Cox Energy upbeat on Mexico after rejection of energy reform

Mexico-based PV solar player Cox Energy America reports that 1Q22 generation sales to private off-takers are higher than in full-year 2021 and it is upbeat on its sales forecasts through 2024 now that the looming legislative danger of sector reform appears to have been shelved.

“We have more than 500MW of opportunities in Mexico, so we decide this year how the situation – taking into account distribution – evolves when we start launching these projects, developing them, initiating the construction,” said Cox Energy America CEO José Antonio Hurtado in a quarterly results call with investors.

Hurtado, laying out guidance in the call, with PV projects popping up in Chile, Colombia and Central America, said the Mexican legislature’s rejection of the constitutional reforms means the company's power purchase agreement (PPA) sales model can move forward in the country.

He added that with the “positive landscape in Mexico’s energy regulation ... we're more confident about starting to look for new growth opportunities in the country,” though the company is watching legal developments closely. 

“This is just the starting point,” in a high-margin business, said company founder Enrique Riquelme Vives. For 2022, he said, “The main idea here is to break even or be slightly positive … and then create the right fundamentals and platforms to get to the real numbers of this business by 2023-2024.” 

The positive outlook is a refreshing reminder of the opportunities for renewables in Mexico, despite the negative domestic policy interventions that have dominated headlines under the administration of Mexican President Andrés Manuel López Obrador (AMLO), who assumed power in December 2018. 

Executives reported consolidated revenues of 79.5mn pesos (US$3.9mn) for 1Q22, up 230% over full-year 2021 in Mexico, with net profit at a modest, but positive 2.5mn pesos. 

Hurtado sees Ebitda jumping into the black in 2022, reaching 10mn pesos “or at least a half million dollars” in Mexico by year-end.

“We have signed at this moment more than five contracts with big customers and we expect to start new contracts this year,” he added.  

Reporting on opportunities, Cox said it has identified 25 additional projects in the early stages of development, which reach a combined 1,098MWp (peak megawatts).

These include nine projects identified in Chile for 319MWp, eight in Colombia amounting to 198MWp, five in Panama for 191MWp and three in Mexico for 390MWp, noting that the strategy on the latter is focused on the spot electricity market and supplier hedging on PV availability.