Alan Sakar
Roundtable
Alan Sakar
Alan Sakar
Associate in Project Development and Finance
Clifford Chance

In the first and second auctions, CFE was the sole purchaser and virtually absorbed a measurable off-taker’s risk. Starting with the third auction, the Clearing House will represent a pool of purchasers per auction. Clifford Chance applauds the authorities’ design efforts when structuring the electricity auctions. We understand that some banks were involved in the structuring of the Clearing House, which is a strong sign that the government took into consideration certain bankability issues, which the banks would likely raise during the financing of the projects. We have no doubt this model will be replicated in other countries in the coming years. The success of the upcoming auctions will be largely based on the independent performance of CENACE, which will manage the risk of buyers’ nonpayment, the guarantees and the reserve funds.

Unlocking a country’s entire electricity sector to private initiative is not something done overnight.
Óscar Bernal
Roundtable
Óscar Bernal
Óscar Bernal
Director General Mexico
Eosol Energy

Due to the regulations for CEL requirements from the beginning of 2018, CFE needs to acquire a large amount of CELs to compensate for the energy it still produces using fossil fuels. The CELs are expected to attract tremendous demand when they become available so everyone believes CEL prices will increase dramatically. Eosol’s strategy formed almost in response to the auctions due to the absence of private projects. With our full-equity advantage, clients started knocking on our door. In the last 10 months, we have received more renewable energy development projects than in the six years since our company was established.

The country’s regulatory authorities responded to this necessity with the design of a secondary energy trading market: CELs.
Salvador Alarcón
View from the Top
Salvador Alarcón
Founding Partner and CEO
Tradeon Energy
Tradeon Energy explains its role in creating and developing the Mexican electricity market.
Energy Market
Analysis
Mexico’s energy authorities have gone to great lengths to foster an open electricity market that is enticing enough to attract the private sector.
César
Roundtable
César Hernández Ochoa
César Hernández Ochoa
Deputy Minister of Electricity

The electricity market was expected to grow gradually since its inception and it will become increasingly open as it matures. The market is designed to stimulate competition so it operates under a model where cheaper energy is sold first, favoring models and technologies that generate energy at lower costs. In the long term we believe that these models will bring electricity costs down through the incorporation of new technologies and the displacement of older plants. Competitivity will generate incentives to improve services or to lower costs, but this is a market process and thus the determination of costs is not under control of any regulatory entity. It will also cause electricity prices to fluctuate depending on demand during the year. In periods when there is significant demand, prices will rise and vice versa.

As a direct result of the Energy Reform, the Mexican electricity market experienced a transformation that has caused uncertainty among the market
Salvador Alarcón
View from the Top
Salvador Alarcón
Founding Partner
Tradeon Energy
Trade On is an energy broker with over 50 years of experience in the global electricity market, covering trading, legal counseling and consulting.
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