CRE Favors CFE over Private Energy Companies

The government is favoring CFE over private initiatives in the energy sector. Today, at least nine projects by major energy developers such as the German BayWa, the Italian Enel and the Spanish Iberdrola are detained by the regulator CRE. "The lack of clear rules by Mexican authorities has led to a loss of private financing for the development of renewable energy projects. All private energy producers have been displaced from the market due to CFE’s monopoly on renewable energy," said Iñigo Segura, CEO, ZGR Mexico.

Viviana Patiño, Researcher, México Evalúa, explained that even though the country's regulatory framework facilitates private investments intended for solar and wind energy, CRE is sabotaging the permitting process. “Private companies present their documentation in order, but CRE never reveals whether they will get the permits or not, therefore thwarting private investment," she commented to El Financiero.  

"This has stopped not only investments but also power plants that were already operating, leading CFE to replace renewable energy with fossil fuels that are expensive and polluting, resulting in an increase of carbon emissions," explained Víctor Ramírez, Spokesperson, Platform Mexico Climate and Energy.

According to Gonzalo Monroy, Director, GMEC, CRE has stated that its objective is not to build a competitive market, but to help state agencies. He said that CRE is denying all private permits unrelated to CFE or PEMEX, which will lead to a paralysis in renewable energy investments.

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. Patiño 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. 

Meanwhile, Segura assured that Mexican authorities have chosen the slowest mechanism to achieve the energy transition. "I do not believe that Mexico does not want to bet on renewables, but throwing out private initiatives and monopolizing energy production for CFE will definitely slow down energy transition," he said.