Moody’s: New power projects slow as demand grows

“Mergers and acquisitions do not reflect the dynamism of the Mexican electricity sector, but rather the lack of it and the need to have more electricity generation infrastructure,” Moody’s highlighted.

The above benefits the owners and operators of existing projects. The latest acquisitions in the electricity sector have implied a considerable generation capacity of 12.7 gigawatts (GW), the aforementioned 15%, but they have not added new installed capacity to the electrical system, he said.

The rating agency explained that during the six-year term of Andrés Manuel López Obrador, greater participation by the CFE in the generation of electrical energy has been sought, but the development of new projects has slowed down due to the lack of a favorable policy framework.

“As a consequence, electricity prices skyrocketed, which fueled mergers and acquisitions in the sector,” he highlighted.

In February 2024, the government completed the purchase of 13 generating plants from Iberdrola for 6.2 billion dollars, with 8.5 GW of capacity. The government turned to Fonadin and local development banks to finance the acquisition.

Another agreement is that of Actis, through its subsidiary Valia Energía, which in January of this year financed the acquisition of a portfolio of seven Mexican gas-fired power generation plants with a capacity of 3.2 GW.

And in March 2024, Saavi Energía announced the acquisition, through its subsidiary Cometa Energía, of the 130 MW La Lucha solar park.

But the reality is that beyond acquisitions and mergers, Mexico requires more energy.

“Mexico’s next government, which will begin its six-year term in October 2024, will have the opportunity to establish a clear energy transition plan with transparent policies and sufficient generation and transmission capacity to meet its objectives. The rapid increase in consumption electricity in the country requires a clear action plan that maintains the stability of the system and guarantees the availability of energy for residential and industrial customers,” notes Moody’s.