Market Trends of Mexico Combined Heat and Power Industry
This section covers the major market trends shaping the Mexico Combined Heat & Power Market according to our research experts:
Industrial & Utilities Sector to Witness Significant Growth
- The Mexican industrial & utilities sector is in a growing phase, on account of the governmental policies aimed at the expansion of industrial infrastructure and utilities services, to meet the growing demand. The industrial sector presents wide opportunities for the development of combined heat & power plants.
- Mexico generates around 300 TWh of electricity and the industrial sector is the major consumer of electricity i.e. almost 60% of the total electricity generated in 2017. Iron and steel, chemicals, cement, and mining are the primary energy users in Mexico.
- As of April 2018, the total operational CHP capacity was approximately 4.1 GW and represented almost 5.4% of Mexico's total electricity generation capacity. The CHP market in Mexico is majorly dominated by the industrial sector (oil and gas and chemical industries in particular), followed by commercial and residential sectors.
- Also, the oil and gas industry in the country has installed most of the CHP units and capacity in 2019. Other industries, such as petrochemical and chemical, pulp and paper, food industry, etc. are the other major CHP end users in Mexico.
- Industrial CHP at refineries, sugar factories, and in the paper and pulp industry are often captive as a more technically and financially viable option. Adding to this, by reducing the demand on the grid, large-scale, captive CHP projects help stabilize energy prices and reduce electric grid load.
- In March 2019, California based Capstone Turbine Corp. have announced that it has secured orders for two C200 and two C65 microturbine systems to be installed in a pair of industrial combined heat and power (CHP) projects in Mexico.
- Also, on July 2019, Spain-headquartered engineering and technology group SENER is to build a cogeneration plant for Gondi, a leading paper manufacturer in Mexico. In the first phase of this project, SENER will build a steam plant with two boilers and an electric substation, which is scheduled to go into operation in early 2020. There is then a future option to execute a second phase to develop the cogeneration scheme in 2021-2022.
- Therefore, based on the above-mentioned factors and ongoing projects, industrial sector is likely to drive the CHP market in Mexico over the forecast period.
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Favorable Energy Reforms to Drive Market Demand
- Energy reforms brought competition to the long-closed oil, gas, and electricity sectors in Mexico. Energy reforms in Mexico have emphasized the need for a more diversified energy portfolio to enhance energy security, decrease environmental degradation, and increase Mexico's economic competitiveness.
- For over 75 years, Mexico's two state-owned energy conglomerates, Mexican Petroleum (PEMEX), the national oil company, and the Federal Electricity Commission (CFE), the electric utility, enjoyed a monopoly over the country's energy markets.
- Due to significant impact of fuel price on the cost of electricity, the lower price of natural gas (due to shale gas exports from the United States) and the qualification of cogeneration as clean energy, cogeneration cycles are gathering significant interest. In June 2015, PEMEX capitalized on the rising potential of cogeneration and created a cogeneration subsidiary named PEMEX Cogeneration and Services.
- Mexican primary energy demand is expected to increase by about 20% by 2040 (over its 2014 demand), while electricity demand is expected to grow by 85%. Cogeneration systems are expected to contribute 3.6% of the electrical capacity installed between 2018 and 2032 (Secretary of Energy 2018); further resulting additional investments in cogeneration and waste heat recovery.
- Mexico's energy reform has been improving the country's electricity industry by allowing private investment throughout the energy value chain. It is expected that the generating facility of choice will be powered by natural gas, given the parallel reform effort to increase natural gas production in Mexico.
