No New Private Power Generation Project Submitted for Environmental Evaluation in Mexico, an Industrial Info Market Brief

According to weekly reports published by Mexico's Secretariat of Environment and Natural Resources (SEMARNAT), since last March no new private power generation project has submitted an Environmental Impact Assessment for evaluation to obtain environmental permits for construction and operation of newbuild capacity. During the period, the only power generation projects submitted for evaluation belong to state-owned utility Comision Federal de Electricidad (CFE) for the installation of peaking units and the construction of a grassroot combined-cycle plant in the northern state of Baja California Sur.

This is might be a result of the measures recently taken by the federal government against private investment in the energy sector aiming to reduce the participation of private producers in the electricity market and put CFE once again as the main player, with a goal of produce 54% of the electricity in the country by 2024. These measures include a resolution released by the wholesale electricity market operator CENACE by the end of April ordering the immediate suspension of all ongoing and coming commissioning activities of renewable plants, a new set of policy guidelines released by the Secretary of Energy with heavy restriction to the development of new renewable projects, limitations for the emission of new permits and even the prohibition for the construction of new projects on areas with congestion in the transmission infrastructure and increments on the fee charged to private producers by CFE for the use of the transmission and distribution infrastructure that reached values as high as 811%.

At the moment, there 120 active private projects for the construction or expansion of power plants in Mexico in different stages of planning, with an aggregated investment close to $23 billion; 102 of them are wind and solar photovoltaic projects, which seem to be the most affected type of projects. It's expected that many of them will be halted and even cancelled due to difficulties in obtaining permits and connection authorizations, or because of legal uncertainty might discourage private investors to move forward.