How to Get the Best Electricity Rates in the Market
Learn how to obtain more competitive electricity rates in Mexico by understanding the MEM and using strategies like PPAs and energy diversification.Edit description
In recent years, companies and users in Mexico have faced significant fluctuations in electricity rates, directly impacting operational costs.
These changes, primarily driven by variations in the prices of the fuels used to generate electricity, have led to cumulative increases of up to 29% in industrial rates and 22% for high domestic and commercial consumption rates.
As energy demand grows and fuel prices remain volatile, companies must find strategies to access more competitive and stable electricity rates.
So, how can companies secure the best market electricity rates and protect themselves from future variations?
In this article, we'll explore the available options and how Enel can be a strategic ally in this challenge.
Factors Influencing Price Variations
The determination of electricity prices is a multifactorial phenomenon. Firstly, the cost of fuels is a significant determinant, as part of the electricity in Mexico is generated from natural gas and other fossil fuels. Fuel prices can vary, which directly affects the cost of electricity.
Another critical factor is the transmission and distribution system. These systems, which connect power plants with consumers, have high operation and maintenance costs.
Even extreme weather conditions that increase electricity demand can cause prices to rise, at best, or, at worst, skyrocket up to 5,000%, as happened in 2021.
Understanding the Wholesale Electricity Market (MEM)
This does not mean that companies and industries are limited. The Wholesale Electricity Market (MEM) is essential in Mexico's energy landscape. Here's what you need to know about it:
The MEM was created to ensure a reliable, sustainable electricity supply at competitive prices for all Mexicans.
By allowing the participation of multiple generators and marketers, the aim was to encourage investment in the sector, promote the adoption of cleaner and more efficient technologies, and reduce costs for end consumers.
The MEM acts as a platform where electricity generators can sell their energy, and qualified users can buy it. It also facilitates transparency in pricing, as prices are determined based on supply and demand.
Although initially, the MEM was aimed mainly at the largest electricity consumers, its scope has been expanded over time. Today, any entity that meets certain requirements can participate in the MEM, whether as a generator, marketer, or consumer. This includes companies looking to secure more competitive and stable electricity rates.
The most attractive part is that Qualified Users can freely choose their electricity provider within the MEM, allowing them to access more competitive rates and flexible contracts.
How to Get the Best Electricity Rates for Your Company
If you're an entrepreneur or business owner, here's how you can benefit from the MEM:
1. Participate in the MEM:
The MEM promotes competition, resulting in more attractive prices. By participating in it, companies can access various energy sources, including renewables, and enjoy prices based on actual market conditions. Moreover, this market encourages innovation and sustainability while ensuring the security and reliability of the electricity supply.
2. Negotiate a Power Purchase Agreement (PPAs):
PPAs are contracts between a generator and a buyer that establish the terms of electricity sale. These agreements offer long-term stable prices, access to renewable energies, and contractual flexibility. Moreover, they drive innovation in the sector and combine economic benefits with environmental responsibility.
3. Diversify
Don't limit yourself to a single energy source. You can take advantage of different sources and ensure a constant supply by diversifying. The best part is that you don't have to worry about significant investments; a qualified service provider can handle this.
4. Stay Updated
Policies and regulations can change. Being informed allows you to adapt quickly and seize new opportunities. Likewise, the market conditions and your company's needs may vary. It's advisable to review and, if necessary, renegotiate your electricity supply contracts regularly.
5. Consult with Experts
Working with energy management specialists can help you identify, negotiate, and take advantage of the best rates. Leading companies in the sector can also act as energy managers, formulating solutions tailored to your company's needs.
At Enel, we understand the complexities of the electricity market and are here to guide you every step of the way. Whether you want to participate in the MEM, establish a PPA, or simply optimize your energy costs, we have customized solutions that fit your specific needs.
Don't wait for market fluctuations to affect your operation. Contact Enel today and discover how we can help you secure competitive rates and a reliable electricity supply. Because your success is our commitment.
We look forward to working with you!
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