Ministry of Energy Releases Energy Sector Development Plan

Mexico’s Ministry of Energy has rolled-out its National Electricity System Development Program (PRODESEN) for the 2020-2034 period. In the plan, combined cycle and hydroelectric power generation through state-owned utility CFE are to form the base load of the country’s energy mix, which will grow in capacity by 6.8 percent by 2024.

SENER has informed that the safety and reliability of Mexico’s national electrical system are key to the development plan. In regards to expanding the state’s generation capacity, natural gas-based combined cycle technology and mini hydroelectric installation dominate the development plans. SENER notes that combined cycles are clean, whereas hydroelectricity is a completely renewable resource. The two staples combined will therefore habilitate PRODESEN’s goal of having 35 percent clean energy generation by 2024. In 2030, the percentage should reach 43 percent. “Through a new energy model, SENER conducts and coordinates the energy transition in the country gradually and systematically to reach 35 percent of generation with clean energy by 2024,” SENER added.

Furthermore, SENER aims to modernize CFE’s generation capacity, wants to replace fuel oil with natural gas and will work to minimize technical losses in the electricity system. Energy loss is a significant problem in the network, as SENER highlights that around 12 percent of the energy in the transmission and distribution system is lost. La Jornada reports that this is around 4 percent higher than international standards of 8 percent, occasionally even reaching higher losses than other Latin American countries.

We reported last week on 2021-2025 CFE Business Plan, it states that the government does not include private energy generation stemming from past auctions into its expectations. Even though no wind or solar project are integrated into these expectations, the document does note that private companies can continue their plans to sell energy to CFE. “The new capacity program in the short and medium term 2020-2024 resulted from the review of projects with an interconnection contract and strategic infrastructure projects necessary to comply with the national energy policy. After 2024, based on energy policy guidelines, flexible generation projects with conventional technologies and clean energy are considered,” PRODESEN reports.

In addition, it established that between 2020 and 2024, only firm projects with an interconnection contract and those considered strategic infrastructure "necessary to comply with the national energy policy of the National Development Plan" are considered.

SENER mentioned distributed generation (DG) is a positive light as well: “DG in rural areas, homes, micro- and small businesses or companies represents an excellent option for the path towards the energy transition, in a social sense,” the document reads.

By 2034, PRODESEN expects that medium-sized companies will be Mexico’s main energy users, consuming 39.7 percent of the electricity. The residential user follows, with a 24.4 percent, followed by large industries taking up 23.5 percent. The commercial, agricultural and services is expected to take up 12.4 percent of energy demand.