Among this week’s top stories, CRE denied Mexico’s Next Energy its electricity generation permit. Meanwhile, Mexico could take advantage of India’s diversification of its energy supply chain by expanding mineral exports to the Asian country.
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The Energy Regulatory Commission (CRE) denied Mexico’s Next Energy, a company from Nuevo Leon, permission to generate electricity. Since 2022, Next Energy has had contracts removed by federal, state and municipal entities that claimed the company failed to comply with agreements.
Mexico can strengthen its bilateral ties with India, which is seeking to diversify its portfolio of energy suppliers, by exporting lithium, copper and other critical minerals for a clean energy transition. Bhupinder Singh Bhalla, Minister of New and Renewable Energy, pointed out that India's focus on a cost-effective and risk-proof scale-up of clean energy through diversified supply chains and distributive expansion of manufacturing base is a major effort toward achieving the goal of a sustainable and clean energy future.
BBVA, Santander and Bank of America are seeking to jointly finance the US$6 billion that Mexico agreed on to purchase Iberdrola's various plants. Meanwhile, President López Obrador assured that the investment used for the purchase of 13 power plants from Iberdrola will be recovered in 10 years.
The government requested a loan from the Inter-American Development Bank (IDB) to finance a program to develop energy storage systems. Its goal is to be a pioneer in financing SME investments in battery energy storage solutions and energy efficiency projects. The program is set to benefit companies in the industrial and commercial sectors interested in investing in small-scale energy projects and storage systems.
Solar player Ginlong Solis reported that energy storage covers between 10 and 15% of the capacity of distributed generation (DG) systems for homes and businesses in Mexico. According to Sergio Rodríguez, Service Manager for Mexico and Latin America, Ginlong Solis, the main barrier at the moment is the price of batteries. Nevertheless, it is still the best option to boost solar systems and see significant savings in the short term. In 2023, experts estimate that DG could add more than 500MW of capacity in the country.
The Center for Economic Studies of the Private Sector (CEESP) criticized the government's decision to acquire Iberdrola's Mexican assets. CEESP pointed out three negative aspects of the purchase: uncertainty for investors, maintenance expenses and the missed opportunity that nearshoring represents for the country. CEESP suggested that public policy should be aimed at leveraging the opportunities presented by the nearshoring trend in Mexico to fully benefit from its economic advantages.
The president remains confident about their profitability and potential contribution to the country’s energy sector. He pointed out that this purchase will allow CFE to increase its power generation capacity share in the market from 39.6% to 55.5%, growing mainly in the northeastern region of the country.
According to INEGI’s Monthly Indicator of Industrial Activity Report (IMAI), electricity activities, along with water and gas supply in Mexico, increased 0.3% from January to February 2023 and 5.1% compared to February 2022. "At an annual rate and with seasonally adjusted series, the IMAI grew 3.5% last February. By economic sector, mining rose 7.7%; generation, transmission and distribution of electricity, water and gas supply to the final consumer grew 5.1%; construction increased 3.3% and manufacturing ticked up by 2.5%," the report reads.
In March 2023, Marcelo Ebrard, Minister of Foreign Affairs, went to New Delhi, India, to advance innovative binational projects in the fields of aerospace, lithium, biotechnology, water and vaccines. According to Ebrard, both countries will identify priority projects for development, including hydraulic management, electromobility and production of vaccines at a low cost. During the visit, the minister signed an agreement with the Council of Scientific and Industrial Research, which considers a fund of US$1 million, financed by both countries with US$500,000 each.
During the Latam Future Energy Mexico, Central America and the Caribbean Renewable Energy Summit, leading players analyzed the current state of the photovoltaic sector in the region. Sergio Rodríguez, Service Manager Latin America and Mexico, Solis, said that distributed generation has been growing steadily, leading the company to work on strengthening storage systems for regions such as Baja California and the Yucatan Peninsula, where the grid is very unstable. Furthermore, he stressed the importance of storage.
President Andrés Manuel López Obrador’s efforts to change the constitution failed to favor state companies CFE and PEMEX. Yet, he still aims to make a significant impact on the energy sector before his term ends in 2024. López Obrador highlighted that the recent purchase of 13 generation plants from Iberdrola will give CFE control of approximately 55% of the country's generation capacity, making it possible to achieve the target of 65% by the end of next year.
The Mexican Energy Association (AME) recognized the importance of the agreement reached between the Mexican government and Iberdrola as an opportunity to begin a new cooperation phase between public and private industries in Mexico’s energy sector. AME highlighted that public-private collaboration can benefit the economic and social development of the country.