalo Monroy, Director, GMEC, CRE has stated that its objective is not to build a competitive market but to support state agencies. 

Mexico has ample potential to produce renewable energy. Nonetheless, only 5.3 percent of electricity comes from photovoltaic solar sources, arguably Mexico’s most viable renewable power source, against 71.4 percent provided by fossil fuels. Experts pointed out that the global trend for 2030 is to increase the share of renewable energy by 65 percent. However, this is unlikely to happen in Mexico since the projection is for CFE to increase the electricity generation with coal during the following years.