Mexican Regulators Build Certificate System To Support Clean Energy

Mexican Regulators Build Certificate System To Support Clean Energy

July 2016 – Mexico believes in a clean energy future. The country has mandated that 35 percent of its energy come from clean energy resources by 2024, and tasked its regulatory body – the Mexico Energy Regulatory Commission (CRE) – to establish a Clean Energy Certificate program to help bring this energy online.

“We’re expecting to attract more investment with this mechanism,” said Norma Alvarez Girard, the Director General of CRE’s Clean Energy Integration Department.

CRE is charged under Mexico’s landmark energy reform law to build the CEC program from scratch on a quick timetable. The goals are ambitious, and so Alvarez said that avoiding mistakes and building in flexibility is key to creating a successful program.

USAID Support Critical to CEC Program
With the support of the United States Agency for International Development, the National Association of Regulatory Utility Commissioners (NARUC) is working closely with CRE to ensure that the CEC program is built right. NARUC works in partnership with CRE to provide training, expert insight, and peer review of regulations to help CRE contribute to Mexico’s clean energy future.

About Clean Energy Certificates
A Clean Energy Certificate is a tradable instrument that represents one unit of energy produced from a clean energy source. The CEC program is the main mechanism by which the Mexican government has empowered CRE to ensure the country and power producers meet their clean energy goals.

“NARUC has helped us focus on what we really need to focus on,” said Alberto Campos, the Director of Monitoring, Reporting and Verification of Clean Energy Certificates at CRE. NARUC has worked with CRE since 2014 on the CEC program, first focusing on a general overview of clean energy credit programs at a workshop in Mexico City and then bringing CRE staff to meet with U.S regulators and grid operators in Texas and California to provide greater detail on the attributes of a credit program.

Alvarez and Campos said this internship was particularly helpful in providing different views and approaches to how to structure the CEC program. California and Texas took different paths in setting up their programs, allowing CRE to take those lessons and make more informed choices about how to structure Mexico’s program.

Lessons Learned on CEC Structure and Implementation
Through subsequent workshops and trainings — including an externship by a U.S.-based expert in May — CRE has included many lessons learned through NARUC assistance into the CEC program, including the structure of criteria for imposing noncompliance penalties and the personnel needs to successfully implement the program. Overall, Alvarez said, NARUC training has been very helpful in preparing CRE to implement required regulations under the reform law and evaluate the success of rules in the future.

“We have to have mechanisms that are strong enough but also flexible.”
— Norma Alvarez Girard, Director General of CRE’s Clean Energy Integration Department

These results informed the structuring of two recently published regulations: “Administrative Provisions for CEC System Management and Compliance” in March 2016 and “Penalty Criteria for CEC Systems” in April 2016. But much more work needs to be done – CRE is tasked with drafting a half-dozen rules for the CEC program before September, setting terms for how plants will be certified and issuing a public international bid for a tracking system.

The Path Ahead
CRE is looking to the future after all the rules are in place, Alvarez said. Drawing lessons from California and Texas, Alvarez said CRE knows that it needs to build flexibility into the system and be prepared to adapt if challenges arise.

“We have to have mechanisms that are strong enough but also flexible,” she said.

CRE will evaluate the success of the program and will need to be aware of other policy options should the Mexican administration wish to change course, Alvarez said. Campos noted as well that being neighbors with the U.S. provides potential opportunities for CEC trading across the border, something that is envisioned under the reform law.

With the ongoing support of USAID, NARUC is committed to building on this progress toward a clean energy future in Mexico. Through expert-level assistance and targeted trainings and workshops, NARUC is prepared to continue assisting CRE and helping its neighbor build toward its clean energy goals.

This story is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of NARUC and do not necessarily reflect the views of USAID or the United States Government.