What's behind AMLO's energy sovereignty push?

President Andrés Manuel López Obrador’s (AMLO) support of Pemex and public utility CFE raises doubts about his goal to lead Mexico to “energy sovereignty,” at least if the term implies greater domestic production.

“When he began to use the language of energy sovereignty, we thought that might provide an opening to talk about an expansion of renewable energy in Mexico,” Duncan Wood, director of the Wilson Center’s Mexico Institute said at a recent webinar, co-hosted by the Institute of the Americas.

Northern Mexico features a solar belt with unrivaled solar/PV generation potential, while a wind corridor in the south could help stabilize energy provision around Oaxaca. 

A recent spate of regulatory changes and bureaucratic roadblocks, however, has throttled the renewables sector, and could crimp these regions.

Grid operator Cenace tried to stop testing at nearly-finished wind and solar parks, preventing them from coming online, but courts halted implementation in May. Then energy regulator CRE authorized CFE to hike rates on legacy self-supply contracts.

Considering these actions, “we’ve come to really question that: Whether he really means energy sovereignty, or whether he just means control, government control over the energy sector,” Wood said.  

This month, the president started to combine his anti-corruption drive with scrutiny of past regulatory decisions, suggesting more changes will come.

And in early June, senator Ricardo Monreal of AMLO’s Morena party floated plans to merge energy regulator CRE, telecoms regulator IFT, and competition watchdog Cofece. 

Last week, AMLO indicated he’d support the move, because it could save money and because the regulators “authorized all of the fraudulent operations” in recent years. 

A public backlash, however, led Monreal to postpone introducing the plans. Still, like other measures, the merger plans signal the government's intent.

“Time and time again, when push comes to shove, this is really about the centralization of control in the hands of the administration, in the hands of Pemex, in the hands of CFE,” Wood said.