Frank Mercado reports that Mexico is preparing for its 2017 auctions, but in the light of heightened economic uncertainty in the country, a more sophisticated understanding of the market landscape will help bring to light important steps you need to take to maintain a profitable renewable energy business in Mexico as the country plans to invest $146 billion. Mexico independent grid operator, organized and coordinated the auctions, where it matched the buyers and sellers and offered ... 15-year power purchase agreements (PPAs) for energy, with 20-year contracts for clean energy certificates, allowed bidders to offer multiple combinations that include installed capacity, energy and the certificates. Result of the Auctions ... 5.5 gigawatts of renewable energy projects were approved at very attractive terms ... first auction (A1) - average pricing at $53 per megawatt-hour (MWh) for 17 winners, 2085 megawatts new installed capacity The first auction resulted in 17 winners committing 2085 megawatts (MW) of new installed capacity. To the government surprise it was heavily solar over wind (81% solar to 19% wind). In the first round the only buyer was the Comn. Federal de Electricidad, the government-owned utility.
Mexico currently has a mere 66 MW of solar PV operational, amazingly low for a country with such good solar radiation, while, in contrast, Central America already has exactly ten times more, a grouping of six countries where financing and topography is considerably more complex. Solar was so prevalent because of three (3) reasons: 1. solar pricing proved more attractive ... Enel, for example, ended up winning more than a third of A1 because it bid solar prices of about $35 per MWh, 2. price adjustments favored states like Yucatan and Baja California Sur, which have comparatively better solar radiation than wind resources, and 3. there were already a large number of solar developed projects ready to bid... a lot of pent-up solar demand.
Original URL: https://www.linkedin.com/pulse/state-mexican-renewable-energy-business-2017-frank-mercado
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