The Biden Administration to Establish a New Relationship with Mexico Where Clean Energy Sector May Play a Key Role
On April 29, 2020, Mexico’s electricity grid operator (CENACE) indefinitely suspended testing and grid connections for renewable energy plants. Citing COVID-19-related concerns relative to the “intermittent nature of renewables,” the suspension barred renewable energy plant development as an unreliable grid threat “until further notice.”[1] On May 15, in support of CENACE’s decision, Mexico’s Minister for Energy (SENER) issued an executive agreement[2] to modify Mexico’s energy policy. The policy modifications[3] limited clean-energy production, imposed additional operational requirements for solar and wind projects, and authorized CENACE to reject new plant study requests.[4]
On February 3, 2021, Mexico’s Supreme Court ruled that the regulatory changes in the country’s electricity market were unconstitutional. According to analysts, this ruling increases the risk of a presidential bill modeled on similar lines being overturned by the courts if it gets congressional approval. Additionally, a group of bipartisan U.S. lawmakers claimed that the policies violate the U.S.–Mexico–Canada free trade agreement. As a result, neither the CENACE nor SENER directives remain in effect.[5] The recent victory of President Joe Biden may help the U.S. establish a new relationship with Mexico’s energy sector, as Biden has outlined foreign policy changes to promote clean energy investment in Mexico.
A Brief Overview of Mexico’s Energy Policies
Timeline of Events[6]
Dec. 3, 2018
The Mexican government suspends the fourth energy auction one day before bids are due, citing a change in staff and the need to review the objectives and scope of the auction.
Jan. 29, 2019
Two major transmission projects, the Baja California and Yautepec-Ixtepec transmission lines, are canceled.
Feb. 1, 2019
SENER announces the cancellation of the planned fourth energy auction.
Oct. 28, 2019
SENER publishes a decree to modify the criteria for recognition of clean energy certificates (CELs). SENER seeks to allow older clean generation assets to be certified. The changes are rejected, as CELs were designed for new renewable power to help decarbonization objectives.
Dec. 24, 2019
The CFE drafts a proposal that seeks to increase transmission costs for independent private generators.
Feb. 13, 2020
The CRE proposes rule changes to the National Commission for Regulatory Improvement (CONAMER), seeking to prevent legacy projects from making modifications to their permits.
April 29, 2020
CENACE issues a resolution to generators on May 1, suspending all pre-operative connection tests for wind and solar power plants. A few weeks later, SENER publishes a new policy imposing several barriers on renewables due to intermittency and threats to grid stability.
June 10, 2020
The CFE announces an increase in fees to high- and medium-voltage rates paid by private companies for the use of transmission and distribution lines (tarifas de porteo).
Aug. 12, 2020
The CRE rejects the publication in the Official Journal of the Federation of agreements regarding distributed-generation rules, including regulations for small generators and the addition of storage to PV projects. The CRE will prepare modifications to distributed-generation rules.
