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Mexico Grows as World Leader on Energy Reform and Renewables

Time:2018-04-11 Source: Hit:201

By the end of 2018, Mexico's oil and gas industry will be completely open to private investment from domestic and foreign companies across the value chain — from oil exploration to gas stations. Since liberalizing its energy markets Mexico has become something of a model for countries that wish to encourage investment, innovation and competition across their energy sectors.

2018 is also the year that Mexico’s market for clean energy certificates (CECs) comes on line: a key plank in the country’s transformative and highly ambitious law on renewable energy. Published in 2012, the law confirmed Mexico’s intention of increasing the amount of electricity generated from clean energy sources, including nuclear energy, to 35 percent by 2024 and to 50 percent by 2050.

To put that in context, the 2018 target required Mexico to build, in three years, the total wind farm capacity that Canada took 23 years to develop. Meeting even half the 2018 target requires the equivalent of the entire Danish fleet of wind turbines.

To meet its goals, Mexico introduced a system of auctions for energy, capacity and CECs that offer long-term contracts — and consequent stability — for foreign and domestic investors: 15 years in the case of energy and capacity; 20 years for CECs. Notably, the auction system was designed to capture relative values of different generation technologies by both location and production profile. Projects in higher-price areas of the country or that deliver power at peak times can secure higher revenues and more investment through the auctions.

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