Mexico changes renewable energy rules, citing COVID-19 pandemic

Wind turbines command the view near La Ventosa in the southern Mexican state of Oaxaca. The town’s name means “the windy one.” (Photo courtesy of Diego Arriola)

MEXICO CITY – The COVID-19 pandemic has given the Mexican government an opportunity to make changes to its renewable energy market. And some fear this could bring higher rates, less investment and more state control.

In late April, the government of Andrés Manuel López Obrador instructed new renewable energy plants to yield the production to the state-owned energy company, arguing that the pandemic requires new regulations.

On Friday, the government ordered a stop to certain investments in renewable energy. This favors fossil fuels, a sector in which the administration invests.

“Not only the content of the regulations, but the way it was published – forced in the official gazette – is what gives us concerns,” said Diego Arriola, an independent energy consultant.

He said the measures will increase consumer prices and scare off foreign investment, as the government ignores private operators.

“They’re taking centralized control over basically the market, and particularly intermittent renewables,” Arriola said.

A judge challenged April’s order as a violation to environmental and commercial rights, while companies say Friday’s order goes against the law.

“The northern states (of Mexico) have a lot of wind and obviously a lot of solar power, and there could be certain limitations in the future,” Arriola said.