Insight
Mexico’s capacity market settlement 2021: A plummeted market
Report summary
Mexico’s reliance on gas-based ‘firm’ generation continues rising. Between June 2020 and June 2021, around 3.7 GW of gas-based generation were added to the grid, which improved capacity availability during 2021. However, as the country continues its recovery path from the drop in loads in 2020, such an increase in capacity has led the market significantly close to an oversupply situation. As a result, 2021’s Capacity Market closed at 0.0257x (clearing price expressed as a multiplier of the Levelized cost for the reference technology, a gas CT) – a continued significant drop from 1.51x in 2019 and 0.32x in 2020. This insight analyzes Mexico’s Capacity Market drivers and results as well as the implications of increasing solar penetration on its dynamics.
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