From its recently announced new regulations in energy, Mexico believes the country requires a more stable electricity due to the economic impact derived from the COVID-19 pandemic, and has decided to postpone the grid construction project for renewable energy, which is anticipated to create impact on the green energy sector that is worth US$6.4 billion, and has aroused commotion amongst investors and the industry.
The continuous spreading of the COVID-19 pandemic has accumulated 54K diagnosed cases and 5,666 deaths in Mexico, creating severe impact on people’s livelihood and the economy, though the Centro Nacional de Control de Energia (CENACE) has decided to announce a new regulation regarding the infinite postponement in all intermittent energy programs, testing, and grid construction for the purpose of elevating the stability of the national power system, which is bound to reduce private power plants’ release of fuel inventory and extend the lifespan of fossil fuel power plants.
As expressed by the industry association, the new regulation has impacted solar and wind power plants, where 28 units are on the verge of grid construction, and 16 units are currently in construction, with a total investment of approximately US$6.4 billion, which has led to numerous local Mexican and foreign investors’ attack on the government. The coverage of foreign media indicated that investment companies from Spain, Canada, and the US are currently appealing to the embassy, court, and arbitration panel.
This regulation has officially suspended all future renewable energy plans for Mexico. As commented by the Business Coordinating Council, the regulation is expected to impact the legal security of investment activities in Mexico, and may introduce consequences including unemployment and reduced confidence for investors. In addition, the council also pointed out that a whopping US$30 billion of investment will be affected by such regulation; it not only believes that the regulation discriminates renewable energy, but also criticizes the government for increasing the electricity prices in Mexico just to ostracize private electricity providers.
Exorbitant electricity prices have always been the crux of Mexican entrepreneurs. According to the data of Global Petrol Prices, each kilowatt of residential electricity was US$0.068 (approx. NTD$2.04) in September 2019, and US$0.138 (approx. NTD$4.13) for industrial electricity. Initially hoping that renewable energy can be developed from the abundance of sunshine and wind, the sluggish progress in infrastructure construction such as power transmission has manifested relatively insignificant results.
Andres Manuel Lopez Obrador, current President of Mexico, might prefer fossil fuel power and state-owned electricity over renewable energy. Since becoming the president on December 1st 2018, he has cancelled on renewable energy bidding, reduced on green energy subsidization, and suspended the bidding on private petroleum exploration. A video uploaded on Twitter in April shows Obrador criticizing wind turbines, which he believes only produce mere power, and that they obstruct the natural landscape, along with the fact that they are all privately owned.
(Cover photo source: pixabay)
