What does a company need to get started with energy procurement in Mexico?
We generally only need the location of the facilities and one year of utility bills to analyze the viable energy procurement options for a potential client.
What energy procurement options are available in Mexico?
For large clients, there are on-site solutions including solar and cogeneration plants, as well as virtual power purchase agreements for renewable energy.
Companies with lower levels of energy demand have fewer options and typically utilize on-site solar systems and energy efficiency solutions.
How long does the energy procurement process take?
The process from the signing of the power purchase agreement (PPA) to the start of supply can take from six months for a small on-site solar project to up to one year for large-scale energy procurement. A cogeneration facility (clients above 25MW) would take roughly two years to complete.
Can a company sign multiple PPAs with various energy suppliers?
Yes, a company can choose the PPA from the supplier that offers the best pricing for a specific location. If a company has multiple facilities throughout Mexico, it can purchase energy from different suppliers. However, this increases the complexity and costs of receiving multiple energy bills each month, the need for multiple letters of credit, and having to negotiate and analyze multiple PPAs before signing.
What are the tenors of the PPAs being offered in Mexico?
PPAs in Mexico can range from one year to as long as 20 years, with three or four-year PPAs being the most popular among multinational companies. One must balance the need to secure larger savings with a longer PPA, versus the risk of market conditions changing substantially over that timeframe.
Equally as important, clients must balance the attraction of the one or two-year PPAs versus the need to solicit, review, negotiate, and execute energy contracts more often as they expire.
Do the meters and transformers need to be changed to buy renewable energy in Mexico?
Yes, a company should expect to install new meters and transformers when entering into a PPA in Mexico as a qualified user. The costs can vary since the transformers are often custom ordered for the facility. For on-site solar systems, new meters and inverters are necessary to begin new supply.
Are there any other physical changes that need to be made other than the meters and transformers?
There is a possibility that depending on the location of the building or plant, that telecommunications equipment may also need to be installed. This is necessary for less than half of our clients.
What savings can be achieved with on-site solar generation?
On-site solar can provide savings of 10% to 40% from current CFE rates. Mexico is a great country for solar generation, and when coupled with rising power prices in the country, onsite solar has become a very viable option for companies of all sizes. A facility needs at least 2600 square meters to 3000 square meters of available roof space to install a 500 kWp solar system.
What savings can be achieved with virtual PPAs in Mexico?
For qualified users in Mexico, virtual PPAs can provide savings of 5% to 20% based on the market environment, location of the facility, and the tenor of the PPA.
PPAs in Mexico offer both fixed pricing and capacity structured PPAs where a certain amount of power is contracted, and any additional needs are purchased from the market.
How can my organization learn more about buying renewable energy in Mexico?
Contact us to learn more about the energy procurement process. Mexico Energy Partners provides industrial and multinational companies with the largest energy savings in Mexico.
Kijana Mack, Executive Director