Clean Energy Certificates: Will they continue to function under Mexico’s new reform?

With Mexico’s recent Constitutional Reform introduced in 2024 and the secondary legislation currently under Senate review, many of us are wondering about the future of Clean Energy Certificates (CELs). CELs, created during the Energy Reform of 2013, were designed to promote clean generation and serve as an additional benefit in the sale of energy, thereby helping to meet the goals established by the General Law on Climate Change and the Energy Transition Law. 

The role of Clean Energy Certificates 

CELs function as a financial market, allowing clean energy generators to recover part of their costs through a levy on national consumption. This levy is expected to increase over time to meet the desired targets. According to the Program for the Development of the National Electric System (PRODESEN by its acronym in Spanish) 2024-2038, the share of clean energy by 2023 in the National Electric System was 23.19%, indicating that the target of 35% for 2024 may not be met. 

The new government has launched “Plan Mexico," which includes significant investments in electricity, particularly in clean energy. This plan aims to increase generation from these sources in the next two years, bringing us closer to the desired goals. Among its objectives: 

• Increase generation by 22,000 MW by 2030 
• Invest $12.3 billion in new power plants 
• Strengthen the transmission network with $7.5 billion in investments 
• Reinforce the distribution network with $3.6 billion in investments 
• Achieve 45% clean energy by 2030 

To meet these goals, CELs will remain a crucial tool for attracting new investments in renewable generation. They also help intermittent generation recover fixed costs. Additionally, the profits from CELs can support backup solutions such as energy storage, which is essential for integrating renewable power plants into the national electric system. 

Proposed changes 

The below changes are expected to significantly impact CELs: 

• Granting CELs to power plants will no longer depend on ownership or start date of operations. Previously, CELs were only granted to power plants commissioned after August 11, 2014. 
• Both suppliers and qualified end users must comply with CEL- related requirements to advance the energy transition. 
• CELs must now be used within 30 months of issuance.  
• Compliance exemptions for load centers in legacy interconnection contracts will no longer be granted. 

Another critical change is the offering of CELs to any clean generator, which could result in an oversupply of CELs. The 30-month timeframe in which to use CELs may not be enough to combat this excess, potentially leading to a decrease in prices and loss of benefits they provide. 

Projections for the future 

To date, approximately 25 million CELs have been issued per year. With the proposed changes, it is anticipated that this figure could increase to 41 million in 2025 and to over 80 million in subsequent years. This could drive market saturation of CELs. 

In turn, the removal of exemptions for legacy contracts could shift the landscape, facilitating the acquisition of clean energy and mitigating oversupply. 

Alternatives to achieve targets 

To meet their clean energy goals, companies will need to adopt effective strategies and ensure that purchased EACs are in compliance with the reporting standards. Options such as International Renewable Energy Certificates (IRECs) or onsite generation represent mechanisms to reduce greenhouse gases emissions and, with the proposed reforms, could become significant resources for companies committed to sustainability. At Trio, we have the expertise to help companies achieve cost and sustainability benefits while navigating legislative changes.