A corporate renewable power purchase agreement in Mexico does not let a buyer step around the utility. Any megawatt hour delivered over the public network still settles through the Mercado Eléctrico Mayorista that CENACE operates. Only generation consumed behind the buyer's own meter sits outside it. The contract reaches the buyer's meter through one of a small number of legal routes, and each route carries a threshold the buyer has to clear before a price is even quotable.

Three routes were open in November 2023. A centro de carga with 1 MW or more of maximum demand over the previous twelve months can register as a Usuario Calificado and contract with a Suministrador Calificado. CRE set the registration rules in RES/2506/2017, published in the DOF on 6 December 2017. A load reaching 5 MW and 20 GWh a year can instead register as a market participant and buy in the wholesale market directly. That higher threshold sits in the Manual de Registro y Acreditación de Participantes del Mercado, published by SENER in the DOF on 15 July 2016. Below 1 MW, a legacy autoabastecimiento membership or on-site generation is what remains. None of this is a bypass, and readers forming a first view of how PPAs are structured in Mexico should start from that.

The route sets the paperwork. Three other variables set the price. They are the node where the plant injects and its congestion record, the transmission and porteo charges applied to the delivery, and who keeps the Certificados de Energías Limpias. None of the three appears in the headline USD per MWh figure a developer quotes.

What the policy record actually showed

Corporate procurement in this period was not being helped by faster permitting. CRE suspended all legal deadlines before it through Acuerdo A/001/2021, published in the DOF on 18 January 2021. Deadlines restarted only in stages, under Acuerdo A/004/2023 of 28 February 2023, which capped how many filings could be submitted each month and sequenced them by entry date. Ordinary statutory processing resumed when CRE published Acuerdo A/023/2023 on 20 July 2023, four months before this article.

Permit requirements moved the same way. CRE's Acuerdo A/006/2022, which governs generation permit applications filed from 31 March 2022, replaced RES/182/2015 and expanded what a generation permit application must contain. Applicants now file audited financial statements covering at least two years, plus shareholder structure and corporate governance documents. CRE justified the change by noting that of 763 permits it had issued, half were operational as of September 2021 and 23% carried expired work programs.

Tariffs did not run in the buyer's favor either. On 28 May 2020 CRE's seven commissioners approved a change to the porteo estampilla transmission tariff charged to holders of legacy interconnection contracts, the structure through which most pre-2014 self-supply schemes deliver power. Forbes México reported that day that the tariff then in force was 0.04900 pesos per kWh at high and medium voltage and 0.09799 pesos per kWh at low voltage. The commissioners approved the measure without publishing the replacement rates.

One fiscal instrument does exist, and it is worth naming precisely. Article 34 fraction XIII of the Ley del Impuesto Sobre la Renta allows a 100% deduction in the year of investment for machinery used to generate electricity from renewable sources, provided the equipment stays in operation for the five years following. The deduction accrues to whoever owns the asset. Under a PPA that is the developer, not the offtaker. If an offer implies the buyer captures it, the ownership structure is not what the buyer thinks it is.

Where the price comes from

Mexican power prices are nodal, and the spread between nodes is wide enough to decide a project. CENACE's weekly market report for 28 May to 3 June 2023 put the average day-ahead local marginal price across the Sistema Interconectado Nacional at 627.50 pesos per MWh. In that same week the highest nodal price reached 10,000.00 pesos per MWh at node 08BEL-115 and the lowest fell to minus 92.13 pesos per MWh at node 01VMA-400. Shadow prices on the four most constrained transmission links averaged between 114.17 and 2,915.31 pesos per MWh while binding.

Those figures are why a PPA priced at the plant is not a PPA priced at the meter. A contract that settles the generator at its injection node and the buyer at its withdrawal node leaves basis risk with one of the two parties, and the term sheet decides which one. Ask for the historical spread between the two nodes over at least twenty-four months before you accept the allocation.

Transmission is the other half of the answer. SENER published PRODESEN 2023-2037 on 29 May 2023. It plans about 2,426 circuit kilometers of new transmission between 2023 and 2031, roughly 1,800 of them at 400 kV. Over a shorter window it shows installed capacity rising from 89,890 MW in 2022 to 110,315 MW in 2026, with net consumption growing 2.5% a year to 2037. Generation is planned to grow faster than the wires that move it, so congestion between a cheap node and an industrial load is a planning outcome rather than an accident.

What a PPA does not do

A PPA is a price instrument. It does not keep a plant running through an outage and it does not deliver particular electrons to a particular meter. Physical reliability comes from the grid, from on-site generation, or from storage. Treating a signed offtake as supply security is the most expensive misreading in this market.

