Energy Advisor Publishes Comments from Dino Barajas and Eduardo Canales on Mexico’s Power Sector Reforms

Akin Gump cross-border transactions partner Dino Barajas and oil and gas associate Eduardo Canales were quoted by Energy Advisor in a featured Q&A on the topic “Are Mexico’s Power Sector Reforms Finally Paying Off?.”

Energy Advisor framed the question in terms of several developments in Mexico’s energy space, including the publication of the country’s annual clean energy report, which noted that a fifth of its energy came from clean energy sources in 2015, and the increase in power purchase agreements signed by foreign companies with Mexico’s Federal Electricity Commission.

In response to the question of the mix of clean energy in Mexico’s power matrix and what the government may have missed in its calculations, Barajas and Canales noted that Mexico has been at the forefront in design and enactment of clean energy policies, noting, “It was one of the first countries to confirm the COP 21 Agreement on Climate Change and was the first developing country to deliver its Intended Nationally Determined Contributions.”

They noted, however, that these policies and commitments would not mean much without a shift in the Mexican energy industry. They explained, “The Ley de Transición Energetica, or LTE, was Mexico’s concrete response to its commitments during COP 21. The LTE included ambitious goals such as calling for electricity in Mexico to come from clean energy sources at an increasing rate: 25 percent by 2018, 30 percent by 2021 and 35 percent by 2024. These clean power generation thresholds are challenging targets, especially because Mexico has historically relied on coal and hydrocarbons to fuel its power generation.”

Barajas and Canales pointed to increase in competition in the power generation sector since the Peña Nieto administration’s 2013 energy reform and the ensuing regulatory changes and said, “As part of the LTE, the Energy Ministry (SENER) closely monitors the clean energy sector and prepares quarterly reports with its conclusions. In its latest report, SENER said that in 2015, almost 63,000 gigawatt-hours, or about 20 percent of electric power in Mexico, was generated by clean energy sources, a 6 percent increase year-on-year, and that installed power generation capacity had already reached 28 percent. “

They closed by noting that, although Mexico is headed the right direction to achieve its clean-energy goals, much remains to be done. They said, “While clean energy sources such as wind and solar pose their own challenges, other countries around the world have successfully developed and incorporated technologies into their everyday lives by creating economic and social incentives for investors, generators and the public in general. Mexico’s clean energy success is in the works, but such efforts will only be sustainable in the long term to the extent that public and private actors collaborate to create and implement innovative and environmentally responsible solutions to the energy challenges that lie ahead.”