Climate Week NYC ran from 22 to 29 September 2024, convened by the Climate Group in the same days as the high level week of the seventy-ninth United Nations General Assembly. Three themes ran through the program. Training for renewable energy work, participation by Indigenous communities, and new structures for project finance. Only one of the three reaches the calendar of a plant director in Mexico who is buying power from an offsite wind or solar project.
Participation by Indigenous communities is not an ethics topic in Mexico. It is a permitting step with a file, an authority and a clock, and it sits between a signed power purchase agreement and the day electricity reaches your meter. Eólica del Sur shows how long that clock can run. The Secretaría de Energía opened the consulta previa with the community of Juchitán de Zaragoza in Oaxaca on 20 June 2014. Consent was signed on 30 July 2015. An amparo followed on 15 September 2015, the Suprema Corte de Justicia de la Nación rejected the challenge in November 2018, and the 396 MW plant was inaugurated in June 2019.
Five years separated the opening of consultation from commercial operation. If you are negotiating offsite renewable supply from a plant that is not yet built, the question below is the one to settle first. What must sit in the developer's permitting file before you sign a term sheet naming a commercial operation date, and who carries the cost if that date moves.
The two filings that stand between a project and your meter
Article 120 of the Ley de la Industria Eléctrica, published in the Diario Oficial de la Federación on 11 August 2014, requires anyone seeking a permit or authorization for an electricity project to file an evaluación de impacto social with the Secretaría de Energía. The filing must identify, characterize, predict and value the social impacts of the activity and set out mitigation measures. SENER then issues a resolutivo with recommendations.
The procedure was formalized by the Disposiciones Administrativas de Carácter General sobre la Evaluación de Impacto Social en el Sector Energético, published in the DOF on 1 June 2018. Those rules set four filing templates, A through D, graded by project complexity and the size of the area of influence. Natural Gas Intelligence reported in June 2018 that SENER has around 90 calendar days to evaluate a power project, against 90 business days for hydrocarbons.
Consultation is the second filing and it behaves differently. Article 119 of the same law requires SENER to run the consultation procedures needed to account for the interests and rights of Indigenous and Afro-Mexican communities where an electricity project is developed, in coordination with the Secretaría de Gobernación. No statutory day count governs that process. Its length is set by the number of assemblies, the information and translation phases, and any litigation that follows.
The difference matters for drafting. A resolutivo is a document with a date and a file number, so you can make it a condition precedent. A consultation record is not one document. A consultation a court later finds inadequate can be reopened after permits are already in hand.
Why Oaxaca and Yucatán are where this bites
Mexico closed 2023 with 7,413 MW of wind capacity across 71 parks in 15 states, or 8.26% of installed generation capacity, on figures the Asociación Mexicana de Energía Eólica gave Energía Hoy on 22 February 2024. Only 96 MW was added during 2023, against 158 MW in 2022 and 473 MW in 2021. Electricity demand grew 9% over the same year. New wind supply is not tracking load, and that weakens a buyer's hand on delivery dates.
The strongest wind resource sits in the Isthmus of Tehuantepec in Oaxaca. Yucatán has drawn the larger photovoltaic projects in the southeast. Both are states where Indigenous population density is highest. INEGI reported on 6 August 2024, using the 2023 ENADID, that 27.3% of people aged three and over in Oaxaca and 26.1% in Yucatán speak an Indigenous language, against 5.9% nationally. Resource quality and consultation exposure sit on top of each other.
Yucatán carries the sharper recent example. A Tribunal Colegiado in the state granted a definitive suspension on 16 June 2022 against the permits for the Ticul A and B photovoltaic project, 195 MW and 103.5 MW. The ground was that the Maya communities of San José Tipcéh and Plan Chac had not received the information needed to assess the project before the permits were issued. CEMDA reported the ruling on 17 August 2022. That is 298.5 MW taken out of the contractable pipeline on procedure rather than on engineering, on the record as CEMDA reported it on 17 August 2022.
What a moved start date does to the number you took to the board
An offsite renewable contract does not save money on the day it is signed. It saves money on the day the plant delivers. Until then you keep buying at the CFE basic supply tariff, or from your qualified supplier at whatever the market gives you. A commercial operation date that slips twelve months does not add twelve months to the term. It deletes the first year of the price differential and leaves the end date where it was.
The market gives you little room to push back on that point. SENER's PRODESEN 2024-2038 put clean generation at 24.3% of the total in 2023, against the 35% share Mexico carries in national law and in its Paris commitment. The same document identified 25,251 MW of capacity additions required between 2024 and 2027. IMCO published that reading on 6 June 2024 and noted 194 CFE transmission projects and 5,719 km of line planned to 2030, with no expansion for the Yucatán Peninsula. Projects that can actually deliver are scarce, and developers price that scarcity into the delay terms they will accept.
