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Engie, Enel and Acciona Wind, Solar Plants Blocked in Mexico by Regulator -Bloomberg

Solar Panels (Daniel Rodrigues/Bloomberg) Energy regulator stops plants from operating amid permit delay. A dozen solar and wind plants await modifications to permits.

Amy Stillman, Bloomberg News

MEXICO CITY
EnergiesNet.com 07 14 2022

France’s Engie SA, Italy’s Enel SpA and Spain’s Acciona Energia SA are among the foreign companies that Mexico’s energy regulator has blocked from operating wind and solar plants as the government seeks to concentrate power in the hands of the state utility.

At least a dozen photovoltaic and wind-energy projects totaling more than 1,500 megawatts have been constructed and are ready to operate in Mexico, but there’s a hitch. The energy regulatory commission, or CRE, has yet to approve modifications to their permits that would enable them to conduct operations, according to government information seen by Bloomberg. 

Neither the CRE nor Engie immediately responded to calls or emails seeking comment, while Acciona had no comment.

Enel’s three completed plants, Amistad II, III and IV in the state of Coahuila — which total $507 million in investment — are still waiting permits to start commercial operation. “The reasons why these plants have not received such permits should be asked to the energy regulator,” a spokesman for the company said by email. Enel has been waiting for two years for approval to proceed, according to Bloomberg Linea.

While globally the transition away from fossil fuels is happening at an accelerated pace, in Mexico President Andres Manuel Lopez Obrador, known as AMLO, sees the private renewables industry as a threat to his nationalist energy policy. In addition to the permit delays, AMLO modified the law in 2021 to enable the Comision Federal de Electricidad, or CFE, to have priority for its aging hydroelectric and thermal plants in the energy grid, while privately-owned wind and solar projects come later in the dispatch order. 

The newly-constructed wind and solar plants are among hundreds of electricity projects that have stalled. In December 2020, Bloomberg reported that more than 200 projects in various phases of construction in Mexico were awaiting permits. That number has since doubled, including projects awaiting approval for the modification or transfer of electricity-generation permits as of March 10, as well as 102 applications for new permits submitted by June 10, the data show.

The investment cost per megawatt of installed capacity totals more than $1.77 billion, according to industry estimates of $800,000 per megawatt for photovoltaic energy and $1.5 million per megawatt for wind energy.

Opposition from companies, climate activists and lawmakers has been strong. AMLO’s legal changes have been mired in injunctions from specialized courts. While the March 2021 law was upheld by Mexico’s supreme court in April this year, a majority of the justices voted against its fundamental articles, setting an important precedent for companies that seek to take legal action against them in lower courts.

Engie’s Akin Solar and Nueva Xcala plants in Sonora and Tlaxcala states, respectively, are awaiting modification of permits, as is Acciona Energia’s San Carlos wind project in Tamaulipas. In general, modifications are for administrative purposes, such as changing the date of commercial operation.

This month, Spain’s Iberdrola similarly faced hurdles from the CRE, which notified the company that a wind farm already in operation in the state of Guanajuato would need to request a new permit to continue. The wind farm received a permit in 2015 to operate in the state of San Luis Potosi, but after Iberdrola discovered the land was already rented to a third party, the company moved the plant across the state border to Guanajuato. Three years ago, Iberdrola requested to modify the permit, but that request was rejected in March.

Separately, Iberdrola was fined 9 billion pesos ($435.3 million) for allegedly violating the terms of a self-supply contract. However, the fine was recently suspended by a judge. The company’s combined cycle power plant in the state of Nuevo Leon remains shut amid a legal battle after the CRE rejected Iberdrola’s request to modify its permit.

bloomberg.com 07 14 2022

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