MEXICO Trends and Developments Contributed by: Carlos de Maria y Campos, Francisco Fernández Cueto, Antonio Borja and Eduardo García Travesi, Galicia Abogados
The strategic implications are as follows. • Hedging – Self-consumption helps large consum- ers protect themselves from price volatility. • Agility – Flexible permitting and regulatory certainty make it a key growth segment. • Bankability – A reliable source of revenues and qualified offtakers increase the likelihood of secur- ing non-recourse financing for these projects. • Decentralisation – It allows developers to capture opportunities without relying on centralised plan- ning. Cogeneration Cogeneration produces electricity and usable heat from a single energy source, improving efficiency, cut- ting emissions and lowering energy costs – ideal for industrial consumers. The modalities are as follows. • Self-consumption – The energy is used by the permit holder or other authorised users within a pri- vate network; sales to users inside that network are treated as a third-party sale but remain under the self-consumption scheme. • Market participation – The plant connects to the grid and sells into the wholesale market, following dispatch rules. • Authorised capacity – new permits will be granted with a capacity limitation related to the internal cogeneration needs of the host that generates the power, thus restricting the possibility of generating unlimited excess power. Dispatch rules: • market plants must follow mandatory dispatch schedules; and • self-consumption plants may inject surplus energy, subject to reliability criteria set by the National Centre for Energy and Control ( Centro Nacional de Control de Energía , CENACE). Why it matters: • lower energy costs and higher efficiency; • flexibility to use or sell power; and
• clear operational rules that support financing and growth. Wholesale market (MEM) The wholesale electricity market (MEM) remains an important space for private participation – but under more structured rules. Participation now requires full alignment with binding planning criteria. Once the projects are authorised, the MEM operates under the economic dispatch model. This means that power plants are dispatched based on cost efficiency and system needs, while ensuring reliability. Although the MEM is more state-directed than before, it contin- ues to offer opportunities for experienced participants who can adapt to this new environment. The strategic implications are as follows: • participation is now more structured and competi- tive; • planning alignment is a precondition for market entry; and • a solid regulatory and bidding strategy is essential to succeed. Mixed development schemes The new legal framework introduces “mixed develop- ment schemes” to combine state and private invest- ment. These projects, which must be approved by the board of directors of CFE and awarded pursuant to transparent rules, must align with the state’s plan- ning criteria and must meet standards on reliability, efficiency and sustainability. Long-term production – Private developers build, finance, operate and maintain power generation assets. CFE is the sole buyer under long-term offtake agreements. Key features include the following. • Energy, capacity and other products are sold exclusively to CFE. • No third-party offtakers or alternative permit schemes are permitted. • CFE represents the asset in the MEM.
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