Mexico selects 16 bidders in 3rd power auction

Mexico has selected 16 offers in the preliminary results of the country's third long-term electric power auction, with the definitive results scheduled to be announced on November 22.

In an event on Wednesday evening, the energy ministry and energy control center Cenace announced the selected offers out of a total of 46.

The projects will have total generation capacity of 2,562MW from 15 new power stations requiring estmated investment of US$2.37bn over the next three years.

The preliminary results produced highly competitive prices in comparison with the second long-term power auction in September last year, when prices were around 30% lower than in the first auction held in March 2016.

Average clean energy prices, for power plus CECs, were US$20.57/MWh, 38.5% lower than in the second auction, while the price for power was US$36,253/MW/y, which are among the lowest prices achieved worldwide, according to the government.

Chile's most recent auction on November 2, for example, saw prices pushed down to a record low of US$32.5/MWh.

Mexico's prices translate into a saving of 65.7% for clean energy and 34.3% for power with respect to the maximum prices for purchase offers, which were US$60/MWh for clean energy and US$55,200/MW/y.

The auction was declared a success, with 5.49mn MWh, 5.95mn clean energy certificates (CECs) and 593MW/y of power, covering 90.2% of the energy to be purchased, 97.8% of the purchase of CECs and 41.9% of the purchase offer of electric power, according to the authorities.

The prices offered at the auction represent a saving for state utility CFE of more than 27.3%, which means that a subsequent auction round will not be necessary.

As with the second auction, solar was the dominant clean power source, accounting for 55.4% of the energy to be sold and 58.3% of the CECs to be issued, while wind power accounted for 44.7% of the electricity and 41.7% of the CECs.

Gas was the dominant power source for firm energy, with 84.4% of the total to be sold, followed by wind with 13.9% and solar with 1.69%.

Clean enegy acquired in the fixed capacity auction represented 1.78% of the total annual generation, which the authorities described as an important step toward Mexico achieving its clean energy goals set out in the energy transition law, including 35% from clean sources by 2024.

The offers selected at the preliminary stage were: