Mexico Energy Insights
Perspectives on the energy sector that create value for over 10,000 market participants each month
Energy Procurement In Mexico
Businesses and other organizations use 76% of the energy produced in Mexico, and they are increasingly interested in procuring renewable energy. Over 1,500 firms already use renewables, and capacity keeps rising. Mexico reached over 24,000 MW of sustainable energy capacity in 2019. As the number of market participants rises and the depth of the market increases, renewable power becomes more reliable and cost-effective.
Risks Are Rising In Mexico's Power Market
The Wholesale Electricity Market
The Energy Auctions in Mexico
The status of energy auctions in Mexico has become increasingly complicated, but private auctions still promise to help Mexico transition to clean energy. The immediate impact of private auctions will mostly be on existing projects, but they could lead to additional renewable energy development in the future.
The Natural Gas Industry In Mexico
New pipelines have enormous potential to support increased natural gas production in Mexico and also reduce the costs of imports. Although there is already an impressive pipeline infrastructure for transporting natural gas from the U.S. into Mexico, it does not reach the entire country.
An Overview Of Virtual PPAs
For many years, the market for clean energy was limited by unstable prices. Energy prices are generally difficult to predict, but clean energy adds the uncertainty of new technologies and the weather.
Frequently Asked Questions
A power purchase agreement sets out the terms of a bi-lateral agreement in which one organization buys energy from another. The main elements of a power purchase agreement include the price for capacity, the price for energy (basically, the marginal cost of electricity), and the number of years that it will last.
Solar Power Enjoys Strong Fundamentals
Mexico was the first country to commit to specific targets under the Paris Climate Agreement, and achieving those targets is driving the adoption of solar energy. Mexico agreed to cut greenhouse gas emissions 22% by 2030.
Renewable Energy Project Execution
Energy project execution received significant unfavorable coverage in Mexico this year, which makes it imperative to look at the issues carefully. There is a real danger of underbidding and delayed projects in renewable energy auctions. However, we believe Mexico’s overall record is good by international standards.
Reliance on US Natural Gas Poses Risks
Over the last 20 years, the Mexican natural gas scenario changed dramatically. During the nineties, a decrease in natural gas prices and ongoing improvements in combined cycle technology resulted in a large substitution of oil power stations by natural gas and combined cycle plants.
Energy Efficiency Solutions In Mexico
Our Energy Efficiency Assessments begin with our consultants analyzing historical energy consumption and identifying trends or ways to optimize energy spending. We meet with building/facility staff and management to discuss the strategy of the facility or plant, which allows us to make thorough recommendations on ways to lower the energy footprint.
PPAs vs Wholesale Spot Market
A PPA is a long-term contract between parties to purchase a certain amount of energy for future delivery. The agreements are typically between five and 15 years in tenor and are similar to what you would see in the US power market. However, the new PPA structure in Mexico weakens some of the protections that benefited generators in previous PPAs with the state-owned utility, CFE.
Geothermal In Mexico: The Ring Of Fire
Mexico is committed to expanding geothermal energy as part of its strategies to reach its clean energy targets. Although most geothermal plans are owned by the state’s Federal Electricity Commission (CFE), Mexico has implemented a set of regulations that encourage private developers to participate in the electric market.
Mexico’s Electricity Market
The reforms introduced Power Purchase Agreements (PPAs) as one of the main ways to trade energy. A PPA is a mid- or long-term contract to purchase a certain amount of energy to be delivered in the future at a fixed price.
Financing Renewable Energy Projects
Mexico has been one of the Latin American countries who has embraced climate change action. For instance, in March 2015, it submitted a climate action plan to the UN Framework Convention on Climate Change (UNFCCC), being the first developing country to do so. As a part of its efforts, Mexico has set policies and laws to increase energy efficiency promote clean energy.
Oil And Gas Conference In Oslo, Norway
Mexico Energy Partners was delighted to have co-sponsored this year’s event, in Norway and Scotland, showcasing Mexico’s energy sector opportunities to private investors.
Transmission And Distribution Infrastructure
Mexico’s power grid will have to be expanded and modernized to handle the large amount of renewable projects that will need to be connected to the grid. Mexico’s Minister of Energy said that “over the next 15 years the country aims to build almost 25,000km of new power transmission lines, achieving an investment of at least $13.4 billion.”