Until November it was virtually impossible for a private developer of renewable energy power plants to become an independent power producer (IPP) in Mexico. Article 27 of the Mexican Constitution precluded private investment stating that electricity generation for public use is an activity to be undertaken exclusively by the Government.

Mexico’s enactment of a new law for the use of Renewable Energy and the Financing of the Energy Transition (Ley para el Aprovechamiento de Energías Renovables y el Financiamiento de la Transición Energética) substantially improves the legal framework for private investment in renewable energy projects. The law regulates renewable energy electricity generation for purposes other than providing public electricity services. The law states that the use of renewable energy for electricity generation is possible for private use and any excess energy can be sold, but only based on regulations and approvals by Mexico’s energy regulatory body, CRE.

Last week 37MW of the Eurus wind farm commenced operations in Oaxaca. Once completed the project will have a total capacity of 250 MW (167 turbines of 1.5 MW). It will become the largest wind farm in Latin America in terms of installed capacity, with a total investment of US$ 550 million. The project was developed by Mexican cement producer CEMEX, together with Spanish renewable energy company Acciona.

The project is a “self-generation” project as the power generated from the wind farm will supply CEMEX with 25% of their energy needs (according to CEMEX). More important are the carbon credits that will be generated as the project qualifies as a CDM (clean development mechanism) project under the Kyoto Protocol. Some 500,000 tons of CO2 credits are expected to be generated by 2012, although the project will mitigate 6 million tons over its lifetime.

Mexico’s Federal Electricity Commission, or CFE, has said that the country, which relies primarily on its oil resources for energy, would increase its mix of renewables by 23 percent (up from 2 percent of the current mix) by the end of the current administration in 2012.