Power generation is growing in Mexico with more than three-quarters of the nation’s electricity and capacity coming from fossil fuels, according to a report from the U.S. Energy Information Administration (EIA) on Sept. 21.
The Mexico Country Analysis Brief, which is not yet final, is part of EIA’s continuing international energy reviews.
According to Mexico’s Secretaría de Energía (SENER), Mexico had 54.4 GW of effective generation capacity in 2014. The country generated an estimated 258 billion kilowatt hours (kWh) of electric power in 2014, representing an increase of nearly 25 percent from a decade ago, EIA said.
Power plants using fossil fuels provide 78 percent of Mexico's electricity capacity and generation. The industrial sector accounts for 58 percent of Mexico's electricity sales, while the residential sector is responsible for slightly more than one quarter of electricity sales.
Coal consumption in Mexico rose 21 percent from 2008 to 2012, although coal represents only 8 percent of total electricity generation. Mexico is a net importer of coal, supplying 81 percent of its coal demand domestically.
Mexico has a single nuclear power plant, Laguna Verde, in Veracruz. The Laguna Verde power plant, which includes two CFE-operated boiling water reactors with a combined generating capacity of 1,400 MW, accounted for 4 percent of total electricity generation in 2014.
Current operation licenses for the reactors expire in 2020 and 2025, but they are expected to receive extensions, EIA said. There are plans to expand Mexico's nuclear generation capacity by building additional plants; however, low natural gas prices have delayed these plans.
Mexico has 16,295 MW of total renewable installed capacity as of 2014, predominantly in hydroelectric, wind, solar photovoltaic (PV), and geothermal capacity.
The largest source of renewable power generation is hydroelectric power. Mexico had 11,632 MW of hydro capacity in 2013, which accounted for 18 percent of the country's total installed electrical capacity. Hydropower supplied about 15 percent of Mexico's electricity generation in 2014.
The largest hydro plant in the country is the 2,400 MW Manuel Moreno Torres, at the Chicoasén dam in Chiapas.
Several wind projects are in development in Mexico's Baja California and in southern Mexico with the aim of boosting Mexico's wind generation capacity from 2 GW to 12 GW by 2020.
Mexico is hoping to achieve this goal by encouraging $14 billion in investment between 2015 and 2018.
Mexico’s National Energy Strategy sets a goal to generate 35 percent of the nation’s electricity from non-fossil sources by 2024. Non-fossil generation accounted for 22 percent of Mexico's electricity supply in 2014.
The state-owned Comisión Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling more than three-quarters of Mexico’s installed generating capacity. CFE also holds a monopoly on electricity transmission and distribution. The Comisión Reguladora de Energía (CRE) has principal regulatory oversight of the electricity sector.
The Public Electricity Service Act of 1975 established exclusive federal responsibility over the electricity industry through CFE, but amendments to Mexican law in 1992 partially opened electricity generation to the private sector.
Private participation in electricity generation is now permitted in certain categories, including construction and operation of private plants for self-supply, cogeneration, small production (under 30 MW), and import/export.
Any company seeking to establish private electricity generating capacity or to begin importing or exporting electric power must obtain a permit from CRE. As of 2014, independent generators—Productores Independientes de Energía (PIE)—held about 12.9 GW of generation capacity or 24 percent or total capacity, consisting mostly of combined-cycle, natural gas-fired turbines, according to the EIA report.
Although electricity trade between the United States and Mexico has existed since 1905, the exchange has remained small for a variety of reasons, EIA said.
Existing electrical interconnections between Mexico and the United States are relatively limited in capacity and are operationally constrained by non-synchronous cross-border ties, except in the Southern California-Baja California region.
Mexico has been a modest exporter of electricity to the United States since 2003. In 2013, Mexico exported 7.8 million kWh to the United States, or 11 percent of total electricity imports.
Electricity sales from Mexico to the United States could increase in the mid-term, as the U.S. Department of Energy (DOE) recently issued a presidential permit for construction of a transmission line across the U.S.-Mexico border. When completed, the transmission line will supply electricity from a Mexican wind project to the California market. Mexico also exports smaller amounts of electricity to Belize and Guatemala.
Mexico is a net importer of natural gas, mostly via pipeline from the United States, and its natural gas demand is rising because of expanding power generation capacity.
In 2014 Mexico imported a total of 1,052 Bcf of natural gas; 729 Bcf came from the United States, an increase of nearly 120 percent from 2010
Mexico has considerable natural gas resources, but its production is modest relative to other North American countries. The development of its shale gas resources is proceeding slowly.
Mexico will rely on increased pipeline imports of natural gas from the United States and liquefied natural gas (LNG) from other countries.
According to the EIA's assessment of world shale gas resources, Mexico has an estimated 545 Tcf of technically recoverable shale gas resources—the sixth largest of any country examined in the study. The figure of technically recoverable shale gas resources is far smaller than the total resource base because of the geologic complexity and discontinuity of Mexico's onshore shale zone. Most of Mexico's shale gas resources are in the northeast and east-central regions of the country.
PEMEX is the largest company in Mexico and one of the largest oil companies in the world. Comisión Nacional de Hidrocarburos (CNH) provides additional oversight of PEMEX and its oil and natural gas activities.
PEMEX will remain state-owned, but it will be given more budgetary and administrative autonomy and will have to compete for bids with other firms on new projects.