Mexico Power Market Trends

Market Trends of Mexico Power Industry

Thermal Power Generation Expected to Dominate the Market

• Thermal power plants, consisting of oil-based, coal-based, nuclear, and natural-gas-based power generation in the country, will maintain their dominance by 2030. The new government has recently given dispatch priority to thermal power plants in the coming years, which can increase the share of thermal power in the country, which, as of 2022, formed the major part of 72% of the electricity generation mix.
• Though wind and solar power generation have massively replaced coal technology in the last five years, this will not be the future trend. The country has many upcoming coal- and natural gas-based power projects. The oil-fired power sector will also rise but remain behind the gas-fired generation in the coming years.
• For instance, in January 2023, Mexico’s state power company Comisión Federal de Electricidad (CFE) is targeting to bring 1.5 GW of natural gas-fired power generation capacity online on the Yucatán Peninsula by summer 2024.
• In February 2022, Mexico’s Federal Electricity Commission (CFE) awarded a contract to the Spanish companies Técnicas Reunidas, TSK, and Mitsubishi Power, which will provide the turbine technology. The contract includes the development of the new natural gas combined cycle plants of Valladolid and Mérida, both in the state of Yucatán, worth USD 355 million.
• Such developments in the country are expected to provide robust growth to the power market in Mexico.

Expansion of Transmission and Distribution Network Expected to Drive the Market

• The transmission network of power in Mexico has witnessed a steady development over the last decade to respond to the growing power demand and accessibility issues.
• The energy demand in Mexico is proliferating due to increasing urbanization and population. According to the Statistical Review of World Energy Data, in 2022, Mexico's primary energy consumption was 8.73 Exajoules, an annual increase of 9.2%. Thus, to cope with the growing demand, Mexico's Federal Electricity Commission (CFE) has s begun to define and execute a series of transmission line projects as part of the National Electric System Development Program (Prodesen)
• The Mexican government plans to invest USD 107 million to develop these six transmission lines. Moreover, companies from Asia are relocating their operations closer to Mexico, which has been a factor in reduced transportation costs, shorter supply chains, and easier access to the thriving North American market.
• Some other key projects were also planned for 2021-2035. One is the modernization of the Tecamachalco–Tlacotepec transmission line project in Tlacotepec and neighboring towns in Puebla. It is a 33 km transmission line with a voltage of 115kV. The expected commissioning year of the project is 2024.
• The new transmission plans are expected to boost the country's power market due to such developments.