Mexico Energy Monitor

Mexico faces power outages

  • A severe heat wave gripping Mexico combined with lack of sufficient investment in new generation and transmission, has triggered widespread power outages across the country. The scorching temperatures have overwhelmed the country’s power infrastructure, leading to disruptions in electricity supply in numerous states.
  • The power outages, described by the President as unprecedented, have affected millions of households and businesses, exacerbating concerns about the resilience of Mexico’s electrical grid. With temperatures soaring to record highs, the strain on the power system has become increasingly evident, prompting urgent calls for action to mitigate the impact on citizens and the economy.
  • Reports from various sources highlight the severity of the situation, with many areas experiencing rolling blackouts as authorities struggle to manage the demand for electricity. The outage crisis has underscored the vulnerability of Mexico’s energy infrastructure to extreme weather events and has raised questions about the country’s preparedness for future challenges.
  • In response to the crisis, the government has mobilized emergency response teams to restore power and provide assistance to affected communities. However, the extent of the damage caused by the heat wave and the long-term implications for Mexico’s energy sector remain uncertain. As the country grapples with the aftermath of the power outages, there is growing pressure on policymakers to address the underlying issues and strengthen the resilience of the electrical grid to withstand future extreme weather events.
  • In the past, ongoing issues with transmission line congestion left Mexico vulnerable to large-scale power outages. One solution to alleviate this problem could be building direct current lines to reinforce the existing network. Further projects under discussion include a line in the north of the country running parallel to the US border, another one from Nuevo León to the south, and a connection between Baja California South and the mainland states of either Sonora or Sinaloa. Many argue that diversifying the energy supply using additional clean energy financed by the private sector would also improve the network’s performance.

 

CRE forms task force to develop solar standards

  • Energy regulator CRE established a new working group focused on the development of the Mexican Official Standard (NOM) for photovoltaic systems, modules and test methods. The objective of the working group is to establish safety and performance requirements, test methods for photovoltaic panels and related infrastructure, to prevent risks and establish a minimum degree of safety and performance of photovoltaic systems.
  • The Administration of Andres Manuel Lopez Obrador (AMLO) has blocked many solar energy projects during the last six years. State-run utility CFE announced that the French development agency (AFD) will provide $98.7M for construction of the first phase of the Puerto Peñasco solar plant in the state of Sonora.
  • CFE said that AFD’s contribution is part of a larger agreement to provide financing options to advance energy transition projects in Mexico. This first phase of the Puerto Penasco solar plant will have an installed capacity of 120MW of renewable energy generation.
  • The Puerto Penasco plant is a key component of the so-called Plan Sonora, a comprehensive renewable energy project that includes five additional solar plants as well as LNG and semi-conductor projects. The plan is facing criticism due to the lack of details released to the public.
  • Mexico’s role as a net power exporter to the US could grow further in the coming years as expected increased solar power generation under the Plan Sonora has the potential to rise. State-run utility CFE previously announced it would build around five solar power plants in the Sonora region by 2025. Information from CFE, however, has not confirmed progress details, with specific information on the first solar power plant coming from sources.
  • The first phase of the solar plant located in the Sonoran city of Puerto Peñasco is able to connect to Mexico’s mainland SIN grid, going to Ciudad Obregon as well as the Baja California system at San Luis Rio Colorado. It cannot send electricity to both at the same time, however. This development would mean that in theory the solar plants could export more electricity to the US state of California.

CRE considers power storage regulation

  • Energy regulator CRE submitted a proposed methodology to the regulatory reform agency CONAMER for determining the standards necessary to integrate energy storage systems (SAEs) into the national power grid (SEN). This draft aims to establish regulations for energy storage systems, which are designed to consistently supply electricity to the SEN network and are generated from renewable sources.
  • Among the new requirements outlined in the draft for the new energy storage systems are the need to apply for a new permit or modify existing permits, comply with the interconnection process, charge the SAE with the variable generation plant, address the variability of the primary energy source, and meet the efficiency, quality, reliability, continuity, safety, and sustainability criteria outlined in the network code.
  • Furthermore, for isolated supply plants, the SAEs must certify that they have the necessary infrastructure to prevent the injection of electrical energy into the national transmission network or the general distribution networks. Mexico’s government agencies are required to submit proposed regulatory changes to CONAMER’s website to receive public comments and secure its compliance with the current legal framework.
  • CRE filings said that the main objective of the proposed regulation is to establish the general conditions under which SAE will be integrated into the SEN, in order to do so in an orderly manner, allowing for the reduction of operational costs, counteracting the variability of intermittent power plants, and taking advantage of the products and services that SAEs can offer to improve the efficiency, quality, reliability, continuity, safety, and sustainability of the SEN. Specifically, it aims to establish the general conditions applicable to SAEs, define the modalities for their integration, establish the general requirements, as well as the interconnection/connection procedure that interested parties must observe when integrating SAEs, CRE concluded.

 

EYES ON ENERGY

Developing the southeast of Mexico is the most urgent imperative in terms of social policy for the next presidential administration, said leading Mexico City-based think tank IMCO in a new report. The development of this region requires guaranteeing access to reliable energy, with low emissions and at affordable prices, IMCO added.

According to the report, the lack of reliable power supply exposes consumers to frequent power outages and limits the chances to attract investment to the region, especially in the states located in the Yucatan Peninsula. IMCO added that limited access to natural gas restricts the generation of electricity and broader level of industrial investment in the area.

Improving the energy supply of Mexico’s southwest has been a priority in the political narrative of President Andres Manuel Lopez (AMLO). One of the most significant projects connected to improved natural gas access to the region is the Southeast Gateway. Canada-headquartered energy infrastructure builder TC Energy had said in the past that the Southeast Gateway pipeline project continues to track to cost and schedule with a targeted in-service date of mid-2025.

TC Energy added that it has invested $1.1bn so far in the development of Southeast Gateway known in Spanish as Puerta al Sureste. The $4.5bn project is TC Energy’s second offshore natural gas pipeline project in Mexico and once completed, it would be expected to play a critical role supporting key demand centers in the southeast part of the country.

TC Energy executives said the firm secured various land acquisition agreements required for pipeline interconnections and compressor stations in Veracruz and Tabasco. The Southeast Gateway pipeline project is expected to connect Tabasco and Veracruz and to deliver to a proposed liquefaction plant at Coatzacoalcos. TC Energy expects to commence onshore construction for its two compressor stations during the summer of this year. The company is also anticipating that by the end of 2024, it should start the offshore pipe installation.

State-run utility CFE is also expected to increase natural gas demand in the region. The combined cycle plants in the cities of Merida and Valladolid on the Yucatan Peninsula are scheduled to start commercial operations on November 2024 and January 2025, respectively, according to CFE information. The two plants have a combined investment of around $1.2bn. The combined cycle plant in Merida is planned to have a generation capacity of 499MW while the one in Valladolid is planned to have a 1.02GW capacity.

CFE is focusing on increasing the gas supply to the Yucatan peninsula. The completion of the Cuxtal I project in 2021, which connects the France-headquartered ENGIE-owned Mayakan natural gas pipeline to the national Sistrangas grid, increased the amount of gas transported to the peninsula to approximately 120-140 million cubic feet (mcf)/day. CFE has an ongoing agreement with ENGIE to expand the Mayakan pipeline.

The Yucatan peninsula maintains among the highest power generation costs due to deficient natural gas pipeline infrastructure as well as fewer transmission lines.