Report Launch: Clean Energy Cost-Savings: A Study of Mexico’s Federal Electricity Commission (CFE)

Since the Lopez Obrador administration took office in December 2018, there have been a series of decrees and interventions in Mexico’s energy sector. In September, the administration sent an initiative to Congress aimed at amending the constitution and completely restructuring the electric sector and market.

The administration has set forth specific criticisms of the prevailing market structure, particularly with regards to the Comisión Federal de Electricidad (CFE).

Specifically, the Lopez Obrador administration and director general of CFE argue that the 2013 energy reform and electric sector industry law and its power market elements have obligated CFE to acquire clean energy and the corresponding renewable energy credits (CELs in the parlance of the Mexican market). This structure and the market-based mechanism of long-term auctions have caused CFE to incur additional losses in their view.

In an effort to enhance understanding of these issues, we conducted a fact-based economic analysis of current policies and regulations. Our report, “Clean Energy Cost-Savings: A Study of Mexico’s Federal Electricity Commission (CFE),” provides an assessment of the impacts both in terms of CFE’s financial outlook and emissions profile.

The purchase of clean energy through the auctions in order to obtain the corresponding CEL certificates has allowed CFE to avoid variable generation costs at its thermoelectric plants, which would have been far higher than the cost of purchasing the clean energy.

Indeed, the amount saved can be estimated based on fossil fuel use avoided and cost of the emissions that would have been generated, as we review in detail.

Moreover, in an effort to highlight economic and environment health impacts at a regional level, our report sets forth specific case studies of La Paz, Baja California Sur and Salamanca, Guanajuato where CFE power plants are located.

Join us on November 18 at 11am PT/1pm CDMX/2pm ET for our report launch webinar and discussion featuring principal authors Francisco Xavier Salazar and Francisco Barnes.