CELS
In 2015, Paris hosted a meeting between 195 countries that set a new course for sustainable development in the world: it was the United Nations Climate Change Conference (COP21), where 195 countries debated and reached agreements on actions and commitments to combat climate change and global warming.
With the United Nations Climate Change Conference (COP21), the Paris Agreement came into existence, which purpose is to prevent the increase in global temperature from exceeding 2°C by the end of this century. This is to be achieved through the reduction of greenhouse gases by all participating countries, which committed to report their results and emission reduction targets every five years.
In this agreement, Mexico committed that by 2024, 35% of the energy generated and consumed in the country will be clean. In order to measure compliance with these CO2 emission reduction goals, Clean Energy Certificates or CELs were created, which certify to users that a percentage of the energy they consume comes from renewable sources.
To understand the role of the CELs in the Wholesale Electricity Market (MEM), it is essential to understand their relationship with Generators, Suppliers, and Qualified Users:
Who can issue CELs?
- Green / renewable generators: those whose generation is 100% clean energy, who are awarded 1 CEL for each MWh generated.
- Combined cycle generators -or cogenerators-, which receive 1 CEL for every 5 MWh generated.
Who are obligated to acquire CELs?
- Basic Service Suppliers such as CFE, which provides energy to residential and business users that have an annual contracted demand of less than 1 MW, as well as those whose demand is greater than 1 MW, but have contracted before August 2014 and have not migrated to Qualified User.
- Qualified Suppliers and Suppliers of Last Resort must comply with the obligation in favor of the electric energy consumption of Qualified Users.
- Qualified Market Participant Users must also comply with the payment of CEL.
- Conventional Energy CIL Holders.
- End Isolated Supply Users.
This validation is controlled by the Energy Regulatory Commission (CRE) which, in case of non-compliance, may impose fines ranging from 6 to 50 minimum wages for each CEL not acquired. The Qualified Supplier must fulfill the obligation on behalf of the qualified user, and the latter has to pay for it. Therefore, the supply and demand of CEls is not only an agreement, but an essential requirement for the operation of the MEM.
The obligation to pay the CEL is for all (domestic use, industries, businesses, governments, etc.) and is indistinct to the origin of the supply, i.e., those who consume renewable and/or conventional energy are equally obliged to do so. The obligation for this year was set at 5% of the total energy consumed during the year. Thus, for example, if a business consumed 1000 MWh/year, it must pay 50 CEL. This obligation increases every year: for 2019 the percentage will increase to 5.8% and will continue to rise year by year. By 2021, to 10.9%; and in 2022 the minimum required will be 13.9%.
In our capacity as renewable Power Generators, at Enel we offer CEL within the Wholesale Electricity Market to Suppliers and Qualified Users, which can acquire them on a mandatory or voluntary basis.