Dive into Mexico's Renewable Energy Market
Mexico's energy regulation has allowed two different EACs, or Energy Attribute Certificates, to coexist and complement each other in the market: Clean Energy Certificates (CEL) and International Renewable Energy Certificates (I-REC).
CLEAN ENERGY CERTIFICATE (CEL)
With the implementation of the Electricity Industry Law, in 2014, the Wholesale Electricity Market (MEM) was shaped, giving access to energy generators and consumers to a market that was traditionally reserved for state-owned companies, creating an important market competition. This law also created the Certificados de Energía Limpia (CEL), or Clean Energy Certificates in English, which is an EAC used to comply with the current regulation.
These certificates are generated by renewable energy and energy efficient projects commissioned after 2014. Also, this Law dictated a minimum amount of these certificates to be purchased and retired, equivalent to a percentage of the annual electricity consumption of a company, creating a financial incentive for renewable energy generation.
As of 2022, this regulation obliges the “qualified consumers” to purchase 13.9% of CELs equivalent to the Annual Electricity Consumption. In consequence, CELs have made significant strides in promoting clean energy adoption in Mexico, as this certificate was the first EAC to operate in the Mexican market.
INTERNATIONAL RENEWABLE ENERGY CERTIFICATE (I-REC)
The International REC Standard (I-REC Standard) is a non-profit international organization, which created a robust, and internationally applicable mechanism to develop energy attribute tracking systems around the world. Its main objective has been to ensure renewable energy generation around the world, through incentives for the generators, such as I-RECs. These certificates are generated solely from renewable energy projects, issued by international issuing bodies and are used in various markets around the world.
This is one of the main mechanisms recognized by RE100, an international initiative created in collaboration with the Carbon Disclosure Project, tracking the renewable energy objectives and best practices of some of the biggest companies in the world.
Additional to the claiming rights both EACs grant for the renewable origin of the energy consumption, these certificates also confer the end party an environmental attribute for the avoided Scope 2 GHG Emissions, translated into t CO2e / MWh.
HOW CAN COMPANIES MANAGE THEIR EACs PROCUREMENT STRATEGY?
These certificates complement corporate environmental strategies, and the proper implementation of both EACs lead to an enticing proposition for corporates seeking to maximize their financial gains while embracing sustainability.
While Clean Energy Certificates (CELs) have played a significant role in promoting renewable energy in Mexico, nowadays International Renewable Energy Certificates (IRECs) offer additional advantages for corporates. The tracking qualities of the IRECs make them an option for businesses aiming to maximize financial gains while embracing sustainability, additional to their compliance obligations with the Mexican Authority.
As Mexico continues its renewable energy journey, participants should consider the potential benefits of integrating IRECs into the value chain to unlock new opportunities in the transition to a greener future. Some reasons to integrate both EACs in their Scope 2 strategy are the geographic recognition of each EAC, regulatory framework, price and risk management.
Using the combination of both EACs, considering the minimum compliance percentage of CEL (13.9%) and the rest of this consumption being claimed through I-RECs, corporates can diversify their renewable energy portfolio by spreading risks across various projects and regions. This reduces the exposure to potential fluctuations in the domestic market and regulatory changes, enhancing long-term stability, financial predictability, and environmental compliance with the authority, current and potential clients, and stakeholders.
WHAT CAN STRIVE BY STX DO FOR YOUR COMPANY?
Our company prides itself on working closely with organizations worldwide, helping them comply with regulations and reach their environmental objectives, encompassing a comprehensive approach that goes beyond procurement of renewable energy. We are committed to designing long-term solutions that reflect a sustainable and environmentally-friendly vision. Fill out this form to start your climate conversation with our team.
