The awarding of 7400 MW distributed across 37 projects under the mixed scheme with CFE This represents one of the most significant advances for the Mexican electricity market in recent years. However, for the developers who received favorable rulings in the first call for bids launched by the Federal Electricity Commission (CFE), the real challenge begins now.
Although the process concluded with positive results for a large part of the industry, a series of technical, contractual and financial stages still need to be completed, which will be crucial to transforming the announcements into operational power plants capable of contributing new capacity to the National Electric System.
The first relevant milestone will be the presentation of the guarantees of seriousness , scheduled for June 16 , while the signing of the contracts is scheduled to begin on June 19 , according to the official timetable of the call.
"They are not yet finalized," warned Arturo Carranza, director of energy projects at Azka Advisors , during the streaming event "It had to be said and it was said," hosted by Energía Estratégica.
These guarantees constitute one of the main financial filters in the process. They are resources that developers must set aside during construction to ensure compliance with their commitments.
“Not just any private individual can contribute a percentage of the project's value and have that resource there without having it available,” Carranza explained.
As he explained, the guarantee serves as a protection mechanism for CFE. Why? If the project meets the established deadlines and conditions, the funds are released once the power plant becomes operational; however, if the project does not progress as planned, the state-owned company can enforce the guarantee.
The financing challenge
Beyond the guarantees, another key point will be the financial closure of the awarded initiatives: the economic structure of mixed contracts requires a delicate balance between private capital and external financing.
In general terms, “the projects contemplate schemes where between 70% and 80% corresponds to debt, while equity represents between 20% and 30%.”
Under that model, the expected profitability, future income from energy sales, and the conditions established in the contracts with the CFE were factors that directly influenced the negotiations developed during the last few months.
“Part of the negotiation that explains why the schedules were being pushed back has to do with the capital structure of these projects and with the energy purchase that was going to take place,” he said.
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And it is worth remembering that the scheme establishes that CFE will acquire 70% of the energy generated by the awarded projects, while the remaining 30% can be traded on the electricity market.
From award to construction
The significance of this new phase is not solely due to financial considerations. There is also strong government expectation regarding the impact these projects will have on expanding the national electricity supply.
For several years, Mexico has faced increasing pressure stemming from rising demand, particularly in strategic industrial regions and nearshoring-related hubs.
For Carranza, the success of the call will not be measured solely by the megawatts awarded, but by the effective capacity to convert them into operational infrastructure.
“The important thing is that these projects operate so that there is enough energy to meet the growth in demand,” he said.
The specialist notes that the incorporation of new private generation slowed significantly after the cancellation of the electricity auctions in 2018, creating a lag that the authorities are seeking to reverse through new investment mechanisms.
Therefore, the signing of the contracts in the coming weeks will be closely watched by developers, investors, and financial institutions.
The market is already looking ahead to the next call-ups.
While the winning bidders move forward with the guarantees and contracts, the industry is already starting to pay attention to the next opportunities that the Mexican government is preparing.
Authorities announced new calls for private projects and schemes related to energy storage, a segment that is generating increasing interest among developers.
“There will be great interest,” Carranza said regarding the upcoming processes.
According to the director of energy projects at Azka Advisors, many of the companies that failed to obtain capacity in the first call exclusively for private entities, awarded in December, will continue to participate in future schemes , especially now that they have a deeper understanding of the technical, financial and regulatory requirements demanded by the authorities.
Thus, while the 7,400 MW awarded are moving towards the contractual and financial stage, the Mexican market is beginning to prepare for a new race for investments that could define a good part of the country's electrical expansion during the next few years.