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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Mexico's liberalization of its Oil & Gas Industry has drawn widespread news coverage, but leaders in that country also have taken big steps to restructure Mexico's Power market. Mexico hopes to lower end-use electricity prices by building new generation and repairing its leaky transmission and distribution system. Chronically short of capital, Mexico is hoping its market liberalizations will attract private power developers and engineering, procurement and construction (EPC) firms.
Three Spanish energy companies--Iberdrola (Bilbao), Gamesa Corporación Tecnológica (Zamudio) and Acciona (Madrid)--recently announced plans to invest about $14 billion in the Mexican electricity sector between 2015 and 2018. The companies reportedly will focus on constructing gas-fired generation and renewable energy.
The Mexican energy secretary predicted about 12,187 megawatts (MW) of new natural gas combined-cycle (NGCC) units will be built between 2013 and 2027. These units would account for more than 67% of all new generation additions planned in that period. Renewable generation--mainly wind and hydro--also are expected to grow significantly, given Mexico's renewable portfolio standard (RPS) that 35% of electricity will come from renewable sources by 2024. Specifically, wind energy is expected to increase by 2,404 MW by 2027, while hydro is projected to grow by 2,099 MW, and geothermal is expected to add about 255 MW by that year.
Project developers on both sides of the border have been busy watching the market evolve and are preparing proposals for generation and transmission projects. Industrial Info is tracking 415 active Mexican power projects with total investment value of $59.3 billion. Of that list, 311 projects worth $40.9 billion are scheduled to kick off over 2015-17.
During 2015-17, several Mexican states stand out for their aggressive power development plans, including:
Click on the image at right to see a chart showing Power Industry project activity for the 10 most active Mexican states.
When Mexico finishes restructuring its electricity market, private firms will be able to build generation, transmission and distribution assets. The liberalization will overturn nearly a century where only the Mexican government built, owned and operated the Power Industry's assets.
Industrial Info is tracking numerous big-ticket projects scheduled to kick off by yearend 2017. Most are grassroot projects, but some large unit additions also are planned. Some of the biggest projects include:
In liberalizing its electricity market, Mexican officials are hoping to lower electric prices by adding generation and lowering line losses on its transmission and distribution network, all of which should create jobs, support manufacturing, and generate new economic wealth. Electricity costs for Mexico's industrial, commercial and residential sectors are far higher than their corresponding sectors in the U.S., according to data from the Comision Federal de Electricidad (CFE), the state's electric monopoly. Subsidies are provided to residential customers to lower the impact on that sector, and liberalization will not do away with those subsidies.
Click on the image at right to see average electricity prices by sector in Mexico and the U.S.
"There are a lot of promising signs in Mexico's electricity liberalization program," said Brock Ramey, Industrial Info's North American power specialist. "However, liberalizing that market and opening it to private companies will be a huge challenge--both for Mexican officials and private developers. And given the long history of corruption in state-owned monopolies, I expect the transition to a more open, competitive market will take years. U.S. companies should keep their eye on the Mexican electricity market, but they may want to be fast followers rather than staking out a position on the bleeding edge."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Three Spanish energy companies--Iberdrola (Bilbao), Gamesa Corporación Tecnológica (Zamudio) and Acciona (Madrid)--recently announced plans to invest about $14 billion in the Mexican electricity sector between 2015 and 2018. The companies reportedly will focus on constructing gas-fired generation and renewable energy.
The Mexican energy secretary predicted about 12,187 megawatts (MW) of new natural gas combined-cycle (NGCC) units will be built between 2013 and 2027. These units would account for more than 67% of all new generation additions planned in that period. Renewable generation--mainly wind and hydro--also are expected to grow significantly, given Mexico's renewable portfolio standard (RPS) that 35% of electricity will come from renewable sources by 2024. Specifically, wind energy is expected to increase by 2,404 MW by 2027, while hydro is projected to grow by 2,099 MW, and geothermal is expected to add about 255 MW by that year.
Project developers on both sides of the border have been busy watching the market evolve and are preparing proposals for generation and transmission projects. Industrial Info is tracking 415 active Mexican power projects with total investment value of $59.3 billion. Of that list, 311 projects worth $40.9 billion are scheduled to kick off over 2015-17.
During 2015-17, several Mexican states stand out for their aggressive power development plans, including:
- Baja California Del Norte ($5.4 billion of projects under development)
- Chihuahua ($5.2 billion of projects under development)
- Nuevo Leon ($3.2 billion)
- Oaxaca ($2.9 billion)
- Sonora ($2.7 billion)
Click on the image at right to see a chart showing Power Industry project activity for the 10 most active Mexican states.When Mexico finishes restructuring its electricity market, private firms will be able to build generation, transmission and distribution assets. The liberalization will overturn nearly a century where only the Mexican government built, owned and operated the Power Industry's assets.
Industrial Info is tracking numerous big-ticket projects scheduled to kick off by yearend 2017. Most are grassroot projects, but some large unit additions also are planned. Some of the biggest projects include:
- Central Ciclo Combinado Juarez Norte Unit III, a 924-megawatt (MW) NGCC, with a total investment value (TIV) of $1.5 billion
- Central Ciclo Combinado Noreste, a 899-MW NGCC valued at $1.4 billion
- Energia Sierra Juarez Windfarm, a 475-MW windfarm with a TIV of $1.3 billion
- Torreon Norte Unit V Power Station, a 944-MW NGCC valued at $1.1 billion
- Villa de Reyes Polo Generador Power Station, a 940-MW NGCC with a TIV of $1 billion
In liberalizing its electricity market, Mexican officials are hoping to lower electric prices by adding generation and lowering line losses on its transmission and distribution network, all of which should create jobs, support manufacturing, and generate new economic wealth. Electricity costs for Mexico's industrial, commercial and residential sectors are far higher than their corresponding sectors in the U.S., according to data from the Comision Federal de Electricidad (CFE), the state's electric monopoly. Subsidies are provided to residential customers to lower the impact on that sector, and liberalization will not do away with those subsidies.
Click on the image at right to see average electricity prices by sector in Mexico and the U.S."There are a lot of promising signs in Mexico's electricity liberalization program," said Brock Ramey, Industrial Info's North American power specialist. "However, liberalizing that market and opening it to private companies will be a huge challenge--both for Mexican officials and private developers. And given the long history of corruption in state-owned monopolies, I expect the transition to a more open, competitive market will take years. U.S. companies should keep their eye on the Mexican electricity market, but they may want to be fast followers rather than staking out a position on the bleeding edge."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