The environmental claim is a separate question again. The clean attribute travels with the Certificados de Energías Limpias, and a contract can leave them with the generator, transfer them to the buyer, or split them. A buyer can hold a renewable PPA for fifteen years and still have no right to report the emissions reduction. Read that clause before the price clause. Buyers chasing an emissions target without a physical connection to the plant usually end up in a virtual PPA, where the treatment of the certificates is most of the transaction.

The regulatory risk a Mexican PPA carries

The reform to the Ley de la Industria Eléctrica published in the DOF on 9 March 2021 changed the dispatch order in favor of CFE generation and altered the terms on which private plants sell. On 7 April 2022 the Suprema Corte de Justicia de la Nación dismissed the constitutional challenge to that reform because it did not reach the eight votes needed to strike it down. The decree stayed in force, while individual amparo proceedings continued under simple majority rules. SENER's Política de Confiabilidad, Seguridad, Continuidad y Calidad en el Sistema Eléctrico Nacional, published in the DOF on 15 May 2020, had already tightened the terms on which intermittent plants interconnect. Before both, CENACE canceled the fourth long-term auction on 31 January 2019.

On our read, that sequence is why a fifteen-year Mexican offtake prices wider than the same contract signed in Chile or Colombia. Resource quality is not the variable doing the work. Change in law, curtailment and regulatory event clauses are where a Mexican term sheet departs from a template, and they deserve more negotiation time than the energy price.

What to check before you sign

Five items decide whether a Mexican PPA term sheet is worth taking further.

• Route and threshold. Confirm the site qualifies on its own, or that the centros de carga can be aggregated under the SENER acuerdo published in the DOF on 1 March 2017. That acuerdo permits aggregation only across usuarios finales in the same grupo de interés económico, and counts only centros de carga of at least 25 kW.
• Node and basis. Get the injection node and the withdrawal node by name, with the historical spread between them, not an annual average.
• Charges. Establish which transmission, distribution, capacity and ancillary service charges sit inside the quoted price and which arrive separately on the CFE invoice.
• Certificates. State in the contract who receives the Certificados de Energías Limpias and what happens if the annual obligation percentage changes.
• Exit. Price the termination payment and the change in law trigger, because the counterparty has already priced both.

The comparison to run against all of that is not a fuel price. It is the all-in cost per MWh on your current CFE bill for the tariff class you are actually billed under, demand charges included, set against the delivered PPA price with the same charges added back. A buyer already on qualified supply is comparing two market prices. A buyer on CFE basic supply is comparing two different products, and the second comparison is the one that goes wrong in board papers.

Have your PPA term sheet reviewed before you sign

Send the draft term sheet or supplier offer, twelve months of CFE invoices for the sites concerned, and contracted demand by site. Mexico Energy Partners returns the delivered price on a like-for-like basis against your current tariff, where the node and transmission charges sit inside that price, how the clean energy certificates are treated, and which termination and curtailment terms fall outside market practice. You receive a written response and a call to work through it. We do not promise a saving, and we will say so if the offer in front of you is already competitive.

Sources

• CRE, RES/2506/2017, disposiciones administrativas de carácter general sobre el registro de Usuarios Calificados, DOF 6 December 2017.
• SENER, Manual de Registro y Acreditación de Participantes del Mercado, DOF 15 July 2016.
• SENER, acuerdo sobre el concepto de demanda y la agregación de Centros de Carga para Usuarios Calificados, DOF 1 March 2017.
• Holland & Knight, "CRE deja sin efectos Acuerdos de Suspensión de Plazos en México", July 2023, on Acuerdos A/001/2021, A/004/2023 and A/023/2023.
• Holland & Knight, "Comisión de Energía de México modifica criterios para otorgar permisos de generación eléctrica", 1 April 2022, on Acuerdo A/006/2022.
• Forbes México, "CRE cambia tarifas de transmisión eléctrica a empresas", 28 May 2020.
• IDC, "Deducción de equipos para la generación de energía", 7 June 2021, on Article 34 fraction XIII of the Ley del Impuesto Sobre la Renta.
• CENACE, Reporte semanal del Mercado Eléctrico Mayorista, Sistema Interconectado Nacional, week 22 of 2023, 28 May to 3 June 2023.
• Greenberg Traurig, "Programa de Desarrollo del Sistema Eléctrico Nacional 2023-2037", July 2023, on PRODESEN published by SENER on 29 May 2023.
• Cámara de Diputados, decreto de reforma a la Ley de la Industria Eléctrica, DOF 9 March 2021.
• DLA Piper, "La Suprema Corte de Justicia de la Nación desestima acción de inconstitucionalidad contra la reforma a la Ley de la Industria Eléctrica", April 2022.
• SENER, Política de Confiabilidad, Seguridad, Continuidad y Calidad en el Sistema Eléctrico Nacional, DOF 15 May 2020.
• La Jornada, "Se cancela la cuarta subasta eléctrica: Cenace", 2 February 2019.