Uncertainty, Policy Shifts Challenge Mexico’s Power Market

Q: How have conditions changed for qualified suppliers between the past and current administrations?

A: The main challenge has been adaptability and managing risk. Since the opening of the electricity market, suppliers have taken on an increasingly active role, gaining experience and refining internal processes.

Collaboration with institutions such as CFE Distribution and Transmission, CENACE, and CRE has been crucial. Looking ahead, working with the National Energy Commission (CNE) will be key to navigating regulatory and operational changes.

Q: How is BID managing changes in regulation to continue offering specialized service to consumers?

A: Adaptation is not just a challenge for BID Energy but for all suppliers. Clear communication and simplifying complex regulatory and market dynamics are essential so that qualified users understand both their rights and obligations.

BID Energy’s value proposition goes beyond competitive electricity rates. It provides regulatory guidance, process adjustments, operational support, and advisory services to help users navigate market conditions. This includes understanding price fluctuations, market liquidity, and the factors influencing cost, many of which are beyond the control of suppliers and consumers.

Q: With the increase in distributed generation (DG), what role do prosumers play in the electricity market?

A: Prosumers represent an opportunity that requires continuous adaptation to emerging market dynamics. Alternative supply models, such as distributed generation and isolated supply, have significant potential, particularly if regulatory frameworks evolve to facilitate their deployment.

As part of its strategy, BID Energy has developed Infragrid by BID Energy, a platform that designs tailored energy solutions for industrial users across Mexico. These solutions address growing energy demands through various technologies, not limited to solar photovoltaic systems. While rooftop solar is a common perception of DG, industrial clients often require more robust solutions, such as gas or diesel turbines, to meet their operational needs. Through Infragrid Energy, BID Energy conducts in-depth analyses to offer integrated energy supply and generation alternatives based on user requirements, location, and available technologies.

Q: What are the main barriers to entering and operating in the Mexican wholesale electricity market compared to earlier stages?

A: It is still too early to give a definitive answer, as regulatory modifications are ongoing. However, uncertainty remains one of the biggest obstacles. Discussions about potential energy reforms and broader political changes have slowed investment and decision-making in the sector. Despite this, there is still strong interest from users in exploring market alternatives.

A key concern is the removal of the requirement for high-demand users (those consuming over 1MW) to transition to the wholesale electricity market, a provision established in the 2014 legislation. Under the new regulatory framework, this obligation has been eliminated, raising questions about the market's future liquidity and competitiveness.

This shift means that rather than a regulatory mandate driving participation, it will now be up to suppliers to inform users about the benefits of migrating. The challenge will be to provide clear, compelling value propositions that encourage voluntary participation in a more dynamic and competitive market.

Q: How have PPAs evolved in recent years, particularly after the changes introduced by the previous administration?

A: In recent years, we have seen a shift toward shorter-term PPAs. Regulatory uncertainty and a lack of transparency have led companies to adopt a more conservative approach when entering the market, opting for shorter contract durations.

This trend is not limited to agreements between suppliers and end users but also extends to coverage contracts with generators. Previously, PPAs were typically structured for 10 to 15 years, aligning with the lifespan of generation assets. However, market volatility, a slowdown in new projects, and ongoing regulatory uncertainty have made long-term commitments less viable. As a result, PPAs today are not only shorter but also more precise in defining obligations and risks for all parties. 

It has become increasingly important for consumers to fully understand the terms of their contracts, including the financial and operational implications of participating in the wholesale electricity market.

Ultimately, the electricity sector operates as a financial market, with daily transactions occurring 24/7. While a lower tariff may be attractive, it often comes with exposure to market risks, which companies must carefully assess before committing to a PPA.

Q: What are your plans for 2025, and which projects are you most excited about?

A: Our main objective is to remain adaptable and resilient in the face of regulatory changes, viewing them as opportunities rather than challenges. Instead of focusing on the uncertainties, we aim to leverage these shifts to drive innovation and strengthen our offerings.

At BID Energy, we are committed to expanding turnkey infrastructure solutions, particularly in distributed generation, or what we call "early-stage generation." This includes both physical energy solutions and strategic integration to help users optimize their energy management. Beyond supplying electricity, we strive to support clients in defining their strategies and meeting their energy objectives.

Additionally, we are embracing digitalization. While we already operate with highly automated processes, we are continuously improving through AI and other advanced technologies. Our focus remains on enhancing digital integration to refine and optimize the products and services we provide.

BID Energy is an energy management solutions provider that helps organizations to reduce their energy costs and optimize their energy use.