Mexico's Federal Electricity Commission (CFE) faces an unprecedentedly competitive selection process following the submission of 222 completed projects totaling 37,749 MW by more than 80 development companies. This oversupply is redefining traditional award criteria, as the call for bids under the mixed investment scheme has an initial target of 7,500 MW , implying a pressure exceeding 580%. "Considering the oversupply received, a determining factor in whether or not the private proposals are approved has to do with permits and construction approvals," warned Arturo Carranza, Director of Energy Projects at Akza Advisors , in an interview with Energía Estratégica .
"Those projects that have permits can be built and become operational in shorter times, thereby helping to guarantee the country's energy needs," he added.
Analysis of the regulatory progress of projects confirms a significant gap between mature initiatives and those in early stages.
Of the total number of completed registrations, only:
- 105 projects have an MIA or are in process (041%)
- 116 projects present MISSE management (045.5%)
- 125 projects have interconnection studies (049%)
- 91 projects have none of these three advances (036%)
Developments that already combine environmental viability, grid access and land definition significantly reduce uncertainty and shorten timelines.
Within this universe, companies such as AES Mexico, Atlas Renewable Energy, Invenergy, Gemex, Solarig or Cúbico concentrate projects with different levels of progress, including cases with authorizations already resolved or in advanced stages, which positions them better in the evaluation process.
Among the most advanced developments are, for example, the Atria Wind Farm II (259 MW) and Atria Wind Farm 1 (140 MW and 112 MW) wind farms of AES Mexico in Nuevo León, which already have conditional environmental authorization and resolved interconnection permits.These are in addition to the company's Durango Solar Park (270 MW and 150 MW), which has full compliance with permits, studies and land definition.
In addition to initiatives such as México Lindo Solar PV I (65 MW) by Energía Aljaval in Coahuila, as well as Vega Energy Project (58 MW) by Reden in Nuevo León.
Also included are highly mature projects in the north of the country, such as Thermion's Energéo Los Molinos (171 MW) in Tamaulipas, Grupo Simsa's Energía Solar Alaia II (180 MW) in Chihuahua, and projects by Solarig (72 MW) and Atlántica (200 MW). The shift in logic compared to previous schemes is fundamental to understanding the current market behavior, since during the electricity auctions implemented after the energy reform, the price of energy was the primary factor in awarding contracts.
However, that model was interrupted in 2019 with the cancellation of long-term auctions , leaving the sector without a competitive public bidding mechanism for several years and even facing political and regulatory uncertainty during the López Obrador (AMLO) administration. This largely explains the "avalanche" of projects seen in the current call for bids, where private capital has once again found a concrete opportunity to participate. "Electricity auctions were designed to minimize electricity costs.
"In the case of the call for bids for mixed investment generation, the objective is to expand the generation capacity in the national electricity system in the shortest possible time and at the lowest cost for the Mexican State," the specialist noted.
In this new paradigm, the evaluation incorporates factors such as bankability, the level of permits and the need for reinforcement works in the network, which directly impact execution times and costs.
"Other important elements for the allocation and approval of proposals are related to how attractive the projects are from a financial perspective and how much reinforcement work they include so that they can connect to the grid and become operational," Carranza warned.
"To the extent that a project includes a significant number of reinforcement works, it becomes costly and less attractive in financial terms," he added. The geographical variable will also impact the results of the process, particularly on price formation and regional competitiveness. According to the specialist's analysis, peninsular regions like Baja California and Yucatán will tend to register higher prices , while areas like the northeast and northwest could show more competitive conditions.
“It is important to understand that the logic that will ultimately determine whether a proposal is approved or not has to do with permits and construction approvals, project bankability, and network reinforcements,” Carranza emphasized. In terms of market structure, the design of the call for proposals anticipates a distributed allocation among multiple actors, capabilities, and technologies, avoiding excessive concentration. This is based both on the foundations of the process and the diversity of participants, and it aligns with the need to diversify execution risks in a context where the priority is to incorporate capacity quickly and reliably.
"International developers will be able to contribute the technical and financial capacity to execute the projects," the consultant noted.
And it is worth remembering that a significant portion of the companies that participated in the call correspond to global players, among which Cox, EDF, Atlantica, EDP, Opdenergy, Trina Solar and BayWare stand out, which raises the competitive level of the process.
"It is likely that the labor and supply markets will adjust, making it more expensive to hire skilled talent and access specialized inputs," noted the Azka Distributors representative.
"Today, companies are starting to show interest in the sector again."
Although cautious, this interest is linked to an irrefutable fact: the energy market is very attractive.
"The sale of electricity, whether to the main supplier or between private parties, is and will continue to be a clearly profitable activity," Carranza concluded.