Mexico Energy Companies Plan Private Auctions to Boost Power

(Bloomberg) — Acoording to bloomberg.com, after Mexico’s National Energy Control Center canceled a widely anticipated long-term power auction almost five months ago, the frustration among private companies was palpable. Now, they are taking matters into their own hands — with the help of an upstart energy company formed by some of the power auctions’ original architects.

Mexico City-based Bravos Energia is launching new, private energy auctions and will release details in a week. The first auction is expected to attract private companies that would have participated in Mexico’s canceled long-term power auction, said Bravos founder Jeff Pavlovic in a phone interview on Thursday. The results are expected in December.

“The process will be more efficient, and will permit more megawatts” to enter the system, said Pavlovic. Bravos Energia will coordinate with electricity auction developer Aklara and plans to hold its private power auctions annually, with contracts ranging from five to 15 years. They will also include Clean Energy Certificates, Pavlovic added.

Pavlovic founded Bravos in 2017 with former colleagues in the energy ministry who helped design the power auctions launched by the previous government. That initiative was dealt a serious blow after Mexico canceled its fourth long-term power auction on January 31, calling for companies to show results from contracts already awarded.

Mexico President Andres Manuel Lopez Obrador has sought to strengthen the state’s grip on the energy market, devising rescue packages for national oil company Pemex and state utility CFE, while canceling bid rounds designed to lure private investment.

Now, private companies are seeking alternatives. Energy providers have already been growing their business in Mexico through power purchase agreements, or private deals to buy and sell power. The auction process will make this more efficient by having competition lined up for electricity generation, and diversify risks for consumers, potentially lowering the financing rate that banks will offer as a result.

“The sector had been very depressed for the first three months of the year, but now business is growing again, the sector is reorganizing internally,” said Sandro Tello, a manager at energy logistics company TIBA, speaking on the sidelines of a Bloomberg New Energy Finance event in Mexico City on Thursday.

Luis Zavaleta, Latin America Environmental Sustainability Director of PepsiCo’s foods division, said the private power auctions were a ”very good option” to meet the sector’s needs. “We have to see much more liquidity than there is now, and that means more supply from diverse sources,” he said.

Source: bloomberg.com

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