Move to Halt Renewables Blocked at the Last Minute

Actions taken by CENACE to bar new green energy projects from being connected to the grid have been stopped at the last minute, reports Bloomberg News. This information is based on documents and e-mails viewed by the international news agency. CENACE’s measures included halting crucial tests for renewable projects, without which they could not be connected to the grid. CENACE´s explanation was that stopping the tests was needed so that the control center could stabilize the grid in difficult times induced by COVID-19. Private players, however, identified the measure as a way to hold back competition so state-owned CFE could gain advantage.

A May 12 email coming from an official at the National Commission for Regulatory Improvement is the source for Bloomberg’s report. In this email, the official expressed concern for potential compliance costs stemming from the regulation. Further regulatory impact studies were needed, the official argued against SENER, who had wanted to publish the measure in Mexico’s official gazette at once.

Energía a Debate reported yesterday that SENER had urgently requested the publication of the agreement in the Official Gazette of the Ministry of Internal Affairs. Nonetheless, both the National Commission for Regulatory Improvement (CONAMER) and the authority of the Official Gazette refused to do so without due discussion. Bloomberg now adds further importance to what this discussion entails.

If the government’s move is indeed stopped at the last minute as reported, this will undoubtedly be received with relief by Mexico’s private renewable energy players. The Federal Antitrust Commission (COFECE) published an opinion yesterday, via law firm White & Case. The opinion was addressed to the Ministry of Energy, CRE and CENACE. In the opinion, COFECE questions the need to halt the to improve the Mexican grid, its potentially adverse effects on the sector and in what manner CENACE will implement the measure. COFECE advised CENACE to review its measure focusing on basing the measures on clear and public technical criteria and to only apply them for the grid’s stability when needed. The opinion already hinted at further legal actions, stating that “considerations stated by COFECE in the Opinion may be useful in the event of a potential claim against the Resolution.”

Tensions between Mexico’s public sector and private renewable energy players have been lingering since President López Obrador took office. After cancelling new renewable energy auctions, the government planned to open up the CELs system to CFE’s older, more polluting hydro-based plants. CELs have thus far provided great incentive to build renewable energy projects as buyers of energy, including CFE, were mandated to source part of their energy through this way. Associations such as AMDEE and ASOLMEX stated that the measure defeats the purpose of CELs entirely, but a federal court suspended the measure after legal action was taken.