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Mexico’s solar energy boom

Tuesday, October 4, 2016

Mexico last week awarded contracts for 8.9 terawatt hours a year of electricity from renewable generators, mostly solar, or enough to provide power equivelent to some 3% of current output.

The auction was the second this year, as part of the launch of a wholesale electricity market.

The average price of $33.47 per megawatt hour was well below the $60 maximum set by the Comisión Federal de Electricidad, the country’s main distributor, and is among the lowest prices reached at the international level, according to Mexico’s Energy Secretariat.

Winners include Enel, Engie, Acciona Energy, Iberdrola, Zuma Energia, IEnova, OPDE, Tuto Energy, Grenergy, X-Elio Energy and Fotowatio.

An auction held last March, which resulted in an average price per megawatt hour of $41.80,  was the first in which private companies could bid for the right to sell renewable energy under long-term contracts, starting in 2018.

The auction resulted in the award of 1,720 MW of capacity in wind and solar projects.

Major awards included Enel with 992 megawatts, SunPower with 509 megawatts, and Jinko Solar with 241 megawatts.

The state for decades had a monopoly in power generation.

Mexico wants to use renewable sources to generate at least a third of its electricity, including hydro and nuclear power, by 2024.

Solar was the big winner in the opening of the sector, with over half of the contracts in the second auction, and three quarters of the total in the first.

Wind power was second.

Mexico will require investment in electricity of $131 billion between now and 2030, including $15 billion in transmission lines, according to government sources, with the private sector eligible to participate in the process.