Reforma, Mexico City, January 9, 2023
By Diana Ghent
The federal government is blocking the generation of clean energy by private companies.
Renewable electricity projects are the most affected by the delays and rejections in the issuance of permits by the Energy Regulatory Commission (CRE) for new generation projects or modifications of existing projects. ...As of November 10, 2022, there were 65 permits pending which, if approved, would add an additional installed capacity of 5,559 megawatts.
In the past year, the CRE reviewed 55 permit applications...of which 33 private generation requests were denied. All of the requests from the private sector were for wind and solar projects.
Of the 22 approved permits, 19 were for public natural gas projects and one for a public renewable energy project. Two private applications were approved for companies to extract gas from oil fields and biomass with very little capacity.
Among those approved with the greatest capacity, those developed by the CFE [Federal Electricity Commission] stand out. These include the Puerto Peñasco solar park, the Pemex Dos Bocas oil refinery, and the Felipe Ángeles International Airport built and operated by Sedena [Secretariat of National Defense, i.e., the Army].
The list of pending renewable permits includes some that were submitted as early as 2019, before the pandemic was declared.
Since the current Administration began, the electricity sector has been slowed down with the cancellation of energy auctions and the brake on the development of private projects, mainly from renewable sources. This brake is justified on the grounds that the proposed private projects would negatively affect the reliability of the electrical system and would be detrimental to the dominance of the CFE.
Óscar Ocampo, coordinator of energy practice for the Mexican Institute for Competitiveness (Imco), said that the few private permits that are approved are for small generation projects.
"If we look at the permits that are not from the Government, they are about the generation of 10 megawatts or less, like for a sugar mill. They are very small permits, and despite the demands of the T-MEC [Treaty Between Mexico, the United States and Canada], there is no change in policy or greater opening , and that seems to be the route the government intends to follow.
"These project cuts in 2022 make this another lost year for the energy transition and the expansion of installed capacity in Mexico," he said.
If the pending permits were to be approved, those just for wind energy would add another 5,800 megawatts [to Mexico's electricity network], and it could come into operation very quickly.
Some 800 megawatts would come from projects that have already been completed but that require some kind of authorization for their entry into commercial operation. The other 5,000 are already in advanced stages of development and could be completed quickly if it were decided to open the sector, according to data from the Mexican Wind Energy Association.
Paolo Salerno, a partner of Salerno y Asociados, explained that the brake on new projects is a political position that has been maintained throughout the term of the López Obrador administration and that it affects not only the project developers, but also foreign companies that want to establish themselves in the country and who require reliable energy.