What decides whether a facility has procurement options at all?

One number: 1 MW of demand. That is the threshold for Usuario Calificado status, and it is demand rather than annual consumption. SENER set out the measurement in its acuerdo published in the DOF on 1 March 2017, which for a medium or high tension site with recent service is the maximum demand in kW recorded over the preceding 12 months. A plant below that line stays on CFE Suministro Básico at CRE-approved tariffs and its options run to on-site generation and efficiency work. A plant above it can put its load out to competitive supply.

CRE maintains the Registro de Usuarios Calificados and issues the registration, under the disposiciones administrativas published in the DOF on 6 December 2017. CENACE registers the Centro de Carga in the Mercado Eléctrico Mayorista. Those two steps get confused constantly, and the confusion is the most common cause of a slipped start date. The questions below cover what comes after.

What does a company need to get started?

To size the viable options we need:

• The location and CFE tariff class of each facility, normally GDMTH, DIST or DIT for an industrial site.
• Twelve months of CFE billing.
• Interval demand data for each Centro de Carga where it is available.
• Available roof or land area, if on-site generation is in scope.

Tariff class matters to the answer, not just to the paperwork. The split between GDMTO and GDMTH is 100 kW of demand, and the split between GDMTH, DIST and DIT is the voltage at which supply is taken. A saving quoted against one class does not transfer to another.

What procurement options are available in Mexico?

For qualified users, the routes are a supply contract with a Suministrador de Servicios Calificados, a bilateral PPA with a generator, a virtual PPA settled financially, on-site solar, and cogeneration where the site has large simultaneous thermal and electrical loads. Companies below the qualified user threshold typically use on-site solar and efficiency work.

Cogeneration is screened on the steam and power load profile, and specifically on how many hours a year the two coincide. A megawatt threshold on its own does not settle whether a site is a candidate.

How long does the process take?

From signature of the PPA to the start of supply, six months is realistic for a small on-site solar project and up to a year for large-scale procurement. Cogeneration runs longer because it is a construction project.

Two items gate the schedule more often than the negotiation does. The first is CRE registration as a Usuario Calificado, which has to be in hand before supply can move. The second is transformer lead time, because industrial transformers are built to order for the site's voltage and capacity.

Can a company sign multiple PPAs with different suppliers?

Yes, and a multi-site company frequently should, because the best price at one location is rarely the best price at another. The cost of doing so is administrative: multiple monthly invoices to reconcile, multiple letters of credit to post, and multiple contracts to negotiate and keep track of. Price the administration before splitting a portfolio across four suppliers to capture a small delta at one site.

What tenors are being offered?

PPAs in Mexico run from one year to as long as 20 years, and three to four year terms have been the most common among multinational buyers. The trade-off is the ordinary one. A longer term buys a larger discount and a longer exposure to a market that may move against you. A shorter term keeps optionality and puts the procurement team back in the market more often, with the internal cost that repeating a solicitation, review and negotiation cycle carries.

Do meters and transformers need to change?

Expect to install new revenue-grade metering and, in most cases, a new transformer when migrating to qualified supply. For on-site solar, new metering and inverters are required to start supply. Telecommunications equipment is sometimes needed as well, depending on the site, and in our own project experience that applies to fewer than half of clients.

Costs vary by site because transformers are specified to the facility's voltage and capacity. Get written quotations against the actual single-line diagram rather than working from a rule of thumb.

What savings can on-site solar achieve?

On-site solar has delivered savings in the range of 20 to 50 percent in the projects Mexico Energy Partners has worked on. Savings in this range are measured against current CFE supply and vary materially with tariff class, region, load factor and consumption profile. The figures are illustrative rather than committed, and no range can be confirmed for a specific facility without a review of interval data and 12 months of billing.

Two practical constraints shape what is possible. As a planning rule of thumb, a 500 kWp array needs roughly 2,600 to 3,000 square metres of usable roof. And generación distribuida is capped at 0.5 MW of generating capacity, not at the facility's load, under the SENER Manual de Interconexión published in the DOF on 15 December 2016 and CRE Resolución RES/142/2017 published in the DOF on 7 March 2017. A system quoted at 500 kWp is quoted in DC panel rating, and whether it sits inside the 0.5 MW cap depends on the inverter rating. Confirm which figure the interconnection application uses before ordering equipment.

What savings can a virtual PPA achieve?

For qualified users, virtual PPAs have produced savings in the range of 10 to 50 percent depending on the market environment, the location of the facility and the tenor of the agreement. Savings in this range are measured against current CFE supply and vary materially with tariff class, region, load factor and consumption profile. They are illustrative rather than committed and require a review of interval data and 12 months of billing before any range can be confirmed for a specific site.

Both fixed-price and capacity-structured PPAs are offered in Mexico, the latter contracting a set volume and leaving the remainder to be bought from the market. The structure decides how much of the exposure actually transfers, and our comparison of fixed PPA pricing against nodal spot exposure works through the difference.

Where does porteo land in the comparison?

Porteo is the wheeling charge for moving power across the Red Nacional de Transmisión and the Redes Generales de Distribución, and it is set by CRE rather than by the supplier. A PPA price that fixes the energy component leaves porteo floating unless the contract says otherwise, which is why an offer quoted against the energy line can look far better than the delivered bill it produces.

The risk is not theoretical. CRE revised the porteo estampilla applicable to holders of legacy interconnection contracts, the grandfathered autoabasto and cogeneración permits, with the higher charge reported as applying from July 2020. La Jornada reported on 11 June 2020 that CFE Intermediación de Contratos Legados raised those porteo tariffs by 427 to 811 percent depending on voltage level. Ask every bidder which party absorbs a change in the CRE-approved transmission and distribution tariffs during the term, and compare all offers as delivered cost per MWh at the meter.

What is the regulatory position as of early 2022?

The reform to the Ley de la Industria Eléctrica published in the DOF on 9 March 2021 changed the dispatch order to favour CFE's own generation and extended Certificado de Energía Limpia eligibility to clean generation regardless of commercial operation date. It is law, and its application has been widely blocked by amparo suspensions. A separate constitutional reform initiative remains before Congress and a constitutional amendment requires a two-thirds majority.

Our view is that the practical exposure for an industrial buyer sits in contracts that depend on a project not yet in commercial operation, rather than in supply from plants already running. Where a procurement decision rests on a project still to be built, ask for permitting and interconnection status in writing and negotiate a delay remedy. Our route-by-route look at procurement options covers how each structure is exposed.

Put your sites through a procurement review

Mexico Energy Partners analyses which procurement routes a facility qualifies for and what each would cost delivered, including porteo and the physical migration. The review needs 12 months of CFE billing, the location and tariff class of each site, interval demand data where available, and a single-line diagram. Our energy procurement page sets out how the work is run.

Request an energy procurement review