Since the commencement of the current federal administration, there have been clear signs that Mexico's energy policy will undergo a radical change of focus to restore the dominance of the state energy companies instead of developing the liberalised energy markets implemented in the 2013 energy reform. During the past year, the power sector has received the most attention in this regard. However, in recent months, the oil sector has regained the administration's focus.
The year 2020 was one of conflict for the Mexican power sector. This article summarises the government's main attempts to undermine the electricity market's competitiveness in favour of the Federal Commission of Electricity, the status of said actions, the new law reform initiative and expectations for the Mexican electricity market in 2021.
Green Net Tax Profit Accounts (CUFINs) were established in 2016 as a double tax incentive. The effect of a Green CUFIN is deferral of income tax payment at the corporate level while the shareholders anticipate the benefits of their participation in the entity. This is a valuable incentive for power generation companies and its requirements can be easily complied with through an adequate corporate structure.
The new federal government has taken many actions in an effort to prioritise the Federal Commission of Electricity, Mexico's state-owned power company, over other participants in the open electricity market implemented by the 2013 to 2014 energy reform. Now, despite multiple promises from the president that Mexico's energy legislation would not be reformed, his party has announced a legislative plan to embark on a new energy reform.
Due to the excessive exploitation of finite resources such as coal and oil, alternative sources of renewable energy are required to satisfy the high demand for energy. However, the creation and use of alternative sources of renewable energy require significant investment, which has become a major obstacle. Against this background, crowdfunding platforms have become an excellent financing option to develop projects focused on generating alternative energy.
The Ministry of Energy recently published the Policy of Reliability, Security, Continuity and Quality of the National Electric System, a regulation which tacitly incorporates competition barriers for intermittent clean energy power plants. The policy allegedly aims to maintain the electricity supply and minimise risks which could prevent final users' electricity demands being met. However, it does not provide sufficient technical grounds to justify said objectives.