Mexico’s electricity infrastructure is not keeping pace with rising demand, according to new analysis by the Instituto Mexicano para la Competitividad (IMCO) think tank.
IMCO researchers broke down the latest Prodesen electricity sector planning document published May 31 by energy ministry Sener. Sener’s projections for demand growth during the 2024-2038 period are “potentially conservative,” according to the IMCO team.
Natural gas is the leading power source in Mexico, accounting for about 60% of electricity generation.
IMCO researchers noted that while last year’s Prodesen forecast average annual demand growth of 2.6% for the 2023-2037 period, Mexico’s actual power demand rose by 3.5% year/year in 2023. The country’s installed generation capacity, meanwhile, only grew by 0.6%.
Distributed or decentralized generation projects located adjacent to the point of consumption have been the exception, with installed capacity growing by 28% in 2023 versus 2022 to reach 3.36 GW, IMCO highlighted. These projects typically are sponsored by large industrial power consumers seeking reliable electricity to power their operations.
The government of President-elect Claudia Sheinbaum “will face the challenge of expanding generation capacity and modernizing the electricity grid in a context of rapid demand growth,” according to IMCO.
Researchers added that, “if installed capacity is not increased, maximum power demand will be increasingly difficult to satisfy…”
Mexico’s power grid already has been strained this year, with unseasonably high temperatures triggering rolling blackouts.
The latest Prodesen models base case annual power demand growth of 2.4% from 2024-2038. “If we compare the observed growth in 2022 (3.4%) and 2023 (3.5%), it’s likely that these projections will be exceeded,” IMCO researchers said.
The higher than expected growth in demand has been driven by “the electrification of economic activities, growth in electric mobility and new investments, among other factors,” according to IMCO.
The most rapid growth in power demand, at 3.8% annually in the base case, is forecast for the Yucatán Peninsula region. State power company Comisión Federal de Electricidad (CFE) is seeking to expand natural gas access on the peninsula, where it is building two combined cycle gas-fired plants with combined capacity of about 1.5 GW.
Natural gas, wind and solar have accounted for the vast majority of new generation capacity installed in Mexico in recent years.
Installed capacity of combined cycle natural gas plants stood at 35.2 GW as of the end of 2023, up from 27.4 GW at the end of 2018, Sener data show.
Over the same span, wind capacity rose to 7.06 GW from 4.9 GW, while photovoltaic solar grew to 7.5 GW from 1.9 GW.
Combined cycle gas plants supplied 58.5% of Mexico’s electricity in 2023, according to Sener. Wind and solar combined to account for 11.1% of generation.
The power sector has consumed 4.42 Bcf/d, or 52% of Mexico’s total natural gas demand year to date through May 29, Wood Mackenzie data show. That figure is up by 49 MMcf/d, or essentially flat, versus the same period in 2023.
