Mexican Regulator Publishes Report On Clean Electrical Energy Sector

It is worth mentioning that this analysis was prepared prior to the approval and publication of the recent reform to the Electric Industry Law (LIE, per its initials in Spanish), published in the Federal Official Gazette on March 8, 2021, which, from COFECE’s perspective, eliminates the conditions required for competitive dynamics in the electricity market.

Even before the reform to the LIE, the document estimated that Mexico would not achieve the 35% clean energy generation by 2024 committed to under the Paris Agreement, reaching 29.8% in a conservative scenario, that is 5.2 percentage points below the goal. With the reform, it is foreseeable that there will inevitably be an even more pronounced non-compliance scenario with regard to the committed goals.

The above, because the achievement of the environmental protection objectives set by Mexico in electricity matters was anchored to the existence of a competition dynamic as a means to generate electricity efficiently at the lowest possible social costs, including environmental costs. Given the technological changes in this industry, the least expensive electricity generation is usually precisely the one that comes from cleaner sources.

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