Northern Private Energy Producers Offer Savings Up to 40 Percent

Private energy producers operating in the Northern Gulf Wholesale Electricity Market (MEM) have been found to offer rates up to 40 percent more cost effective than the Federal Electricity Commission (CFE) according to an analysis by Energia Solario.

For the past year, on average, the state company in Monterey expends MX$1.02 (US$0.051) to produce one kilowatt per hour, and an additional MX$0.18 to generate energy in the Bajio. Meanwhile, in order to produce the same amount of energy, private companies within the MEM were found to spend almost 40 percent less or MX$0.62 (US$0.031) uniformly throughout Monterrey, Saltillo and Reynosa. Moreover, even 700km away in cities like Irapuato and Queretaro their costs remain relatively anchored, rising by only MX$0.14.

“There is a window of possibility of savings that could reach up to 40 percent in the cost of generation, depending on the coverage to be offered by the supplier, the risk that the consumer is willing to accept and the location of the consumption center,” said César Pérez Mireles, Commercial Manager of Energía Solario.

Large energy consumers like industrial and commercial businesses in the region thereby stand to benefit from opening the energy market to private participation. Moreover, as self-supply contracts are set to expire for industrial consumers in the context of legal uncertainty, this revelation offers them a risk-adverse option to defer to.

“What is relevant about the MEM is that the consumer also has the option of investing or obtaining financing to incorporate generation plants of less than 500 kW, taking advantage of unused roofs, spaces in patios or parking spaces within the location of consumption centers or underutilized land, anywhere in the national territory,” added Pérez Mireles.

Notably, the study did not account for CFE´s incurred transmission and distribution costs from the last 12 months, which has been steadily applied to the GDMTH’s basic energy supply rate in the Northern Gulf region. Therefore, although CFE’s rates cannot compete with those available in the MEM, it may be due to the additional costs related to the infrastructure needed for energy distribution in the region.