22 November 2017
On November 22, 2017, CENACE (the Mexican National Energy Control Center), announced the winners of its third auction for long-term power purchase agreements for clean energy production. 16 projects (out of 46), won tenders for the sale of electricity, capacity and clean energy certificates, with an emphasis on solar (55.35% of electricity) and wind projects (46.65% of electricity), and with an average bid price of USD20.57 per MWh.
In this auction, the Mexican Government introduced a regime intended to modernize the Mexican energy market. Under the new regime, the PPAs awarded in each auction will be administered by a clearinghouse, which will be the counterparty to each PPA and act as an intermediary between a group of offtakers and a group of generators. In addition to collecting all payments from the offtakers, the clearinghouse will also (i) administer the so-called "safety nets" - guarantees provided by the offtakers to backstop their payment obligations (cash collateral, performance bonds and a reserve fund)- and (ii) have the ability to conduct bids to replace any defaulting offtaker.
Mexico's Third Auction: Strong Market Response to the New Regime