Mexico: Bidding Guidelines Published For Mexico's Second Long-Term Power Auction

José Antonio Prado and Carlos A. Ochoa Valenzuela are partner's and Aldo González Melo and José Toriello Martinez are Associate's in our Mexico City office.

Mexico's National Centre for Energy Control (CENACE) on May 13, 2016, published the Bidding Guidelines for the second long-term power auction (SLP) in Mexico, seeking to award power purchase agreements (PPA) to clean energy producers.

The energy products to be auctioned in the SLP are power (energía eléctrica acumulable), capacity (potencia) and clean energy certificates (CELs). Bidders may present single or combined sale offers for any of these products. CENACE will award PPAs with a 15-year term for winning bids in power and capacity. PPAs with a 20-year term will be awarded in the case of CELs. The state-owned enterprise Comisión Federal de Electricidad (CFE), or Federal Electricity Commission, will be the sole purchaser of the auctioned products.

Any person or entity interested in participating in the SLP as a bidder shall meet the following prequalification requirements:

  • Legal Existence: Bidders may participate as individuals or through any legal entity, national or foreigner, including joint ventures (consorcio). To meet their sale offers, participants may use operating power plants or power plants pending construction. Bidders that do not own power plants may participate, provided that they obtain authorization from the corresponding owner, developer or generator.
  • Financing Experience: In addition to the legal requirements, bidders shall have to prove sufficient experience in the financing of similar renewable projects (installed capacity and generation technology).
  • Technical Experience: All bidders are required to prove that they have experience in developing, operating and/or maintaining power energy systems. This requirement may be satisfied with the combined experience of contractors and developers through relevant commercial agreements, the creation of a joint venture or a special purpose vehicle (SPV), as applicable.
  • Registration and Prequalification Fees: Bidders shall pay 1) a registration fee of approximately US $1,510 plus value-added tax (VAT), 2) a prequalification fee for each sale offer submitted of approximately US $15,100 plus VAT, and 3) US $1,510 plus VAT for each sale offer.
  • Bid Bond (Garantía de Seriedad): In addition to the applicable fees, prequalified bidders are required to place a bid bond (in the form of a stand-by letter of credit) depending on the amount of the offered products and the installed capacity of the applicable power system or systems.

Other Key Notes and Dates

Please note that the guidelines for this SLP reflect feedback and information gained by CENACE in the previous SLP process, resulting in a more efficient prequalification stage for the benefit of the bidders.

The deadline for registration is July 22, 2016. Once the registration fee is paid, the bidders will be able to participate in an online question-and-answer session regarding the guidelines, which shall take place May 23-26.

Finally, please note that CENACE has also published to its website the following additional documents: 1) expected differences, schedule adjustment factors and marginal prices spreadsheets, and 2) the 100 critical hours and methodology for its calculation.

The energy team from Holland & Knight (MEX), led by Partners José Antonio Prado and Carlos Ochoa, represented eight bidders in the first power auction, all of which were successfully prequalified to submit a final bid. The firm's clients participated with 18 projects and a total installed capacity of 750 megawatts (MW), representing more than 10 percent of the final prequalified bidders.   

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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