Mexico to overhaul electricity sector with new renewables auction

Mexico will start its first auction of renewable energy certificates later this month in a move to overhaul the electricity sector and end the state-owned power company's monopoly, according to a government statement on Wednesday.

The new certificates will provide the right and impose the obligation to produce clean energy and are set for March, officials said.

Up to 6 million of the certificates will be awarded in the first auction through 20-year contracts designed to produce 2,500 megawatts of additional power generation from renewable sources including wind and solar.

Mexico’s National Electricity Company CFE will be the only buyer initially of the energy from companies that are awarded the certificates in the competitive tenders.

Energy Minister Pedro Joaquin Coldwell said that new wholesale power companies allowed by the energy overhaul will later be able to purchase it as well.

Coldwell said: "This blueprint guarantees that there will be demand for companies that generate electricity from clean sources."

The new contracts will help CFE meet a target to generate at least 5 per cent of its power from clean sources by 2018.