ENERGY SOVEREIGNTY

It has not been the easiest of years for renewables in Mexico. With the intention of giving back power to state-owned companies like Pemex and CFE, the current administration has put a halt to an overhaul of the outdated energy market started by the previous administration. Ideas to diversify the power market and attract foreign capital to clean energy in Mexico through auction bids begun under the previous president are now on the scrap heap. To start, power auctions were canceled soon after President Andrés Manuel López Obrador assumed power in 2018 and the National Center for Energy Control (CENACE) announced in April 2020 that all ongoing pre-operational testing of wind and solar electric generation projects were to be suspended until further notice, although an injunction could allow previously approved projects to go ahead. All of these actions are part of a policy to push for more energy sovereignty, but took many by surprise, especially considering average winning bids offered some of the lowest prices per kilowatt hour in the world. Despite the political unrest, the private sector continues to welcome new energy options to the market. A leading example is Deacero, a steel manufacturer that also happens to be one of the largest energy consumers in Mexico. The company decided to throw its hat into the ring by becoming the first Mexican company to participate directly in the wholesale electricity market in Mexico. “I noticed that there were many opportunities to go beyond what we have done in the company before by leveraging all the opportunities provided by the energy reform,” said Katya Somohano, Energy Director of Deacero Power. Along with the increasing interest from Mexico’s largest consumers of energy to diversify sources and reduce costs, the wealth of resources the country has in wind and solar energy continues to be undeniable. Players are outspoken about their commitment to have a long-term presence in the country. Referencing the growth of the company in Mexico over the last two decades, “The fundamentals for business have been in place for the past 20 years and are still in place, and our investments continue to be important for Mexico in the long run. Mexico is going through a difficult situation, though investments are even more important to overcome these difficult times," said Tania Ortiz, Director General of IEnova. However, if the administration continues to place arbitrary conditions on the progress of green energy, the patience of the market may soon come to an end, forcing players to look for opportunities elsewhere.