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Mexico Expecting 9.2 GW of New Natural Gas-Fired Plants in Next Four Years

Mexican combined-cycle gas turbine (CCGT) projects in the queue will add 2.3 GW of generation capacity this year and 3.6 GW in 2019, according to projections by the Energy Ministry (Sener).

The completion of these plants and others in the coming years is also expected to continue driving up demand for natural gas on the national power grid, currently Mexico’s leading consumer for the molecule, Sener said in its 2018-2032 Prodesen power sector outlook, published at the end of May.

“Based on the expected growth in installed capacity, in the first four years of the planning period  we expect to incorporate 9.2 GW of both CCGT and gas turbine power plants, all of which will be fully operational by 2021 and will represent 47% of all new capacity additions” over the initial period, according the document.

Over the next decade and a half, the power sector is forecast to put into service 28.1 GW of CCGT capacity. These new generators, representing 42% of all capacity additions over the next 15 years, would roughly double the size of Mexico’s current fleet of combined-cycle plants.

This growth in capacity should lead to gas demand in the power sector “increasing by an average rate of 2.4% per year, such that by the end of the planning period,” in 2032, “it will account for 63% of all fossil fuels consumed for electricity production,” the ministry said.

Mexican power plants currently consume around 3.9 Bcf/d, accounting for 52% of the country’s gas demand. Sener is forecasting power sector demand to reach 5.95 Bcf/d by 2031.

Total installed capacity on the power grid reached 75.7 GW at the end of 2017, including 28 GW of CCGT plants.

Combined-cycle and other conventional thermoelectric plants, which burn diesel, fuel oil and coal, comprised 70.5% of Mexico’s installed capacity. Non-fossil fuel sources, including wind, solar, hydroelectric and nuclear energy, accounted for the remaining 29.5%.

State-owned power utility Comision Federal de Electricidad (CFE) owned around 57% of the Mexican generation fleet by the end of last year. Independent power producers selling exclusively to CFE operated an additional 17.2%.

CFE began competing with private generators only two years ago, when regulators launched the country’s first-ever competitive wholesale power market.

The state utility is also the anchor customer for various private sector pipeline projects to expand Mexico’s natural gas transmission network. These transportation agreements include capacity to supply CCGTs under construction in the Pacific Northwest, which would receive gas shipments from pipelines connected to the Permian Basin.

Mexican power use rose 3.7% in 2017 to 309,727 GWh, excluding congestion and line losses.

Combined-cycle plants provided around 50% of Mexico’s power supply last year. Non-fossil fuel energy sources generated 21.1% of the country’s electricity, while the remainder came from oil- and coal-fired plants.

Mexico has set a “clean,” i.e. non-fossil fuel, power generation target of 35% by 2024 and a longer-term goal of 50% by 2050.

Of the 67 GW in new capacity expected to come online by 2032, 36.7 GW would come from non-fossil fuel energy plants, namely wind farms and solar parks, according to the Prodesen report. 

To date, the Mexican power grid operator has held three long-term power supply auctions, contracting around 7 GW of mostly wind and solar plants. A fourth supply auction is scheduled for November.

Most of the remaining capacity additions over the next 15 years would come from CCGT plants, including several projects tendered by CFE.

The state power company also began a conversion program in 2014 to allow seven of its older power plants to start burning natural gas. By the end of 2017, CFE had finished converting five units for dual fuel generation, according to the Prodesen document. The two remaining generators are expected to be finished this year.

The Energy Ministry also expects the power sector to retire 115 generation units, or about 11.8 GW of capacity, over the next decade and a half. The majority of the retired units would come from older thermoelectric plants, although they also include 1.66 GW of CCGT capacity.

By the end of 2032, the Mexican power grid is expected to have 130 GW of installed capacity, of which about 42% would be from CCGT plants. In Sener’s base-case planning scenario, national power consumption grows at an average annual rate of 3.1% over the next 15 years, reaching 492,165 GWh in 2032.

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