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SENER Implements Amendments To Guidelines For Granting And Allocation Of Clean Energy Certificates

Author:Mr Rogelio Lopez-Velarde, Jorge Jiménez, Amanda Valdez, Diego Campa and Daniela Monroy

On October 28, 2019, Mexico's Ministry of Energy (Secretaría de Energía) ("SENER") published in the Federal Register (Diario Oficial de la Federación) an order that amends the Guidelines establishing the Criteria to grant Clean Energy Certificates and the Requirements for their Acquisition (the "CEL Guidelines").

Back in 2014, SENER issued the first set of CEL Guidelines in order to foster and increase the renewable generation capacity in Mexico, as an implementing regulation of the new market of Clean Energy Certificates (Certificados de Energías Limpias) ("CEL") created by the Electricity Industry Law (Ley de la Industria Eléctrica) ("LIE"), which in turn liberalized the generation and marketing activities in the Mexican electricity industry.

The first CEL Guidelines contemplated the possibility of granting CEL to the so-called Preserved Power Stations, term used to designate the power stations of Mexico's national power utility company: Comisión Federal de Electricidad ("CFE"), which operated and delivered power to the grid prior to the enactment of the LIE; provided that such Preserved Power Stations (i) produced clean energy, and (ii) increased their power output through clean sources.

As part of the new administration's plans for CFE, SENER has introduced amendments to the CEL Guidelines in order to remove the conditions under which CFE was able to receive CEL with respect to its Preserved Power Stations; therefore, as of today, CFE will be entitled to receive CEL for each MWh produced by Preserved Power Stations through clean sources (including the energy output generated at the nuclear facility Laguna Verde and all of their hydros).

This would have a major impact on the CEL market and the value of these instruments in Mexico, since their offer would increase for all Load Serving Entities (Entidades Responsables de Carga) interested in acquiring CEL in order to meet their CEL requirements (currently representing 5.8% of consumption - increasing to 7.4% for 2020).

The constitutionality and legality of these amendments are questionable, Clean Energy Generators (owners of clean power stations operating after the enactment of the LIE) and private owners of preserved power stations (other than CFE) are likely the injured parties.

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