Comparative analysis of Mexico’s independent system operator with U.S. peers: Institutional assessment structures and performance metrics

Alejandro Ibarra Yúnez,Mary Collins,James Mahady

doi:10.22201/fca.24488410e.2020.2527

Abstract

Wholesale electricity market assessment frameworks from the US provide a useful perspective for Mexico’s new electricity market. First, an institutional economics analysis of strengths and weaknesses of Mexico’s ISO (CENACE) provides a foundation for market assessment. Then, assessment frameworks used by US regulators studied herein for wholesale market operators highlight a framework for minimum necessary characteristics of electricity market products for application in Mexico’s wholesale market. Such institutional frameworks could serve as future performance measures in CENACE, independent of the electricity policy model.

Highlights

Mexico’s energy marketplace is undergoing transformation due in part to electricity market restructuring and rapid adoption of renewable energy
CENACE has a legal obligation to a) enhance and deepen the wholesale market operations of all products traded; b) guarantee energy, physical requirements of efficiency, quality, reliability, continuity, security, and sustainability; and c) guarantee open access with no undue discrimination to the national transmission and distribution networks of all participants from the supply and demand sides of the market, in accordance with the Mexican Electricity Industry Law, or LIE (2014) and CENACE’s founding documents (CENACE, 2015)
5 System lambda represents the incremental cost of energy derived from the economic dispatch function performed by a balancing authority area’s control center. It is the incremental cost of a marginal generating unit, with no system’s constraints in losses or congestion, expressed in U.S dollars per million Btus, translated to dollars per MWh. 6 This metric could be enhanced by new resources committed, such as new ancillary services expense, complementarities or substitutability with respect to increased transmission expansion investment, or energy storage projects, new technology integrated, which is some metric of key interest for the present quantitative evaluation of independent system operator (ISO)/RTO commitment in the U.S and for Mexico’s CENACE

Summary

Introduction

Mexico’s energy marketplace is undergoing transformation due in part to electricity market restructuring and rapid adoption of renewable energy. CENACE has a legal obligation to a) enhance and deepen the wholesale market operations of all products traded; b) guarantee energy, physical requirements of efficiency, quality, reliability, continuity, security, and sustainability; and c) guarantee open access with no undue discrimination to the national transmission and distribution networks of all participants from the supply and demand sides of the market, in accordance with the Mexican Electricity Industry Law, or LIE (2014) and CENACE’s founding documents (CENACE, 2015).

Results

Conclusion