“Private clean energy associations warned that they will go to national and international authorities to defend their rights and protect their investments.

The private electricity industry collided with the energy policy of President Andrés Manuel López Obrador after a regulatory change that will transform the course of clean energy in Mexico.

The disagreement began with the intention of the Ministry of Energy (Sener) to modify the rules for the delivery of Clean Energy Certificates (CELs) to power plants. The legislation established with the Energy Reform during the PRI six-year period of Enrique Peña Nieto pointed out that only plants built after August 11, 2014 could issue them, with the aim of promoting new investments in green energy.

But the change made by the government of the so-called “Fourth Transformation”, effective since last Monday, October 28, allowed the issuance of said titles to the 60 hydroelectric plants and a nuclear power plant of the state-owned Federal Electricity Commission (CFE).

The agency responsible for energy policy justified its decision before an alleged “commercial speculation” on these certificates, as the prices of electricity produced with clean energy increased, and therefore, the electricity rates for end users also, according to the agreement published in the Official Gazette of the Federation (DOF).

But private industry differs from this statement. Electricity that comes from clean sources for CFE Basic Supply was 63% cheaper than the energy that the state company acquires in the Wholesale Electricity Market (MEM) – including the cost of CELs – and cheaper than that that comes from contracts bequeathed with CFE Generation at 37%, according to data published by the Energy Regulatory Commission (CRE) in the Report on the calculation of tariffs, cited by the electric associations of private companies.

“These benefits cannot be obtained with the agreement imposed,” declared the Mexican Wind Energy Association (AMDEE), the Mexican Solar Energy Association (Asolmex), the Mexican Hydropower Association (Amexhidro), Cogenera Mexico and the Mexican Academy of Energy Law (AMDE) in a joint statement.

The consequences

“The modification published has several consequences that affect the development of the energy sector in the country, since this decision puts at risk investments – national and international – for more than 9,000 million dollars (mdd) that were anchored in the original rules of the CELs, ”the Business Coordinating Council (CCE) said in a statement.

The business group considered that the decision deforms the “only legal mechanism” to meet national clean energy goals of 35% by 2024 and international commitments to mitigate pollutant emissions.

In the preliminary draft of the agreement, more than 60 private actors and organizations asked the National Commission for Regulatory Improvement (Conamer) to open the regulatory impact analysis procedure so that society could participate in the discussion of a topic of great relevance for both investments already carried out as for the economic and environmental future of Mexico, but it freed Sener from carrying out a more exhaustive analysis of the impacts that the measure would have on the sector.

On October 10, 2019, the president of AMDEE, Leopoldo Rodríguez, explained in a workshop with means that if this change took effect, the price of CELs would be virtually devalued to zero, and even put at risk future renewable projects, as The power of the plants is usually sold together with the Certificates in long-term contracts.

On the afternoon of October 29, the CFE CEO, Manuel Bartlett Díaz, mentioned that, given the presidential instruction to generate energy, the company will promote clean energies, but “will take precedence over energy sovereignty” to prevent it from ending up subsidizing to third parties, because “the CFE does not have to subsidize private generating companies”.

Even the head of Sener, Rocío Nahle García, congratulated Bartlett for the changes promoted in the company, “in compliance with a State policy that seeks to strengthen the Mexican energy sector” and highlighted the long work done to enable power plants generating the CFE issue the Certificates.

The electricity industry considered that these changes contradict basic principles of investment protection, protected not only in the Mexican legal framework but also internationally, and involve direct economic damage in private investment projects.

“We will go before the competent national and international authorities to defend our rights,” the electrical associations warned in the joint document.”

Source: https://www.forbes.com.mx/industria-privada-choca-con-la-4t-por-regulacion-de-energias-limpias