The goal of generating 35% of clean energy by 2024 in accordance with the Paris Agreements encounters several challenges in the final stretch of this deadline. Experts argue that decisions over the current six-year period have prevented a full energy transition.
“The potential to generate energy from renewable sources is much wider in Mexico than can be deployed. The truth is that energy and regulatory authorities have defended the energy balance strategy and that is what we are doing,” said Arturo Carranza, director of energy projects at the consulting firm Akza Advisors.
The Ministry of Energy has stated that energy balance is a matter of national security with the purpose of guaranteeing the population access to basic electricity and fuel services, even if this involves denying permits to private individuals.
A setback for greater private participation in the energy sector occurred with the cancellation of energy auctions, when the National Energy Control Center (Cenace) canceled the fourth one in December 2018. This is a tender mechanism where generators compete to offer the lowest price of energy. Cenace argued for technical, economic and planning reasons.
“Electricity auctions have been canceled, the approved generation exceeds demand forecasts and this, based on energy authorities (means that) the energy balance must be adjusted. This is what they say,” Carranza said.
Electricity generated with clean technologies represented 26.1% of all generation in 2022, according to an analysis by the Mexican Institute for Competitiveness (IMCO) based on six energies considered to be clean by Cenace: biomass, wind, geothermal, hydroelectric, nuclear and photovoltaic.
A consultation of these data in the period from January to July of this year shows this percentage at 22.96%.
Setbacks on the road
At the end of June, the World Economic Forum's Energy Transition Ranking was announced, where Mexico fell 22 places in two years, going from 46th place in 2021 to 68th in 2023.
The report notes that although countries such as Qatar and Mexico made progress, “their progress fell below the average of other countries”, an aspect that demonstrates the difficulty of these nations in maintaining progress.
“Instead of government actions, it was the lack of actions or public policy that slowed us down a lot. First of all, all the policies that were from past administrations were set aside,” said Mónica Rodríguez, deputy director at Integralia Consultores in her personal capacity.
For the expert, the spirit of energy reform has not changed, but there has been a lack of compliance with the energy transition with regard to several laws.
Energy management in the present administration takes place in a context of dispute with private participants.
“In the case of this administration, something very clear is that permits were no longer granted to generate electricity with clean or renewable sources. The argument is that they were wanted or were being requested by private companies. And we already know this blockade that existed in the energy sector, this was an important obstacle, the other is that there was no longer a new energy transition policy, which proposed how to achieve the goals that Mexico already had proposed,” Rodríguez said of the setbacks of the energy transition.
An IMCO analysis shows that between 2017 and 2022, clean energy increased 48.4%, from 58.7 to 87.2TWh.
However, between 2021 and 2022, clean energy generation in the country fell -1.8%, from 88.8 to 87.2 TWh, the research center attributed this in part to the fall in wind power generation (-3.6%) and solar photovoltaic (-4.6%).
New projects
There is a commitment on the part of the federal government to include thermoelectric power plants, a type of energy that is not renewable because it uses fossil sources such as gas.
An analysis by the BNamericas bank of energy projects worth more than 50 million dollars indicated that between 2023 and 2025, 17.7 GW of power will come into operation, of which 66.2% correspond to thermoelectric generation.
“More than a reading, I see it as a reality, the strategy to expand electricity generation of the Federal Electricity Commission (CFE) takes as its fundamental basis the construction of combined cycles that operate from natural gas, which is fossil, although it is less polluting than oil and coal, for example. This has an explanation and part of the fact that the CFE has contracted transport capacity and molecule in very high volumes of natural gas. The CFE justifies this decision by saying that if it has contracted a large natural gas capacity and for a long time, its business model would mark in a sense that this capacity is used,” said Carranza.
On the other hand, one of the federal government's renewable energy commitments focuses on projects such as the one in Puerto Peñasco, where the government will generate 420 MW of Alternating Current (AC), and is expected to generate 1,195 GWh per year, according to the next two stages of the project.
On April 20, President Andrés Manuel López Obrador reiterated his commitment to reach 35% of clean energy generation during his participation in the Forum of the Major Economies on Energy and Climate.
“Finally, the fulfillment of commitments to generate by 2024 when at least 35% of all energy we consume in the country through clean and renewable technologies,” said López Obrador.
The government's purchase of 13 Iberdrola plants (12 combined cycle and one wind power plant); the modernization of 16 hydroelectric plants and the construction of 3 solar plants in Sonora and four wind farms on the Isthmus of Tehuantepec, Oaxaca, stood out.
Plans out of time
One of the difficulties for the transition identified by Rodríguez in the current six-year term is the untimely departure of various energy plans.
“We don't know if it's done on purpose or because of the disability of the agency. But many documents that they are required to publish on public policy issues in this area have been published late,” said the consultant.
This is the case of the National Program for the Sustainable Use of Energy 2020-2024, which was published until this year.
“It was published in 2023 and is now practically impossible to implement and we would have to expect the next administration to want to apply it as is and to follow up and publish the next one in time, so it really doesn't have much application and without much impact,” said Rodríguez.
It also happened with the National Electricity System Development Program (Prodesen), the main instrument for planning the electrical system.
“It seems to me that except this year, the rest of the administration was published late every year... We have seen that there are some reports from the CRE that were stopped being published, such as the report of the independent market monitor, many Sener figures were also stopped being published, there is a lot of lack of information and many political strategies for documents that are published late and that do affect the sector,” he said.
Future Perspective
The Clean Energy calculation methodology for the authorities could be the difference between achieving the energy transition goals set out in the Paris Agreement or not, says Carranza.
The CFE has started to make modifications to include turbine steam in clean energy and thus increase its numbers. According to a BNamericas report, this technology, together with nuclear technology, increased generation from 15 GW in 2021 to 23.2 GW in 2022 under the category: fossil-free energy.
“Following the regulatory decisions that have been taken, this is to allow the incorporation of different technologies such as clean generation, on that basis there will be better conditions to achieve the goals... They decided that a certain type of generation based on steam from some power plants will count as clean energy, that has not been explained under what international standards it is permissible,” said Carranza.
“On that basis, it is presumable that we could reach 35% (by 2024), but if these types of decisions do not come into operation, as I understand it, through judicial decisions, the trajectory that our country has followed is very clear in terms of the fact that it is very unlikely that this goal will be achieved,” he added.
*This article corresponds to the Energy Challenges series published by Causa Natura Media.
Series:
Energy for industry: wind power problems on the Isthmus of Tehuantepec
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