Mexico cancels clean energy auction - updated

Mexico's grid operator and regulator Cenace (the National Energy Control Centre) has scrapped plans for the country's 5.9TWh clean energy tender.

Wind and solar PV had dominated Mexico’s three previous clean energy tenders in 2015, 2016 and 2017 (pic credit: Acciona)
Wind and solar PV had dominated Mexico’s three previous clean energy tenders in 2015, 2016 and 2017 (pic credit: Acciona)

It had previously suspended the auction in December, a day before bids were due, and two days after new president Andrés Miguel López Obrador was sworn in.

Brian Gaylord, senior analyst for Latin America at Wood Mackenzie Power and Renewbles (formerly Make Consulting), described the decision to cancel the tender as "ludicrous". He tweeted that it was "extremely difficult to envision a logical reason" for the cancellation.

He told Windpower Monthly the decision appeared to be politically motivated as the new administration has vowed to modernise its old thermal and hydro power plants.

In his inauguration speech, Obrador criticised the previous government’s energy reform of opening up the market to private companies for the first time in eight decades.  

Mexico held its first clean energy tender in 2015. Previously, wind farm operators were reliant on selling electricity to corporate and industrial off-takers.

Gaylord said that 2019 should be a "record year" for wind power installations in Mexico due to previously contracted projects.

However, the clean energy auction’s cancellation was likely to have a "major chilling effect" on wind power development in Mexico, he added.

In a tweet, Gaylord added that without the clean energy tenders, it was "impossible to imagine an alternative that doesn’t result in higher electricity rates for Mexicans".

He had previously said it was "understandable" that the new administration would suspend the auction while it took time to review the tender’s scope and objectives.

EDF, Engie, Enel, Invenergy, Iberdrola and Neoen were among the developers pre-qualified to compete in the tender.

An Iberdrola Mexico spokesperson said: "Iberdrola understands and respects the Mexican Government’s initiative to review the process for capacity auctions and analyze whether or not they should be maintained in their current form.

"After four years of energy reform, we believe that tendering processes should be streamlined to become more efficient if they are to meet the country’s increasing electricity demands.

"Iberdrola’s flexibility and expertise will contribute to the modernization of Mexico’s electricity system through whichever mechanisms the Government defines."

Wind and solar PV had dominated Mexico’s three previous clean energy tenders in 2015, 2016 and 2017.

Wind projects accounted for nearly 45% of all capacity awarded in Mexico’s last auction in November 2017, with an average price of $20.57/MWh – a 38% reduction from the $33.47/MWh average bid in September 2016.

Gaylord added: "They had such a great thing going with these auctions – especially the pricing of it – and there were no scandals (in development).

"It’s really unfortunate."

Obrador, the leader of the left-wing National Regeneration Movement, was elected in July, and now heads a coalition government.

He has promised a radical new Mexico and has criticised his predecessors’ economic policies of privatisation.

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