Exclusive: Mexico Withholding Permits for Enel Renewable Projects Worth $500M

Mexican energy sector regulator CRE is withholding permits for three wind farms in Coahuila state

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July 11, 2022 | 10:30 AM

Mexico City — Mexico’s Energy Regulatory Commission (CRE) is holding up three wind farm projects belonging to Italian company Enel Green Power worth $507 million in the country’s northern state of Coahuila.

The Amistad II, III and IV wind farms are already built and ready to enter into operation but have been stalled for two years due to the lack of electricity generation permits from the CRE, three people familiar with the matter told Bloomberg Línea.

The plants were built after Enel won contracts in the third long-term electricity auction held by the government of former President Enrique Peña Nieto, as part of the opening up of the sector as a result of the 2013 energy reform, and which allowed for state utility CFE to purchase the cheapest energy to supply its 44 million residential customers.

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President Andrés Manuel López and his energy team have criticized wind and solar technologies for the risk of their intermittency for the national grid, in addition to being expensive for the backup they require with conventional energies and, consequently, cancelled the fourth planned auction during his third month in office, in 2019.

The three Enel projects have an installed generation capacity of 350MW.

The Covid-19 pandemic in 2020 caused the suspension of procedures by the Mexican authorities, and which, according to the sources, allowed the CRE, which is headed by Leopoldo Melchi, to take advantage of the situation and halt the issuance of permits, while delivering them in a discretionary manner, as has occurred in favor of the state-owned companies Pemex and CFE.

Bloomberg Línea’s requests for comment from the CRE have yet to receive a response.

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The CFE has criticized Enel for participating in what it has referred to as the ‘black market’ in the sector, and which, it claims, has caused losses to the Mexican state-owned company of $3.4 billion through the self-supply business model.

López Obrador said in June 2021 that he would send a diplomatic note to the government of Italy bemoaning that Enel took legal action so that Mexico would not prioritize electric power generation by the CFE’s hydroelectric plants.

Enel subsidiary Enel Green Power Mexico operates 1,720MW of renewable energy projects in the country, of which 675MW correspond to wind, 990MW to solar and 53MW to hydroelectric, in the states of Coahuila, Tamaulipas, Guanajuato, Michoacán, Jalisco and Guerrero.