Mexico renewables spat escalates further as Canadian companies issue complaint

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Image: Esparta.

Canadian solar companies have complained about the Mexican government’s treatment of them, warning that the regime may have already breached a new trade deal signed between the two countries earlier this month.

According to Reuters, a number of solar developers and manufacturers, including the likes of Canadian Solar and EPCs Atco and Northland Power, co-signed a letter addressed to numerous Canadian government officials expressing their concern over the recent suspension of commissioning of new solar projects in the country, delaying their commencement of operations.

In May, Mexico’s power market operator CENACE suspended all testing and commissioning of new renewables projects citing grid stability concerns. The move prompted a significant backlash from Mexico’s business council CCE, which described them as “lacking a solid technical rationale”.

Furthermore, CCE labelled the move as being part of a broader plan for “regulatory capture” launched by Mexico’s government – led by president Andrés Manuel López Obrador – and insisted legal action would be forthcoming.

López Obrador is a vocal critic of the energy policy of previous Mexican regimes while also reserving particular criticism for renewable energy operators in the country. In January this year he claimed that failed energy reforms in Mexico had “cheated” people and led to higher than necessary power prices.

That rhetoric has now been matched by action taken by Mexico’s government. On top of the suspension of testing, earlier this month López Obrador ordered a fraud probe against a number of unnamed solar and wind developers, claiming in a press conference that complaints had been drawn up against a number of companies that officials now wanted to speak to.

He offered no evidence for those claims, nor any indication as to what the fraud probe would entail.

The anti-renewables stance has proven problematic for a number of companies. In May French developer Neoen said the clampdown had all but paralysed the full energisation of its 375MWp El Llano complex which was exporting power at lower than US$19/MWh, costing the company millions of dollars each month.

It also prompted the intervention of ambassadors from numerous European countries and Canada, who co-signed a joint letter in mid-May requesting to meet Mexico’s energy minister Rocío Nahle to discuss the matter. Canada too issued a letter at the time, noting that the decision placed at risk investments Canadian companies including Canadian Solar had made, totalling US$450 million.

Canada’s international trade minister Mary Ng raised the issue with Mexico’s economy secretary Graciela Márquez Colín in late May, however it remains to be seen what further action awaits.

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