CENACE's weekly market report for 10 to 16 December 2023 put the average day ahead marginal price across the Sistema Interconectado Nacional at 544.31 pesos per MWh, and the real time average at 609.15 pesos per MWh. Renewable offers took 7.37% of dispatched energy that week. Thermal offers took 65.29%.
Those numbers describe a contracting problem, not a supply problem. The resource exists and it is cheap. What decides whether a plant in Monterrey or Silao can buy it is which of four legal routes its load qualifies for, and each route is capped by a threshold written into Mexican law. A driver with no route attached is not a driver. It is a preference.
The four routes open to a Mexican site
Basic supply from CFE Suministro Básico is the default. A load above 25 kW per month taken at medium voltage with hourly metering sits on the GDMTH tariff, set out in the schedules CRE published in the DOF on 28 January 2022. GDMTH splits energy into punta, intermedio and base periods and bills demand separately. Nothing in it lets the customer specify where the electrons came from.
Qualified supply is the second route. A centro de carga that reached 1 MW of maximum demand over the previous twelve months may register as a Usuario Calificado and buy from a Suministrador de Servicios Calificados. CENACE's list of market participants for December 2023 records 56 qualified suppliers and 117 generators holding a live contract. That list is the pool a tender goes into, and our explanation of how qualified supply works covers the registration steps.
The third route is entering the wholesale market directly. That takes 5 MW of demand and 20 GWh a year under the Manual de Registro y Acreditación de Participantes del Mercado, published by SENER in the DOF on 15 July 2016. In December 2023, one company in Mexico held that registration as a Usuario Calificado Participante del Mercado. The threshold is rarely what stops a buyer. Carrying settlement, imbalance and collateral obligations inside the MEM is.
The fourth route is generation on the site itself. Article 17 of the Ley de la Industria Eléctrica, published in the DOF on 11 August 2014, exempts generation below 0.5 MW from needing a CRE generation permit. It exempts nothing else. The plant still needs an interconnection contract with CFE Distribución, municipal construction and land use approvals, and electrical sign off. Under CRE's rules for distributed generation, RES/142/2017 published in the DOF on 7 March 2017, the common scheme is medición neta. Surplus is credited against later consumption rather than paid in cash, and credit still unused after twelve months is liquidated at the local marginal price.
CRE's distributed generation statistics for the first half of 2023 show 2,954.65 MW installed across 367,207 interconnection contracts, 99.34% of them photovoltaic. That averages about 8 kW a contract. An industrial site sizing a rooftop array is not buying in the same market as the residential volume behind those numbers.
What the cost driver actually is
The global cost decline is real and it is measured. IRENA's Renewable Power Generation Costs in 2022, published in August 2023, puts the global weighted average levelized cost of utility scale solar PV at USD 0.049 per kWh in 2022. That is 89% below the 2010 figure of USD 0.445 per kWh, and 3% below 2021. Onshore wind came in at USD 0.033 per kWh, down 5% year on year. Total installed cost for utility scale solar PV averaged USD 876 per kW in 2022.
None of that is the number a Mexican CFO can budget from. A delivered offer under qualified supply is built up from the nodal price at the point of withdrawal, plus transmission and distribution charges, plus capacity, plus the CEL obligation, plus the supplier's margin and its view of your load shape. The generation cost is one input among six.
The saving a buyer books is the gap between two complete delivered invoices, not the gap between two energy prices. Sizing it on a specific site takes three steps. Pull twelve consecutive CFE invoices. Separate the energy charge by time band from the billed demand charge and the power factor adjustment. Then require every supplier to quote against that same measured load shape. A saving percentage quoted before that comparison exists is a guess, whoever quotes it and however narrow the range looks. The instrument that turns the comparison into a price is usually a corporate power purchase agreement, and its tenor and indexation matter more than the headline rate.
Price stability is a contract term, not a property of sunlight
Wind and solar have no fuel cost, so the input price cannot move. The delivered price still can. An offtaker settling through the MEM is exposed to the price at its own node, to congestion between generator and load, and to the cost of covering the gap between contracted volume and actual consumption. The week of 10 to 16 December 2023 shows the size of that last exposure. Day ahead averaged 544.31 pesos per MWh and real time averaged 609.15, a gap of about 12% in one week.
What removes the exposure is the contract itself: a fixed price, a defined volume, a stated settlement point and an agreed treatment of imbalance. Two buyers signing with the same wind farm can end up with different volatility depending on which of those four they negotiated.
Energy security comes from the configuration
Sites in load pockets look at on-site generation for continuity as well as cost, and Baja California is the clearest case in the country, because it sits on a separate interconnected system. Be precise about what delivers the continuity. A photovoltaic array with no storage and no engineered islanding shuts down when the grid does, because the inverters are required to disconnect. A grid delivered renewable contract does nothing for continuity either, since the electrons arrive over the same CFE network. Continuity is bought with storage, transfer switching and a design that lets the site run islanded. Those are separate capital items and they belong on their own line, not folded into the energy price.
