Mexico Indefinitely Halts New Renewable Energy Plans

Citing COVID-19’s effects, CENACE has indefinitely suspended tests for new renewable energy projects in the country, reported Bloomberg. These preoperative tests are critical to bring projects to life. Private players say that the suspension of tests has been identified as a tool to boost CFE over private initiatives, adding to a longer-standing argument between the public sector and private renewable energy producers.

CENACE released a statement on May 2, mainly to announce it would take various measures to ensure the continuing reliability of Mexico’s electricity system. Nonetheless, Energia a Debate reported that soon after people took to social media to denounce these measures, being interpreted as an “instrument that could stop the installation of new wind and solar plants by suspending preoperative tests at such facilities during the pandemic.” CENACE has stated that it is merely taking action to reinforce Mexico’s grid, as it has been under pressure due to lower energy use caused by a disruption of industrial activity.

Eduardo Pérez Motta, former head of Mexico’s antitrust regulator showed concern for the issue in an interview with Bloomberg: “This is not in line with the care that one should take of consumers and markets. A company with market power – the CFE – is probably trying to take care of and protect itself through these measures.”

Furthermore, Pérez stated that this measure creates uncertainty for renewable energy operators as it undermines their operational certainty to be able to provide energy. Tensions between Mexico’s public sector and new solar and wind players have been lingering since December, when SENER decided that older energy generating projects that edged toward cleaner energy would also be able to issue CELs, certificates originally meant to boost new renewable energy projects, by making it mandatory for large scale energy users, including CFE, and energy traders to source part of their energy via this route. Critics worried that by opening up CELs, their value would diminish and incentives to start clean energy projects would be eroded. Associations such as AMDEE and ASOLMEX even stated defeats the purpose of CELs entirely.

Nonetheless, a federal court has thus far suspended the measure that would allow CFE a greater competitive advantage by having direct access to CELs via its older plants. While further juridical steps are under consideration by SENER, the suspension remains in place. Now that the government is once again accused by Mexico’s private players to be giving CFE preferential treatment, it is unlikely that tensions will be resolved on their own.