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The Mexican Energy Transition Law completes the nation’s energy reform

The Mexican Energy Transition Law completes the nation’s energy reform

The nation’s Chamber of Deputies recently revised and approved a passable version of the Mexican Energy Transition Law.

On Wednesday, December 9, 2015, the country’s lower legislative house, the Chamber of Deputies, revised and delivered a version of the Mexican Energy Transition Law (LTE) to the nation’s Senate that is expected to be signed into law and implemented in the near future. The version both legislative bodies’ muster was a text that had been discussed and developed in committee for more than a year. While some see the Mexican Energy Transition Law as a positive step in completing Mexico’s overall energy reform efforts, some have reservations related to the effect of the Law’s implementation on the nation’s manufacturing sector.

A commitment made in Paris

Under the LTE, the Mexican government has made an international commitment to powering the nation’s electrical grid using thirty-five percent clean and renewable energy sources by 2024. This declaration was made publicly by president Enrique Pena Nieto at the recently held Climate Summit in Paris, France. The timetable for reaching that percentage goal that is enunciated in the Mexican Energy Transition Law is as follows:

  • twenty-five percent by 2018;
  • thirty percent by 2021;
  • thirty-five percent by 2025.

While some of the country’s legislators, including David Penchyna, a member of the president’s Institutional Revolutionary Party (PRI), view the imminent implementation of the Mexican Energy Transition Law as positive in the context of the broader opening of the country’s energy sector, as well as in terms of considerations linked to price competitiveness and long-term sustainability, other political leaders such as the Labor Party’s Manuel Bartlett are not as sanguine in their assessment of the future effects of the LTE. According to the Labor Party Senator, “the use of clean energy, more expensive that its traditional counterparts, will only increase prices for the user, who in the end will be paying the cost of energy transition.”

Even less optimistic in his view of the LTE is Victor Hermosillo, a senator from the country’s National Action Party (PAN) view the Mexican Energy Transition Law in terms of a “straightjacket” that will result in the passage of the cost of transition down to industry.

Solar has a long way to go

One of the areas that the nation’s policymakers will look to fulfill the goals and obligations spelled out by the Mexican Energy Transition Law is the solar energy sector. As of the present, Mexico has quite a way to go in order to optimally exploit this renewable and sustainable resource. Although the Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN) or National Electric System Development Plan envisions that between 2015 and 2029, Mexico will incorporate sixty gigawatts of additional solar capacity into its energy mix in order to cover additional demand that will materialize over that time period, current estimates are that Mexican solar energy production capacity stands at a capacity that is not greater than fifty-six megawatts.

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