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Mexico Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 43
BMI View: Mexico may be aiming high in terms of the use of renewables, but the odds are it will miss its ambitious targets. The potential clearly exists and, with little immediate action expected on the nuclear front, the country's non-carbon future rests on hydroelectricity and wind power.
During the period 2011-2015, Mexico's overall power generation is expected to increase by an annual average of 3.16%, reaching 297.93TWh. Driving this growth are average annual gains of around 4% in gas-fired, hydro and renewables-based generation.
While there is some interest in expanding nuclear capacity and establishing a strong renewable power generation base, conventional thermal sources are expected to dominate electricity generation in the coming years, with many power projects using coal or gas under construction or planned.
The government is looking to reduce dependency on oil-fired generation, with the majority of IPPs using gas. President Felipe Calderón has announced plans to invest US$2.5bn in new wind farms as part of the government's push to expand renewable energy, according to Reuters. A target to reach 2GW of wind capacity by 2012 appears highly ambitious. According to data from the Global Wind Energy Council, Mexico's wind generating capacity accounted for 519MW in 2010, a marginal fraction of the country's total capacity.
Following an expected 4.0% increase in real GDP in 2011, BMI forecasts average annual growth of 2.7% between 2011 and 2020. The population is expected to rise from the current level of 109.5mn to 117.1mn during the period 2011-2020, and net power consumption looks set to increase from 214TWh to 240TWh by 2015, rising further to 273TWh by 2020.
During the period 2011-2015, the average annual growth rate for electricity demand is forecast at 3.16%, but slowing somewhat later in the decade to an average 2.63% in 2016-2020.
Thanks partly to the forecast rise in net generation, growth of which barely keeps pace with the underlying demand trend, Mexico's power supply surplus is unlikely to grow appreciably over the near term and could fall later in the decade. A gradual decline in the percentage of transmission and distribution losses from around 17% will help protect the export market. The theoretical net export capability by 2015 is put at 8.1TWh, which could be no more than 7.1TWh by 2020.
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