Iberdrola must play by the rules if it wants to re-engage with Mexico, warns president
With new regulations for battery storage in Mexico’s National Electric System said to have piqued the interest of Iberdrola, Mexican president Claudia Sheinbaum has warned the Spanish power company can only return to the country under the conditions of a new regulatory framework for energy.
Sheinbaum said, on Oct. 28, 2024, “This idea that Iberdrola will enter as before… Well, not necessarily. There will be room for private investment but with certain rules.” The head of state said private companies will be able to invest in the electricity sector but they will have to abide by “clear rules” that guarantee technical and operational stability.
Earlier in October 2024, the Mexican Senate approved a renationalization of the Federal Electricity Commission (CFE) and petrochemical company Pemex as state-owned enterprises and permitted the CFE to generate 54% of electricity without being considered a monopoly. The dispatch of CFE-generated power has also been prioritized, as part of the new regime.
Remarking on the new system, with respect to Iberdrola, Sheinbaum said, “These rules have to do with the transmission of electricity, with ensuring that what enters the system does not generate technical problems, let’s put it that way, and the public company (Federal Electricity Commission), which is the people of Mexico, will always guarantee that it has at least 54% of the electricity generation.”
The president said her predecessor had approved the constitutional reform which renationalized CFE and Pemex.
“This was also proposed by President (Andrés Manuel) López Obrador,” said Sheinbaum. “Today, with the purchase of the Iberdrola plants … the state already produces 54% of the generation and we want it to remain that way.”
In February 2023, Iberdrola sold 8,539 MW of combined cycle gas power plants and 103 MW of wind generation capacity for around $6 billion to private investment fund Mexico Infrastructure Partners. With CFE having overseen the sale process, and financial backing from the National Infrastructure Fund of Mexico and other government bodies involved, it is not clear whether the assets which changed hands were nationalized, as claimed by Lopez Obrador, given Mexico Infrastructure Partners is a private entity.
At the time of the sale, Iberdrola said the transaction would enable it to continue to invest in Mexican renewables and, in August 2023, the Spanish utility announced a $1 billion investment plan for a photovoltaic project in the Mexican state of Nuevo León.
On Oct. 29, 2024, Pemex announced it had recorded its second largest third-quarter loss, in September 2024. The business lost MXN 161 billion ($8.04 billion) due to foreign exchange costs of more than MXN 130 billion, lower sales, and higher administrative costs. Only the third quarter of a Covid-hit 2020 was worse for the petrol business.
From pv magazine Mexico.