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Mexico’s first long-term electricity auction

by Jed Bailey | April 15, 2016  [wpdm_package id=2664 template=”link-template-button.php”]

 

During the last week of March, 2016 Mexico held the first auction for long-term power contracts under the new market system. The auction successfully attracted a large number of participants and ultimately awarded contracts covering roughly 85% of the electric energy and clean energy certificates (CELs) that CFE sought to buy. The winning bids were highly competitive, offering electricity at just over US$31 per MWh and CELs at just under US$16 per certificate (equal to 1 MWh of clean energy), for a total price paid to the suppliers of roughly US$47 per MWh+CEL produced (at current exchange rates).

The auction was the first test of investors’ interest in Mexico’s new power sector structure. The strong results—in the number of participants, in meeting the requested demand, and in highly competitive prices—will certainly help establish the new market’s credentials and solidify the reforms that have been enacted to date.

This report analyzes the auction participants, the winning bids, and resulting prices.

 

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