Mexico publishes draft rules for 3rd electric power auction

Mexico's energy ministry has published the draft bidding rules for the country's third electric power auction.

The definitive rules are due to be published by June 27 and auction winners are scheduled to be announced by November 22.

This time around, unlike in the first and second auctions, held in March and September of last year, respectively, multiple buyers of electricity – not just state utility CFE – can participate. CFE is also due to offer generation capacity for sale. Plus, a clearing house will be established, as set out in the country's energy transition law. In addition, the auction will take into account regional price differentials, and there will be more flexibility regarding interconnection limits.

Presenting the bidding rules and calendar, energy minister Pedro Joaquín Coldwell said the changes to the auction format represent a move toward an authentic wholesale electricity market, with the entry of private firms as purchasers.

He added that the auctions allow power generators to guarantee their long-term operations by signing 15- and 20-year contracts, incentives for developers to invest in large-scale plants.

CFE chief executive Jaime Hernández Martínez said this is the first auction to be held since the CFE separated its six generation business units. Each of the units is due to submit offers at the auction.

The CFE will seek to procure clean energy and clean energy certificates, which will help the country meet its clean energy goals. Under current laws, 25% of power must be generated from renewable sources by 2018; 30% by 2021; 35% by 2024; 45% by 2036; and 60% by 2050.

The commercial operation start date for the projects awarded in the auction will be January 1, 2020, the national energy control center's (Cenace) director Eduardo Meraz Ateca said, the energy ministry said in a statement.

The schedule for the auction is the following:

– Publication of the definitive bidding rules: by June 27

– Publication of purchase offers: July 31

– Publication of technical sales offers: September 12-20

– Publication of economic sales offers: November 13

– Analysis of offers: from November 15

– Results announced: by November 22