Mexico makes conditions more flexible in its second electricity auction

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Mexico’s Secretary of Energy (SENER) presented on Monday draft guidelines under which projects will register in the nation’s second electricity market auction. In these are improvements to facilitate the process and make the payment system more flexible.

According to the timetable, definitive guidelines for participation will be published on June 20. On the first week in July Mexican public utility CFE will publish the bidders for energy, capacity and the new clean energy certificates which must be purchased to cover the nation’s electricity demand.

Mexican Energy Secretary Pedro Joaquín Coldwell has explained that the modifications in the second auction announcement are based on 2,000 comments from companies which participated in the first auction.

Among the improvements is a measure allowing more time to evaluate proposals. The process of evaluating bids will commence on September 22 and will conclude on September 29. With this, CFE’s National Energy Control Center (CENACE) will provide more time for evaluating the offers in the previous call, and there will be fewer possibilities of reproducing the errors in the first solicitation, wherein some winners were later rejected.

To ensure the rules of the auction, an elite group comprised of SENER, the Energy Regulator Commission and CENACE has been formed. This group will supervise and track the implementation of the auction. An office has also been created to address concerns by auction participants.

Among these new measures, greater flexibility for the payment process will also be introduced. While the payment of the UDI rate changes daily for winners of the previous auction, now it is a fixed rate. Bank references will also be valid for five days.

Another of the improvements introduced is greater detail in the boundaries of regions, so that the capacity of power zones is better identified with the three interconnection systems in México and price zones, which are ultimately equivalent to the 53 transmission regions identified in the Prodesen program.

Tools have been provided which detail the borders between each price zone. These zones are decisive in the evaluation of bids, as the expected difference between the marginal price in the each price zone and the average of marginal prices in the nation’s electricity grid is taken into account when comparing offers and considering the value of the electricity offered int he zone where it is delivered.

In the first national electricity auction, which was concluded in March, contracts were awarded for roughly 1.7 GW of solar PV projects. In total, three-quarters of the 5.4 terawatt-hours awarded in the auction corresponded to PV projects and the remaining one-quarter to wind plants. According to SENER, the price in the auction stood at less than US$48 per megawatt-hour.

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