Protection therefore has to be contractual and specific. Tie effectiveness of the agreement to the EVIS resolutivo by file number and date. Set a longstop date after which you may terminate without penalty. Price the replacement power you will buy in the gap, and name who pays for it. These are the clauses most often left soft in a first draft. Our earlier note on corporate power purchase agreements in Mexico sets out how the rest of the structure fits around them.
Where this reading could be wrong
Consultation is not the binding constraint on every project. AMDEE told Energía Hoy in February 2024 that the shortfall in transmission investment is what holds wind back, not permitting alone. A plant with a clean social file can still fail to reach a point of interconnection with capacity to take it. Both have to be checked, and neither substitutes for the other.
Structure changes the exposure as well. Generation on your own site, behind your own meter, does not place a third party community between the plant and your load, although a permitted project still files an EVIS. Onsite and offsite renewable options trade against each other on exactly this axis. A plant already in commercial operation carries none of the schedule risk described here, and its contract price reflects that.
What to require before you sign
Ask for these five items, and read the dates on them rather than the summary a developer writes over them.
- The SENER resolutivo on the evaluación de impacto social, with its date and file reference.
- SENER's determination of whether a consulta previa applies to the site, and the acta closing it if one was held.
- The CRE generation permit, with its issue date and the conditions attached to it.
- The interconnection study status with CENACE and the named point of interconnection.
- A search for amparo, agrarian and environmental proceedings covering the site and the access route.
If a developer cannot produce the first two, the commercial operation date in the term sheet is a forecast rather than a commitment. Model it as one, and negotiate the delay terms accordingly.
Check the permitting file behind your renewable supply offer
Mexico Energy Partners reviews the social and permitting file behind an offsite renewable supply offer before a buyer commits to a commercial operation date, and checks the interconnection status of the generating asset. You supply the draft term sheet or power purchase agreement, the developer's stated permitting milestones, and the point of interconnection named in the offer. We return a written read on which milestones are documented, which are asserted, and what the contract should say about each. Request a review of your offsite supply agreement.
Sources
- Climate Group, Climate Week NYC 2024, held in New York from 22 to 29 September 2024.
- Ley de la Industria Eléctrica, Diario Oficial de la Federación, 11 August 2014. Article 119 on consultation procedures and Article 120 on the evaluación de impacto social.
- Secretaría de Energía, Disposiciones Administrativas de Carácter General sobre la Evaluación de Impacto Social en el Sector Energético, Diario Oficial de la Federación, 1 June 2018. Four filing templates graded by project complexity.
- Natural Gas Intelligence, report on the formalization of social impact assessment rules in the Mexican energy sector, June 2018. Around 90 calendar days for SENER to evaluate a power project.
- Nexos, El Juego de la Nueva Suprema Corte, "Caso Eólicas del Sur en Juchitán: la errónea lectura de la Suprema Corte del derecho a la consulta previa", 31 October 2018. Consultation opened 20 June 2014, consent signed 30 July 2015, amparo 454/2015 filed 15 September 2015.
- Energías Renovables, report on the inauguration of Eólica del Sur, June 2019. 396 MW and 132 turbines at Juchitán de Zaragoza and El Espinal, Oaxaca, with the Supreme Court challenge rejected in November 2018.
- Asociación Mexicana de Energía Eólica figures reported by Energía Hoy, 22 February 2024. 7,413 MW of wind capacity in 71 parks across 15 states at the end of 2023, 8.26% of installed capacity, 96 MW added in 2023 against 158 MW in 2022 and 473 MW in 2021, demand growth of 9% in 2023.
- INEGI, Estadísticas a propósito del Día Internacional de los Pueblos Indígenas, 6 August 2024, on 2023 ENADID data. 5.9% of people aged three and over speak an Indigenous language nationally, 27.3% in Oaxaca and 26.1% in Yucatán.
- CEMDA, note on the definitive suspension granted against the Ticul A and B photovoltaic project, 17 August 2022. Ruling of a Tribunal Colegiado in Yucatán dated 16 June 2022, projects of 195 MW and 103.5 MW.
- IMCO, analysis of PRODESEN 2024-2038, 6 June 2024. Clean generation at 24.3% of the total in 2023, 25,251 MW of additions required from 2024 to 2027, 194 CFE transmission projects and 5,719 km of line planned to 2030.