Jorge Armando Gutiérrez
President
Cogenera Mexico
/
View from the Top

Cogeneration Schemes Become Mexican Reality

Wed, 02/19/2014 - 15:29

Q: How has the potential for cogeneration projects evolved in recent years in Mexico?

A: The benefits of cogeneration in Mexico are huge. The development of cogeneration and trigeneration schemes in the country means that efficiency could be as high as 88% in the case of trigeneration. If you compare this efficiency rate with the 33% standard efficiency of CFE’s single cycle power plants, this means we would be using fewer fossil fuels in order to produce more electricity, heat and cold.

The potential of the cogeneration schemes in Mexico so far stands at around 10GW, of which PEMEX can develop over 3GW. The first cogeneration developed by PEMEX and Abengoa has operated since the beginning of last year. PEMEX will also be involved in future cogeneration developments in Cadereyta, as well as in other facilities in the country. To generate the 900 tonnes per hour of steam that PEMEX requires in Tabasco through cogeneration, a total of 300MW must be produced of which only 50MW would be consumed locally. The remaining 250MW have to be wheeled to other PEMEX facilities, but the modifications to the legal framework affecting the cost of this wheeling, implemented in April 2012, make this project very bankable.

Q: How does the availability of natural gas affect the development of the cogeneration sector?

A: It would be impossible to develop cogeneration schemes without natural gas. The only exception is biogas in sanitary landfills, which is mainly natural gas. According to the law, electricity produced from biogas coming from landfills is the main opportunity to develop a cogeneration scheme without natural gas, though is also possible to develop cogeneration schemes using sugar cane bagasse as a fuel.

The problem with natural gas is the lack of infrastructure. Most of the natural gas pipelines are located along the coast of the Gulf of Mexico. With the development of shale gas and oil, natural gas is going to be abundant in Mexico for many years so the price is going to be lowered, remaining at between US$3 and US$6 per million Btu for the next 15 to 20 years. The big challenge is the construction of the infrastructure we will need elsewhere, mainly along the Pacific Coast. Nowadays, CFE and other industrial customers are paying for liquefied natural gas, which is extremely expensive at around US$18 per million Btu. The solution is to build gas pipelines along the Pacific Coast and have an interconnected natural gas network to develop the industry nationwide. We have vast shale gas resources in Tamaulipas and we have to take advantage of that.

Q: How do you convince the industry that cogeneration is a competitive energy source in which they should invest?

A: If companies are steam consumers and need electricity, it should be easy for them to develop a cogeneration scheme. Development companies and industry firms may sign a PPA in which the developers are responsible for the engineering, investment, construction and commissioning of the facility. Developers can offer a cost reduction of 12% to 18% on paper mills as well as in the petrochemical and food industries in comparison to their business as usual scenario. On top of that, you will be reducing the emission of pollutants into the atmosphere.

In the near future, we would like to convince PEMEX to develop all potential cogeneration schemes, somewhere in the range of 3GW. We have to convince the Minister of Energy, Pedro Joaquín Coldwell, to get in touch with all the governors of Mexico and ask them to convince those in charge of landfills to develop cogeneration schemes, to set more biogas as a fuel for internal combustion engines. This will mean methane will not be released into the atmosphere.

With the development of new cogeneration schemes, the competitiveness of the industry will improve. There are many industries that could develop huge cogeneration schemes, while others might develop smaller scale projects. For example, shopping malls in the north of Mexico may be facing outside temperatures of around 40°C and need air conditioning. In such cases you can use the heat from gases in internal combustion engines or gas turbines, and drive these gases into an absorption chiller to get cold water. This means that you could create a shopping mall with a cogeneration scheme in the range of 2 to 10MW. We have been in touch with ANTAD, the association of department stores, to raise awareness of the potential benefits of using cogeneration schemes.