Mexico’s New Administration Outlines Private Sector Participation in the Energy Sector
President Claudia Sheinbaum, who recently took office, announced her administration’s plan to open private sector investment in power generation and clean energies, a shift from the prior administration of López Obrador where private sector participation was greatly limited. On November 6, Secretary of Energy Luz Elena González outlined Mexico’s plan, consistent with its National Strategy for the Electricity Sector, to allow private sector investment in the energy market, with the following schemes:
- Concessions granted through a bid process to deliver energy and capacity directly to the Federal Electricity Commission (CFE).
- Private sector participation in the totality of the electricity generation market will be limited to 46%, with the majority generation of 54% corresponding to the state company CFE.
- The private sector will be allowed to participate in the generation and sale of electricity upon completion of transparent bid processes and can demonstrate compliance with the reliability and backup requirements of the National Energy Plan.
Additionally, any private investment in clean energies (solar or wind) will have to comply with the Renewable Grid Code and with its secondary regulations.
Sheinbaum´s energy plan estimates private sector investment to be between US$6-9 billion and electric generation in the range of 6,400 MW to 9,550 MW during her six-year term.
Additional regulations were announced by the Secretary of Energy related to self-generating homes and small businesses, which will not be required to obtain a license as long as they do not exceed 700 kW.
Foley’s Energy practice will monitor the energetic plans that involves the private industry participation in the electricity market which will be emitted by the current federal administration.
Special thanks to Patricio Sandoval, a law clerk in Foley’s Mexico City office, for his contributions to this article.
