On August 11th, Mexican President Enrique Peña Nieto signed into law landmark energy reform legislation. While media coverage focused on the opening of the nation’s oil and gas sector to foreign companies eighty years after nationalization, the legislation also included a number of significant changes to the electricity sector.
Secondary legislation in the package includes a new independent role for grid operator CENACE, requirements to procure renewable energy, enables companies to directly sign electricity contracts with renewable energy generators, and mandates the creation of a system of renewable energy certificates.
Overall it’s going to be a positive thing for renewables energy generally, and for solar in particular, says GTM Research Solar Analyst Adam James. One of the main reasons that is the case is that generation will now be procured on a competitive basis. It’s going to be a liberalized market where solar developers can come in as independent power producers and develop projects.
Additionally, there is language in the law that allows for competition between clean energy sources in different geographic locations at the lowest cost. James says that while the exact form of that will be determined by regulatory agencies, he expects the creation of a reverse auction system.