Mexico to award longer PPAs under energy auctions, specific scheme for renewables

The final rules of the Mexican electricity market published on Tuesday in the Mexican official government journal establish longer PPAs for projects and a specific supply category for clean energy projects awarded in future national energy auctions.

Long-term PPAs will last 15 years and clean energy certificates obligations will have a duration of 20 years. Earlier this year the government proposed PPAs of only up to ten years in duration.

Longer PPAs was one of the requests submitted by the solar sector to the government. The local solar association Asolmex asked the government for at least 20 year or longer contracts.

Renewable energy producers will be offered specific conditions for the supply of electricity under long-term PPAs. The rules establish a category for the supply of energy aimed for intermittent clean energy sources.

The auctions will be a part of an electricity market which is being introduced with the energy reform in Mexico and will start to operate at the beginning of next year.

Successful projects under the scheme are to commence operations about two years after the auction date. Specifically, standard starting operation date is on the first day of the third year after the auction has been launched.

Energy auctions for long-term supply will take place every year. Additional auctions under altered PPA and technology conditions could be introduced in the future as required.

First auction for this year

Mexico’s Secretary of Energy Pedro Joaquín Coldwell announced last month that the first energy auction is to be launched in October 2015 and the results are to be published in March next year. The auction is expected to be open to renewable energy projects.

Several renewable energy companies like Sowitec and Sunedison have expressed their interest in participating in the auction.

Further details about the auction are yet to be published. Sub-secretary of Electricity César Emiliano Hernández Ochoa said on Tuesday, during the announcement of the rules of the electricity market, that details about the auctions and the operation of the market will be put into consultation in September in published market manuals.

35% of clean energy in 2024

Mexico has a goal of 35% clean energy by 2024. This target, that is estipulated in Mexico’s renewable energy law, doesn’t establish an specific goal for solar energy.

Solar energy installation to date in Mexico is of about 150 MW and government forecasts, published in the grid program Prodesen released last month, point to 1.8 GW of solar energy to have been grid connected by 2029.

However to date about 8 GWof solar projects have been awarded permits from the Mexican Energy regulator. Alone this year, the authorities have greenlighted about 5 GW of solar projects.

The September edition of pv magazine includes a feature article about Mexican electricity market reforms and an interview with Sowitec’s Rosa Tarragó discussing the prospects for solar.