Demand and Supply of Electricity in Mexico

Increase in population and growth in economic development are the two key drivers for increasing electricity demand in Mexico. Mexico's electric sector planning body estimates that the demand for electricity for domestic consumption will increase at an annual rate of 4.8% from 2007 through 2016. Total consumption of

2 In October 2009, in a major move, CFE, the Mexican state owned utility announced take-over of smaller state-owned utility LFC. The key reason cited for this move is inefficiency of LFC's operations [38].

0 Coal

1999 2000 2001 2002 2003 2004 2005 2006 2007

Fig. 11.10 Electricity generation in Mexico by fuel type (Source: SENER [39])

electricity is expected to increase from 197 TWh in 2006 to 318 TWh by 2016. This will require an increase of over 60% in total generation capacity in a decade. It is anticipated that a total of 22.7 GWe new capacities will need to be installed to meet the increase in demand [40].

Historically, residual fuel oil has been the principle source of primary energy for Mexican power sector. Shares of nuclear and coal have been relatively small. The share of natural gas has been increasing steadily since the turn of the century. While natural gas based combined cycle plants are expected to dominate the portfolio of new generation capacity, diversity of fuel-mix and energy security concerns have prompted the inclusion of coal as a potential generation source in the future. Mexico has successfully exploited its renewable energy resources in the past: by April 2008, its geothermal capacity was reported to be 965 MWe, and wind power generation capacity was at 85 MWe. According to the recent planning documents and public releases, there is a renewed emphasis on the role of renew-ables in meeting future demand, especially wind power. Mexican power sector is expected to add 507 MWe wind power generation capacity in 2011 from the state of Oaxaca [54].

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