Clean energy and renewable energy are not the same category
Mexican law counts energías limpias, which is a wider set than renewables. It includes large hydroelectric, nuclear and efficient cogeneration. The statutory target of 35% clean energy generation by 2024 is therefore not a renewables target, and reporting renewable capacity against it compares two different things.
The instrument that prices the obligation is the Certificado de Energías Limpias. CRE created the management and compliance system for CELs in RES/174/2016, published in the DOF on 30 March 2016. SENER's aviso of 31 March 2017 set the acquisition requirement at 13.9% of qualifying consumption for 2022, and Energía a Debate reported on 25 November 2022 that it was not raised for 2023. The obligation travels with the load, so it is a cost line in every qualified supply offer. Ask each supplier whether the quoted price includes CELs or excludes them.
The policy record as of January 2024
Mexican policy in force at the start of 2024 did not favor private renewable development. The reform to the Ley de la Industria Eléctrica published in the DOF on 9 March 2021 reordered dispatch in favor of CFE plants and changed the treatment of legacy self supply permits. On 7 April 2022 the Suprema Corte de Justicia de la Nación dismissed the acción de inconstitucionalidad brought against it, the plenary having failed to reach the eight votes needed to strike it down. The reform stood.
Grid investment is planned rather than delivered. PRODESEN 2023-2037, published by SENER on 29 May 2023, projects 2,426 circuit kilometers of transmission entering service in 2024. The plan flags that as the largest single year in the 2023 to 2031 window, inside a total of 4,324.7 circuit kilometers across the 182 CFE Transmisión projects it lists. Those are projections in a planning document, not commissioned assets. Test the transmission assumption against the interconnection position at your own node before you rely on it.
What to settle before the next budget cycle
Start with the threshold question. Pull the maximum demand recorded at each centro de carga over the last twelve months. Sites at or above 1 MW have a qualified supply option. Sites below it do not, and their levers are on-site generation below 0.5 MW, tariff and load shape work on the CFE account, and demand management.
Then separate the two questions that get merged in most board papers. Cost is answered by comparing complete delivered invoices across the 56 qualified suppliers CENACE listed in December 2023. Continuity is answered by storage, islanding and switchgear, priced on its own. Buying a renewable contract to solve an outage problem is an expensive category error.
Last, fix the reporting basis before signing. Decide whether the company reports against renewable content or against the Mexican energías limpias definition, and write the CEL treatment into the contract. Retrofitting that after signature is where the argument with the auditor starts.
Send us twelve months of CFE invoices
Mexico Energy Partners will review twelve consecutive CFE invoices, your contracted demand, tariff class and metering point. The review returns whether the site qualifies for qualified supply, what the switching timetable looks like, and what delivered price range comparable load is being quoted at now. You supply the invoices and the single line diagram. No site visit is needed for the first review. Our energy procurement service page sets out the scope if you would rather read before sending anything.
Sources
- CENACE, Reporte semanal del Mercado Eléctrico Mayorista, Sistema Interconectado Nacional, semana 50 de 2023, 10 to 16 December 2023.
- CENACE, Lista de Participantes del Mercado con contrato vigente, December 2023.
- CRE, tariff schedules for CFE Suministro Básico defining GDMTH, published in the DOF on 28 January 2022.
- SENER, Manual de Registro y Acreditación de Participantes del Mercado, published in the DOF on 15 July 2016.
- Ley de la Industria Eléctrica, article 17, published in the DOF on 11 August 2014.
- CRE, RES/142/2017, disposiciones administrativas de carácter general en materia de generación distribuida, published in the DOF on 7 March 2017.
- CRE, Estadística de generación distribuida, primer semestre de 2023.
- IRENA, Renewable Power Generation Costs in 2022, published August 2023.
- CRE, RES/174/2016, Sistema de Gestión de Certificados y Cumplimiento de Obligaciones de Energías Limpias, published in the DOF on 30 March 2016.
- SENER, aviso on Certificados de Energías Limpias acquisition requirements, published in the DOF on 31 March 2017. Energía a Debate, "Se estanca requisito para Certificados de Energía Limpia", 25 November 2022.
- Decreto reforming the Ley de la Industria Eléctrica, published in the DOF on 9 March 2021. DLA Piper, note on the Suprema Corte de Justicia de la Nación ruling, 7 April 2022.
- SENER, Programa de Desarrollo del Sistema Eléctrico Nacional 2023-2037, published 29 May 2023. Energía a Debate, "Publica Sener el PRODESEN 2023-2037", 29 May 2023.