Uncertainty Builds Around Energy Reforms; Wind Farms ThriveBy Rodrigo Brugada | Thu, 05/13/2021 - 20:56
Mexico's new energy reforms may create an environment fit for monopolies and consequently affect private investment and breach trade agreements. US' Vice President Kamala Harris held a meeting with President Andrés Manuel López Obrador that lightly touched the matter. In other news, Spanish firm Acciona got positive results from its wind farm in Tamaulipas.
More about this in the roundup!
Potential Monopolistic Practices Threaten Energy Sector: COFECE
The Federal Economic Competition Commission (COFECE) has started investigating a complaint against the Federal Electricity Commission (CFE), warning that possible monopolistic practices may affect the generation and supply of electricity in the country. Industry experts have warned that the changes would increase the cost of energy, damage CFE's transparency and discourage private investment due to the barriers to obtaining permits. For its part, the Office of the US Trade Representative has also been vocal, stating that the bill restricts foreign investors' ability to seek international commercial arbitration with the government.
Energy Reforms May Slow Down Chinese Investments
Public-private collaborations in the energy sector have been frail since President Lopez Obrador came into office. Now, recent regulatory changes are causing significant uncertainty for private investors, particularly foreign ones. These reforms may also bring challenges regarding bilateral investment treaties and will probably start a surge in international lawsuits. China has not had as big of a presence in Mexico as it does in other Latin American countries. This represents a significant opportunity for foreign investment, but Chinese investors may opt to protect their assets with these regulatory changes.
Why Harris Did Not Tackle Energy During López Obrador Meeting
The US has been vocal in the past about President López Obrador's policy direction in the energy sector, pointing that his measures have been detrimental to the investments and operations of US-based companies. But during a call between US Vice President Harris and President López Obrador, the tone stayed cordial and the matter of energy was only lightly addressed. Even though one could read concerns surrounding the energy sector 'limited market access,' energy itself does not appear to have been a primary focus of the conversation. The US is already using the available tools to tackle the issue. Still, there is only so much the US can do since it cannot directly intervene within Mexico's sovereign affairs.
San Carlos Wind Farm Part of Acciona's 1Q2021 Consolidation
Spanish energy and infrastructure giant Acciona reported a positive 1Q2021, with US$2 billion approximate revenues. A significant part of the company's growth is its expanding renewable energy business, including San Carlos Wind Farm in Mexico. The company added 319 MW of renewable power to its portfolio during the quarter, with additions to the San Carlos wind farm amounting to 53 MW of the total and including 60 windpower turbines. The wind farm powers 392,000 homes, avoiding the annual emission of about 421,339 tons of CO2 in coal plants, which are still a feature in Mexico's energy mix.