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Last call for the purchase of energy – Latest News, Breaking News, Top News Headlines

Federico Muciño GarciaFederico Muciño García Source: Courtesy

We finished a very complex 2020 a couple of weeks ago, however, the great challenges that arose in that period. So we begin this 2021 in which companies in Mexico have the urgent need to face these challenges.

The energy sector, and in particular the electrical industry, has not been exempt from complex situations in 2020 as well as a tremendously challenging panorama for this year. These conditions in the energy industry are very interest for medium and large companies electricity consumers in Mexico, especially those in which energy costs have a greater relative weight.

Business executives must be well aware of the current availability of great opportunities in the purchase of electricity and, also at the same time, the imminent shortage expected in the medium term of this type of alternative. Based on this, 2021 will represent for many of these companies the last call to be able to choose to contract the electricity service in very competitive conditions and thus generate great energy savings.

It is widely known that energy regulation in Mexico went through several changes during the year that just ended. All the media commented on the pressure exerted on the renewable energy, the increase in porting fees and the wave of injunctions that followed. Therefore, there are people who have the impression that there is a kind of prohibition or paralysis in the generation and ccommercialization of electrical energy. This is very far from reality, as there are several regulatory schemes for a company to obtain electricity other than CFE Basic Supply. The clear example of this is the Qualified Supply that, in general terms, practically did not suffer immediate effects due to these regulatory changes.

Under the scheme of Qualified Supply, an electricity consuming company has, to date, a wide variety of alternatives to contract the energy service at prices between 10 and 30 percent lower than CFE rates. Most of the clients that we have advised in this process have also achieved these favorable conditions in short-term contracts, which gives them the flexibility to make future decisions. Qualified Suppliers are showing high willingness to negotiate and adapt to the conditions required by the consumer companies. This great opening of Qualified Suppliers, in turn, is motivated by the complicated outlook that awaits them in the medium term.

The 2020 regulatory changes together with the directional adjustments adopted since the beginning of the current Federal Administration have strongly discouraged private investment in the electricity sector, especially foreign investment. Many early stage generation projects have been postponed or canceled due to the uncertain context to which they were subjected. On the other hand, projects that are already operating with available capacity are seeking, with some haste, income certainty, accommodating energy that has not yet been sold to end users. Considering that we will see a drought of new projects for a while, and that projects with available capacity are focused on selling that energy soon, the existing opportunity now becomes apparent.

At the beginning of 2021, large and medium-sized companies that consume electricity have the opportunity to obtain very competitive rates and conditions with flexible agreements. Given the shortage conditions expected in the medium term, this year could be the last in some years where the variety and competitiveness of the alternatives is so good. The new generation projects, Even if they begin to be developed today, they will not be ready in less than 3 years, so if we consider that in an optimistic scenario we will begin to see new developments in 2022, the new alternatives would be available from 2025.

It will depend on each company to obtain information and advice correctly to be able to take this last call in 2021 and have energy savings to face the complex economic situation.

The author is the CEO of EPSCON, a consulting firm specializing in the supply of electricity for medium and large companies.

This is an opinion column. The expressions used here are the sole responsibility of the person signing them and do not necessarily reflect the editorial position of El Financiero.

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