Mexico's Fossil Fuel Power Hits Record in 2023

Mexico's energy sector underwent a significant shift in 2023, as fossil fuel-powered electricity generation reached record highs, according to Reuters. A decrease in hydro power generation to 20-year lows resulted in increased in fossil fuel usage, leading to a surge in power emissions by 11% to over 175 million metric tons of carbon dioxide (CO2). 

These trends raise concerns among climate advocates, particularly as Mexico's power sector heavily relies on fossil fuels despite being the fastest-growing economy in North America.

Fossil fuels, primarily natural gas, played a dominant role in Mexico's electricity generation system, constituting around 57% of total electricity output in 2023. Coal contributed approximately 7% to Mexico's electricity generation, while other fossil fuels, including diesel and fuel oil, made up roughly 14%. Cumulative emissions from fossil fuel use in power generation reached nearly 174 million tons of CO2, marking an increase from around 160 million tons a decade ago and approximately 101 million tons in the year 2000. 

Despite Mexico's 2023 emissions being overshadowed by the United States' power system, which discharged 1.7 billion tons of CO2, Mexico's emissions toll nearly doubled that of Canada's power system, emitting 91.5 million tons of CO2. Notably, while Canada and the United States reduced power emissions by about 15% between 2015 and 2022, Mexico saw a 10% increase, defying regional and global pollution reduction trends. With fossil fuels accounting for around 78% of electricity generation last year, Mexico ranks highest among major economies in North and South America in terms of fossil fuel reliance, indicating a significant lag in regional energy transition efforts.

In contrast, Mexico's government aims to bolster renewable energy generation significantly by 2030. Plans include doubling current clean generation capacity and sourcing 35% of electricity from renewable sources. Despite these ambitions, challenges persist, particularly in regulatory frameworks and infrastructure development for storage systems.

The deployment of Storage Systems (SAE) emerges as crucial for Mexico's energy transition, addressing the intermittency of renewable sources like solar and wind. However, regulatory uncertainties hinder the adoption of storage solutions. Efforts to enhance regulations and accommodate evolving technologies are underway, driven by experts like Juan Carlos Cárdenas from the Inter-American Development Bank (IDB).

Emmanuel Moctezuma from AES Mexico highlights the strides made in energy storage technologies, noting increased deployment of projects to support sustainable energy endeavors. Energy storage systems offer a solution to grid congestion and stability issues, enabling Mexico to store excess energy and enhance overall reliability.

In an interview with BNamericas, Gonzalo Monroy, Manger, GMEC, highlighted that the necessity for a project ensuring power plant supply has persisted for over two decades. However, regulatory complexities, bureaucratic hurdles, and the absence of a viable commercialization strategy in the country have impeded its advancement.

While the integration of Energy Storage Systems presents challenges such as high initial investments and regulatory adaptations, the opportunities are substantial. “The big problem is that business models have not been developed, in addition to legal issues. That is the reason why this project has not progressed,” said Monroy, adding that a few issues regarding regulation in the constitution were solved after gas network operator Cenagas was created by the 2013 energy reform.