MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
(mixed) vehicles. As for the latter, two types of public-private participation modalities are provided: long-term production (energy is sold exclusively to CFE) or mixed investment (CFE participates directly or indirectly in at least 54% of the power plant). In addition, storage facilities associated with a power plant or those “isolated” – ie, operating independently to a load point or power plant – are considered generation assets and, therefore, require a permit from the CNE. From an environmental standpoint, the LGEEPA governs the requirements of the projects, including their environmental impact assess- ments and authorisations. Other federal laws may apply, depending on the specifications of the generation projects, such as those related to waste management, forestry land use and water resources. Local (state and municipal) environmental and zoning regulations may also be relevant and must be considered. Key project agreements – including Develop- ment Agreements, EPC, O&M, financing agree- ments, PPAs and EHAs – are subject to com- mercial and civil contract laws, which generally support freedom of contract and a choice of law doctrine. 3.2 Obtaining Approvals to Construct and Operate Generation Facilities Generation facilities are subject to several regu- latory requirements at the federal, state and municipal levels. The main governmental author- isations for the construction and operation of power generation facilities include the following. • Generation permit: facilities exceeding 0.7 MW of capacity require a generation permit granted by the CNE, the application for which
requires the submission of comprehensive technical, financial and legal documentation and information of the project. The LESE now mandates that generation permits align with the PLADESE, so permit applications for projects falling outside the scope of such plan may be denied. The process to obtain cur- rently takes from six to 12 months (depend- ing on the requests for additional information by the CRE). This timeline may change as a result of the enactment of the LESE and its regulations. • Interconnection agreement: although the grids of the NES are owned by CFE, CENACE oversees grid operation and interconnection procedures. Any interested party seeking to interconnect its generation facilities to the NES must follow a phased technical process administered by CENACE to determine the necessary grid reinforcement and intercon- nection requirements. Once the technical studies are concluded, CENACE directs CFE to execute the relevant interconnection agree- ment with the generation permit holder. • Market Participant Agreement: during the operational phase of the project, generation assets are required to execute a market par- ticipant agreement with CENACE to represent those assets in the WEM. Financial guaran- tees shall be posted in order to perform sales of energy products in the WEM. • Environmental Impact Authorisation: the construction and operation of power genera- tion facilities require a federal environmental authorisation from the Ministry of the Environ- ment and Natural Resources (SEMARNAT), which evaluates the environmental, safety and health aspects of the project. • Social Impact Authorisation: generation facili- ties are also required to obtain clearance from SENER on the social impacts of the project. Filing this application is necessary to obtain
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