Does Mexico’s reforms align with renewable energy picture? 

By the end of 2018, Mexico's oil and gas industry will be open to private investment from domestic and foreign companies across the value chain. Mexico is a model for countries that wish to stimulate investment, innovation and competition across their energy sectors. 
 

Goals fulfilled through auctions

Mexico’s market for clean energy certificates (CECs) take place this year transforming a law on renewable energy. To meet its goals auctions for energy, capacity and CECs with long-term contracts and stability for investors. The auction was developed to capture values of various technologies by location and production profile. Projects in higher-price areas or deliver power at peak times can secure higher revenues and more investment. This differentiated auction system is described by the IEA as “one of the most sophisticated procurement mechanisms for renewable energy…” whose reach and scope “represent the most ambitious energy system transformation worldwide in recent years.” Indeed, the IEA considers Mexico’s electricity market reform as “one of the most ambitious, comprehensive and well-developed reforms undertaken in the world since the 1990s.” Mexico is noted for specific generation share allocated to both wind and solar power and committed to subsidy-free competition between technologies. Analysts predict that the market will add around 15 GW of additional solar PV by 2022. The auction system gives a boost to both solar and wind energy. The prices align with resources available to Mexico and low utility system costs.
 

The secret ingredient are auctions 

Mexico's latest auction saw the world’s lowest average price for solar in a regulated auction. This means tight margins for developers and natural gas push prices lower on the open market. The country attracted 44 foreign direct investment (FDI) projects worth $13.5 billion from the U.S., Germany and Spain. Its benefitted from a unique geographic and cultural position. By bringing its resources to the open market, it has contribution to falling prices overall. This overview of Mexico’s recent history shows is that the country represents the global industry in microcosm. Liberalized markets mean risks and  opportunities through  choices, everything from the weather to geopolitics and trade tariffs have an impact. But have the Mexican reforms has more influence?  The country’s success, its ambitious clean energy targets, fiscal incentives, and legislative stance have placed it among the world leaders in integrating climate change objectives into policy making. It has inspired other countries in Latin America to adopt similar benchmarks in their own efforts to reduce greenhouse gas emissions. Countries like Argentina followed the Mexican example in establishing its own clean energy requirements and revamping sections of its electricity market structures. 

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