Mexico’s renewables market: competitive, but uncertain for now
Mexico’s once fast-growing wind and solar power market is coping with uncertainty due to regulatory changes announced since late April, but insiders remain committed to the country based on its long-term potential.
“Right now, we have a competitive market,” said Daniel García, senior business manager at Atlas Renewable Energy, during a webinar hosted by YouTube on Thursday, entitled LatAm Smart Energy Virtual Panel. But, he said in regard to legal certainty, “we’re passing through some uncertain times in various aspects.”
“We’re seeing a very complicated year because of a combination of factors, but Mexico has a regulatory framework to promote competition,” he said.
Since the onset of COVID-19, Mexico’s energy ministry Sener and grid operator Cenace have attempted to alter regulations that threatened to remake the power market. One solar park, El Llano, almost immediately stopped operations after the Cenance announcement, while dozens more late-stage renewables projects had their future cast in doubt.
The regulatory changes were put on hold in June and July, amid a welter of legal injunctions by Mexican courts in favor of impacted renewables companies and allied business groups.
The spat has brought attention to the dozens of renewables power companies operating in Mexico, but also the possible fragility of the 2013-14 energy reforms that opened up the country’s power market to them via a series of auctions.
One panelist acknowledged that the market had become “disorganized” amid the attempted changes to power sector regulations, which have played out amid lockdowns and, in some cases, operators have slashed capital expenditure for the year as they face recession.
Still, the worst appears to have passed and renewables companies are again eyeing completion of wind and solar parks.
As they prepare for more normalized business conditions, many operators are opting for methodical compliance with regulations.
Like in other markets, Mexico is undergoing a “period of transition”, where power companies that may have enjoyed flexibility in the past must be very scrupulous and careful in fulfillment” of regulations, Katya Minerva Somohano, director at Energía DeAcero, said.“
“It doesn’t mean that [the regulator’s] doors and channels are closed, what it means is that there are no shortcuts,” she said.