New Fortress Energy Achieved First LNG in Altamira
- US developer New Fortress Energy (NFE) achieved first LNG for its 1.4mtpa Fast LNG export facility offshore Altamira, Mexico, the company said in a 19 July statement. The project has been delayed several times from an initial expected start date of late 2023, but most recently NFE indicated that August would be the first shipment date.
- Market scrutiny is growing amid continued delays in this project. Though a month or two delay is not unusual for a new project, NFE faces additional, deeper questions about its technology. The Fast LNG technology is designed to accelerate the deployment of LNG facilities, an innovative approach which involves modular, offshore liquefaction units that can be quickly assembled and deployed compared to traditional onshore plants.
- Fast LNG units are built on floating platforms, which can be relocated as needed, offering flexibility in meeting demand. The technology aims to reduce costs and timelines associated with LNG production.
- NFE is planning to install two additional Fast LNG units onshore in Altamira by 2026. However, these technical delays in the first phase put a spotlight on the company’s timeline for the other two units. For Fast LNG 2 and Fast LNG 3, NFE will have to deal with both the technology and ongoing negotiations with Mexico’s state-run utility CFE, which include acquiring a power supply under preferential conditions.
- NFE announced on 23 July that it had secured a $700m loan for its second Fast LNG unit. “Fast LNG 2 will be developed in partnership with CFE utilizing its extensive in-place terminal infrastructure onshore in Altamira, Mexico,” the company concluded.
CFE Announces $1bn Investment in Generation Capacity
- State-run utility CFE’s subsidiary CFE Generación I increased its installed generation capacity by around 9% year-on-year, according to the company’s first quarter of 2024 results.
- The company added that it is investing around $1.2bn in various projects, including upgrades in two combined cycle plants and five hydropower plants across the country.
- Mexico’s installed capacity includes a substantial proportion of natural gas, oil, and coal, which together account for the majority of the energy mix. The government has also invested in hydroelectric power, but its contribution remains relatively small compared to fossil fuels and renewables.
- Despite this diverse energy portfolio, Mexico faces ongoing challenges with its power grid. The aging infrastructure struggles to meet the growing demand for electricity, leading to frequent power outages and reliability issues. The grid’s inefficiency is exacerbated by losses in transmission and distribution, which are among the highest in Latin America.
- The current administration’s focus on strengthening state-owned entities has raised concerns about investment in renewable energy projects. Participants eagerly await appointments to CFE from the incoming government and possible modifications in renewable electricity policy.
CRE Approves Electromobility Regulation
- Mexico’s energy regulator, the Comisión Reguladora de Energía (CRE), has approved a new framework for electromobility regulation. The new provisions aim to integrate electric and hybrid vehicle charging infrastructure into the national grid, forming part of a smart electrical network. Key aspects include protecting electrical distribution networks, requiring new electric supply services for each charging station, and establishing a platform for transparent information on charging stations.
- Since 2016, the sale of electric and hybrid vehicles in Mexico has seen significant growth. In 2021, 39,100 units were sold, including 768 electric vehicles and 2,500 plug-in hybrids. As Latin America’s largest motor vehicle manufacturer, Mexico attracts investments from electromobility companies setting up manufacturing facilities to serve the North American market, leveraging its existing capabilities and the USMCA agreement.
- Public transportation is also evolving. Mexico City recently purchased ten electric buses from a Chinese manufacturer for the Metrobus BRT system, which serves an average of 25 million users monthly. However, to fully transition to electric mobility, Mexico needs further advancements in charging infrastructure, renewable energy sources, tax incentives, and consumer education.
- Currently, the country boasts a robust charging network, with ChargeNow and Tesla operating over 900 stations, mostly in the capital. Electric vehicles could significantly reduce pollution in Mexico City, provided there is support for alternative energy sources like wind and solar. The region, including the Estado de México, has already seen substantial sales of electric vehicles.
Macquarie Enters Mayakan Expansion Project
- Recently, Mexico’s state-run utility CFE and France-headquartered ENGIE Mexico announced the start of construction work to expand the Mayakan natural gas pipeline. The expansion of the pipeline would increase natural gas availability in the Yucatán peninsula using supply that would come from the recently-announced Gate to the Southeast (Puerta al Sureste) pipeline project.
- This expansion responds to larger future demand of natural gas and to satisfy the operational needs of the newly-developed nearby power generation plants Valladolid IV and Mérida IV.
- The combined cycle plants in the cities of Mérida and Valladolid in the Yucatán peninsula are scheduled to start commercial operations on 1 November 2024 and 3 January 2025, respectively, according to CFE executives. The two plants have a combined investment of around $1.2 billion. The combined cycle plant in Mérida 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 Yucatán peninsula. The Yucatán peninsula maintains among the highest power generation costs due to deficient natural gas pipeline infrastructure as well as fewer transmission lines.
- CFE is also building a solar plant in Mérida. The Nachi Cocom plant would have a total capacity of 7.5MW once built. CFE has said the main goal of the Nachi Cocom solar plant in the southeast state of Yucatán is to provide energy for the new electric public transport system of the city of Mérida.
EYES ON ENERGY
Energy Trade Value Between Mexico and the United States Fell on Lower Fuel Prices- EIA
The value of all energy trade between the United States and Mexico decreased almost 15% from $77.8 billion in 2022 to $66.5 billion in 2023, adjusted for inflation, according to a 15 July report released by the US Energy Information Administration. The US EIA added that lower fuel prices more than offset the increase in the volume of energy trade between the two countries. The value of inflation-adjusted U.S. energy exports to Mexico declined by 19% in 2023. The value of inflation-adjusted energy imports from Mexico decreased by 6% in 2023, according to data from the U.S. Census Bureau, the report reads. US EIA summary of key commodities:
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