What is Renewable Energy?

Renewable energy is energy derived from the natural phenomena, processes or materials that can be converted into energy usable for humanity that regenerate naturally, and is continuously or periodically available.

Types of Renewable Energy

I. Hydroelectric Power. Main source of renewable energy. By 2011, Mexico had an installed capacity greater than 11 GW.

II. Wind Power. It is estimated to have a further development in this type of energy in Mexico. For 2011, México reaches a 0.56% of wind power generation.

III. Geothermal Energy. On August 11, 2014, the Geothermal Energy Law was published, such law has as main purpose the exploration and exploitation of geothermal resources for the use of underground thermal energy within the limits of the national territory, in order to generate power. During 2011, Mexico generated 2.200% of geothermal energy.

IV. Solar Energy. During 2011, solar energy was used to generate 63.3 thousand GWh of global electricity. México generated 0.01% of such energy.

V. Bioenergy. The use of biomass, biogas and biofuels for power generation has become a considerable relevant alternative in many regions. Mexico in 2011, generated the 0.85% of the 1.64% global energy through bioenergy.

Renewable Energy in Mexico

In the General Meeting of the United Nations held on 2011, the initiative named Sustainable Energy for All (SE4ALL) was issued. The main purpose of such program was to change the development conditions through three global purposes that must be met by 2030:

(i) To provide energy access to all population.
(ii) To double the generation of renewable energy within the energy matrix.
(iii) To increase the global rate of energy efficiency.

The Climate Change Law set forth as one of its principal goals to be accomplished by the Ministry of Energy, the Energy Regulatory Commission ("CRE") and the Federal Electricity Commission, to reach at least 35% for 2024 power generation form clean energy sources.

In order to reach the goal established in the Climate Change Law, the Mexican laws set forth the Clean Energy Certificates ("CELs"), which materialized in individual obligations the national goals of clean power generation.

What are the Clean Energy Certificates ("CELs")?

In accordance with the Electric Industry Law, the Clean Energy Certificates ("CELs") are certificates issued by the CRE evidencing the production of a certain amount of Power from Clean Energy sources and used to meet the requirements associated with the consumption of the Load Centers.

The CELs are tools use to promote new projects in power generation that will encourage the development of the National Power System, by promoting the use of energy with less pollutant emissions.

The power users shall demonstrate, through the acquisition of the CELs that the 5% of its consumed electricity comes from clean energies in 2018.

Requirements for Obtaining CELs

A. Pursuant with the guidelines issued by the Ministry of Energy, the Clean Generators which are entitled to receive CELs for a period of 20 years shall comply with the following requirements: (i) the Clean Power Stations shall have started operations after August 11, 2014, (ii) if they started operations before August 11, 2014, their projects shall be focused on increasing its production of Clean Energy, and (iii) the Clean Power Stations with available capacity to be included in an Interconnection Agreement pursuant with the applicable law.

B. Such Clean Generators, will be entitled to receive one CEL for each Megawatt-­‐hour generated without the use of fossil fuels.

C. The CRE shall determine a required % of consumed electricity that does not come from Clean Energies for which CEL must be acquired and liquidated.

D. The National Energy Control Center ("CENACE") will inform the CRE if any Clean Power Station generated electricity in violation of the instructions issued by the CENACE, and no CEL will be granted in such term.

E. The CRE will issue the CELs to the Clean Generators, according with the procedures and requirements issued by such Commission.

F. The CELs may be sold, as long as all provisions issued by the CRE in such regard, are accomplished by the buyers and sellers.

G. If the CELs are liquidated, they will lose all their value and may not be sold again or used to comply with obligations. The CEL holders may request its cancellation by an application to the CRE.