California Institute for Energy and Environment (CIEE)

Regulatory change in Mexico and the United States, along with advances in market structures, pricing mechanisms, and technology enable electricity markets to evolve and incorporate new technologies. From the regulatory and institutional front, the U.S.has faced various levels of promotion and intervention from federal and sub-federal levels of government into balancing markets, while Mexico faces similar challenges in a more integrated way, given more recent regulatory reform and the size of its market. We address the incentive problem to “create” new markets from the transactions cost approach of how easy or difficult it is fornew renewable energy agents,incumbents, ISO/RTOs and balancing regionsto actively be part of the power markets.