Insight
Mexico’s capacity market settlement 2019: A year of change
Report summary
Expressed as a multiplier of the levelized cost of a gas combustion turbine, the closing price has declined for the first time since the market’s inception, settling at 1.51x versus the price cap of 2.00x in 2018. Robust energy market prices provided ample margins to largely offset the initial closing price. In short, the market remains tight but gas generators have little ‘missing money’ to make up in the capacity market, and the final net price paid to generators remains fairly low around 11 USD/kW-yr (216,000 MXN/MW-yr). However, under the surface many new dimensions are emerging as new wind, solar and gas combined cycle capacity is completed. In this insight we discuss the underlying mechanics and drivers of Mexico’s capacity market, how this year’s settlement has changed from prior years and what these changes could hold for the future.
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- Executive Summary
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