Introduction toRenewable EnergiesLegal Framework inMexicoBenjamin Torres-BarronBaker & McKenzie Abogados, S.C.October 18, 2012Las Cruces Convention CenterBaker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology usedin professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly,reference to an "office" means an office of any such law firm.
I. Mexican Energy Sector CRE CRE SENER PEMEX PEMEX PEMEX CRE Energy Regulatory Energy Regulatory Ministry of Energy Oil &&Gas Oil Gas Oil & Gas Commission Commission CONAE IMP National Commission Oil Research CFE for Energy Saving Institute Electricity CONSENUSA IIE National Commission Electricity Research for Nuclear Safety Institute National ININ Hydrocarbons Nuclear Research Commission Institute National Commission for the Efficient Use of Energy New EntityManagement Bodies State Owned Entities
Constitutional framework– Article 25 – The public sector shall have at its charge, the strategic areas mentioned in Article 28, …Federal Government shall always maintain its property and control on the established entities– Article 27 – Mexican State is exclusively entitled to generate, conduct, transform, distribute and provide electric energy for the public service. No concessions shall be granted to any person in this sector– Article 28 – The generation of electricity activities performed by the Mexican State shall not constitute a monopoly
Activities of the Electric Sector Definition by Exception…. Generation Transmission Distribution Sale Public Utility, National Electric Nuclear Power System (SEN) Cogeneration, Different to theSelf-supply, Small SEN Production, PIE, Export/Import Emergencies Activities reserved to the Nation Activities allowed to the private investment
Law for the Use of Renewable Energies and Financing ofthe Energy Transition • Intended to foster and finance renewable energy projects • Regulates the renewable energy sources and clean technologies to generate electricity • Empowers the authority to promote the use of renewable sources • Facilitates the interconnection of renewable energy projects to the national electric grid • Fund for Financing the Energy Transition
Regulations of the Law for the Use of Renewable Energy and the Financing of the EnergyTransition• Published in the Federal Official Gazette on September 2, 2009• Collaboration Agreements between SENER and Federal entities• Development and execution of the Special Program for the Use of Renewable Energies by SENER• Incorporation of the public sector resources for the National Strategy for the Energy Transition and Sustainable Use of Energy• Regulation for renewable generation and efficient co-generation. (i) guidelines and methodologies for the consideration of the renewable generators and contract models, (ii) pubic bids and (iii) projects outside bidding procedures
Law for the Sustainable Use of Energy• Aimed at promoting the efficient use of energy and the development of new technologies• Creates: a) The Consulting Committee for the Sustainable Use of Energy and; b) National Program for the Sustainable Use of Energy
Regulations of the Law for the SustainableUse of Energy• Published in the Federal Official Gazette on September 11, 2009• Provides the scope of the National Program for the Sustainable Use of Energy• Identifies the information requirements that the National Subsystem of Information regarding the Sustainable Use of Energy should have• Sets the criteria to determine those users who have a high energy consumption pattern• Prescribes the requirement to include additional information regarding the energy consumption in new equipments being distributed in Mexico
Special Program for the Use of Renewable Energies– Public policies to promote the use of renewable energies– Specific goals and actions to accomplish the energy transition in Mexico– Looks for higher energy security, not depending in one energy source– Aims to provide renewable energy-based electricity to rural communities when connection to the national electric system can not be performed
Barriers in the renewable energies sector– Lack of information– High transaction costs– Limited access to technology’s development– Inadequate infrastructure– Negative externalities of traditional energy are considered– Obstacles in permits and construction– Evolution of the technology– Lack of access to credit
Capital risks in the renewable energiessector– Higher initial capital costs– Financing deficit– Higher risk perception– Insurance deficiencies– Preference to short term returns of the investment
Thank You Benjamin Torres-Barron Benjamin.Torres@Bakermckenzie.comBaker & McKenzie International is a Swiss Verein with member law firms around the world.In accordance with the common terminology used in professional service organizations, reference to a“partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an“office” means an office of any such law firm.