Economic Package 2022: New Renewable Energy Projects

As part of the Economic Package of 2022, President López Obrador plans to further strengthen the Federal Electricity Commission (CFE) through the tender of six new thermoelectric plants and the modernization of twelve aging hydroelectric plants scheduled for next year.

The new plants are projected to add a total of 4,322 MW to the energy sector. The project in Gonzalez Ortega, Baja California with a 683 MW capacity is set to finish first between 2022 and 2023. The largest energy production project is located in Tuxpan, Veracruz with a 1,086 MW capacity, set to finish construction in 2024. Notably, Valladolid, Yucatan would have the second largest project with a 1,037MW production projected to finish a year earlier in 2023.

The announcement was made by the new head of the Ministry of finance and Public Credit (SHCP), Ramirez de la O, before the chamber of Deputies, thereby solidifying CFEs restored commitment towards renewable energy which is increasingly more competitive than the cheapest fossil fuel, coal.

Edmundo Sanchez Aguilar, Director of Finance at CFE, informed the line of credit is worth US$200 million, announced at the end of last month, would be used to finance the photovoltaic central in Sonora and the rehabilitation of the 12 hydroelectric plants.

“Surely (Ramírez de la O) reported or made known, in general, what is being done in the electricity industry: the strengthening of the Federal Electricity Commission, through the tendering of five or six new thermoelectric plants” and the “moderniz[ation] of twelve hydroelectric plants", said the president.

This follows shortly after the head of state sought the congressional approval that would grant CFE the capacity to produce and distribute 54 percent of the nation’s energy demand, whilst leaving the remaining 46 percent to the private sector. It appears that the proposal of these thermoelectrical plants is meant to serve as a good faith gesture to the private sector riddled with market uncertainty.

The president also briefly mentioned PEMEX to say that the state productive company has ran with luck, referring to Italian NOC ENI’s recent discovery of another offshore well and reduced extraction costs, possibly hinting potential investment in the new site.