The Growth of the Mexican Electric Market: Fundamental Aspects of the Market and the First-Movers Advantage

The Growth of the Mexican Electric Market: Fundamental Aspects of the Market and the First-Movers Advantage

Since the official initiation of a ‘competitive’ market as a result of the constitutional reforms in December of 2014, I have been directly involved in the analysis of the new Mexican electric market and I have witness the implementation of the quoted ‘by-far the most ambitious schedule’ for deregulation of an electric market. In less than a year, the Mexican equivalent of the Department of Energy (Secretaria de Energia – SENER), published the underlying bases (Bases Del Mercado) and laid the foundation with the release of the new market structure model (exhibit 1). These changes would lead the transformation of the closed market into an economically-driven Wholesale Electric Market (Mercado Electrico Mayorista – MEM). Some of the most significant changes of the new model call for the removal of the monopoly power of the national electric company, the Commision Federal de Electricidad (CFE) and allow private participation in the majority of the market.

There is an abundance of material available via different Mexican governmental agencies and via many private organizations that provide details of the entire Mexican Energy Reform, however new entrants have hard time extracting, summarizing and translating the necessary information ‘to catch up’ with the electricity market thus delay the formulation of their entry strategy. The aim is to inform new potential investors and interested parties about the market and to provide a guidance for the analysis needed that will lead to discovery of the ‘low hanging fruit’. With this in mind, the report aims to a) give an overview of the fundamental factors of the new Mexican Electric Market (MEM), b) summarize the current state of the market and c) provide the latest most relevant regulatory and market updates. At the minimum, I hope that my post would give you the necessary information to raise awareness and hopefully to instigate curiosity to assess the business opportunities in this emerging, but promising market. See Exhibit 1 (shown above) – The New Mexican Electric Market Structure.

 

  1. Elements and Logistics of the Mexican Electric Market
  2. Fundamental Factors of the Mexican Electric Market
  3. Current Market Developments

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