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Energy policy reform makes Mexico most attractive power market for investors

Geothermal installations of CFE at Los Azufres, Mexico (source: jeeperos.com)
Francisco Rojas 4 Mar 2015

The Mexican energy reform is that it allows for power generation and trade among private operators, encouraging the use of renewables by awarding clean energy certificates and boosting foreign investment.

Mexico seems to be the hottest place to invest at the moment, according to the latest research done by BNAmericas.

In a recent post in Navigant Research, “According to some estimates, Mexico will add 66 GW of capacity to its power grid over the next 15 years, with investments in renewables potentially reaching $90 billion.” This is obviously great news, both for investors and for the country. The origin of this increase in attractiveness can be traced down to the new energy policy that Mexico has in place since last year. The key benefit of the energy reform is that it “allows for power generation and trade among private operators while taking the regulatory function out of the hands of state power company CFE.”

The same source states that the “energy sector reforms are designed to enable private firms to sell electricity to commercial and industrial consumers, as well as partner with CFE to finance, build, and operate transmission and distribution infrastructure. Private sector companies can participate through an open permitting process for independent power producers and self-supplied and combined heat and power (CHP) facilities that are typically located at industrial plants. Ultimately, these changes are designed to create a more competitive electricity market, according to Fitch Ratings, and to encourage the use of renewables by awarding clean energy certificates.”

Creating a more competitive market takes some of the stress off of private investors that now see Mexico as one of the best regions for investment.

Source: Navigant Research