Mexico renewables firms cut discounts, become more conservative (BNamericas)
BNamericas reported in June 2020 on how renewable developers were repricing offers to large industrial customers weighing a move from CFE Suministro Básico to suministro calificado. The BNamericas report sits behind a subscription, so the pricing mechanics are set out below.
“Renewable energy developers are being much less aggressive when going after large industrial clients looking to move to the free market,” Kijana Mack, Director at Mexico Energy Partners in Mexico City, told BNamericas.
Read the full article at BNamericas (subscription required)
What this meant for pricing from qualified suppliers
A plant leaving basic supply either contracts with a Suministrador de Servicios Calificados or registers to buy directly in the Mercado Eléctrico Mayorista. Usuario Calificado status turns on 1 MW of demand, measured as maximum recorded demand in kW over the preceding 12 months, under the SENER acuerdo published in the DOF on 1 March 2017. It is a demand test, not an annual consumption test, and treating it as a consumption test is the most common first-screening error.
The discount a qualified supplier quotes applies to the energy and capacity it sells, measured against the CFE tariff the facility would otherwise pay. It does not apply to the whole bill. Porteo and distribution charges are regulated and pass through regardless of who supplies the energy.
That is why offers tightened in June 2020. The porteo estampilla tariff on legacy interconnection contracts was revised, which raised the regulated component of delivered cost. La Jornada reported on 11 June 2020 that CFE Intermediación de Contratos Legados raised those porteo tariffs by 427 to 811% depending on voltage level. CENACE's acuerdo of 29 April 2020 suspended pre-operational tests for wind and solar plants, leaving contracted volume from uncommissioned projects uncertain. We think a supplier carrying both exposures holds margin back rather than quoting an aggressive headline discount.
Stop comparing headline discounts. Ask any supplier to decompose the offer into energy, capacity, CEL cost, porteo and other regulated charges, state which components are fixed and which float, and set out the exit terms and notice period. Our note on the regulatory changes of mid-2020 covers the porteo revision in detail, and our energy procurement work covers the supply route decision.
Compare offers on delivered cost, not headline discount
Mexico Energy Partners rebuilds qualified supply offers into a delivered cost per MWh and compares them against the facility's current CFE tariff, with regulated charges shown separately. An initial review needs 12 months of CFE billing, the offer or term sheet, and interval data where available. It produces a comparison, not a guarantee of savings or of eligibility.