REFERENCE CODE GDPE0696ICR PUBLICATION DATE OCTOBER 2013 MEXICO POWER MARKET OUTLOOK TO 2030 MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0696ICR PUBLICATION DATE OCTOBER 2013 MEXICO POWER MARKET OUTLOOK TO 2030

2 Executive Summary Gas-Based Generation Capacity Dominates the Power Mix of Mexico Mexico has large reserves of natural gas, which it both exports and uses for power generation. In 2012, gas-based capacity accounted for XX% of its total installed capacity. The next largest contributor to Mexico s total installed capacity was hydropower, with XX%; followed by oil-based capacity, with XX%; coal-based capacity, with XX%; renewable sources, with XX%; and nuclear power, with XX%. Power Market, Mexico, Cumulative Installed Capacity Break-up by Generation Technology (%), 2012 Coal (thermal) Renewables Nuclear Gas (thermal) Continuous Growth in Power Consumption and Generation Between 2000 and 2012, Mexico s annual power consumption increased from XX Terawatt hours (TWh) to XX TWh, at a Compound Annual Growth Rate (CAGR) of XX%. This was the result of increased industrial activity and increased residential consumption. Its annual generation also increased, from XX TWh to XX TWh, at a CAGR of XX%. Power Market, Mexico, Annual Power Consumption and Generation (TWh), Annual consumption and generation Oil (thermal) Annual consumption (TWh) Annual power generation (TWh) Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on September 11, 2013] Hydropower Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on September 12, 2013] 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Mexico, Power Market, Snapshot Mexico, Power Market, Macroeconomic Factors Mexico, Power Market, Supply Security Mexico, Power Market, Generation Infrastructure Mexico, Power Market, Transmission Infrastructure Mexico, Power Market, Opportunities Mexico, Power Market, Challenges Mexico, Power Market, Market Analysis Mexico, Power Market, Supply Structure Mexico, Power Market, Key Market Players Financial Performance Key Financial Ratios and Inference Mexico, Power Market, Financial Deals Deal Volume and Value Analysis, 2004 H Deals, Split by Type, Mexico, Power Market, Demand Structure

4 Table of Contents Break-up of Consumption by Sector, Mexico, Power Market, Regulatory Scenario Mexico, Power Market, Key Electricity Policies Electricity Sector Reform and Energy Policy Energy Saving Program (PRONASE) Renewable Energy Policy Mexico, Power Market, Foreign Investment Scenario Mexico, Power Market, Capacity and Generation Overview Mexico, Power Market, Cumulative Installed Capacity, Break-up by Generation Technology, Mexico, Power Market, Cumulative Installed Capacity and Annual Power Generation, Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, Cumulative Installed Hydro Capacity and Annual Hydropower Generation, Cumulative Installed Nuclear Capacity and Annual Nuclear Power Generation, Cumulative Installed Renewable Capacity and Annual Renewable Power Generation, Mexico, Power Market, Transmission and Distribution Overview Mexico, Power Market, Transmission Overview Mexico, Power Market, Distribution Overview Mexico, Power Market, Grid Interconnection Mexico and the US:

5 Table of Contents Mexico and Belize: Electricity Import and Export Trends, Mexico, Power Market, Electricity Trading Mexico, Power Market, Competitive Landscape: Snapshot of Leading Power Generating Companies Key Company in the Mexico Power Market: Comision Federal de Electricidad Company Overview Business Description SWOT Overview Appendix Market Definitions Power Installed Capacity Active Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology

6 Table of Contents Coverage Secondary Research and Analysis Primary Research and Analysis Disclaimer

7 Table of Contents 1.1 List of Tables Table 1: Power Market, Mexico, Gross Domestic Product ($bn), Population (Million), and Annual Electricity Consumption (TWh), Table 2: Power Market, Mexico, Deal Value ($bn) and Deal Volume (Units), 2000 H Table 3: Power Market, Mexico, Annual Power Consumption (TWh), Table 4: Power Market, Mexico, Break-up of Electricity Consumption (%), H Table 5: Power Market, Mexico, Cumulative Installed Capacity Break-up by Generation Technology (%), Table 6: Power Market, Mexico, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 7: Power Market, Mexico, Leading Active Thermal Power Plants (MW), Table 8: Power Market, Mexico, Leading Upcoming Thermal Power Plants (MW), Table 9: Power Market, Mexico, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Table 10: Power Market, Mexico, Leading Active Hydropower Plants (MW), Table 11: Power Market, Mexico, Leading Upcoming Hydropower Plants (MW), Table 12: Table 13: Power Market, Mexico, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Power Market, Mexico, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Table 14: Power Market, Mexico, Leading Active Renewable Power Plants (MW), Table 15: Power Market, Mexico, Leading Upcoming Renewable Power Plants (MW), Table 16: Power Market, Mexico, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Table 17: Power Market, Mexico, Line Length of Transmission Network (Ckm), Table 18: Power Market, Mexico, Length of Distribution Network (Ckm),

8 Table of Contents Table 19: Power Market, Mexico, Annual Electricity Import and Export (TWh), Table 20: Power Market, Mexico, Comision Federal de Electricidad, SWOT Analysis Table 21: Abbreviations List of Figures Figure 1: Power Market, Mexico, Gross Domestic Product ($bn), Population (Million), and Annual Electricity Consumption (TWh), Figure 2: Power Market, Mexico, Deal Value ($bn) and Deal Volume (Units), 2000 H Figure 3: Power Market, Mexico, Annual Power Consumption (TWh), Figure 4: Power Market, Mexico, Break-up of Electricity Consumption (%), H Figure 5: Power Market, Mexico, Cumulative Installed Capacity Break-up by Generation Technology (%), Figure 6: Figure 7: Figure 8: Figure 9: Power Market, Mexico, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Mexico, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Power Market, Mexico, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Power Market, Mexico, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Figure 10: Power Market, Mexico, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Figure 11: Power Market, Mexico, Annual Electricity Imports and Exports (TWh),

9 Introduction 2 Introduction Mexico has a federal republic government and practices a free market economy. In 2012, compared to other countries in the North American region, its economy was larger than Canada s but smaller than that of the US. However, there is a huge income disparity in Mexico, with about XX% of Mexico s population considered poor and XX% living under extreme conditions of poverty. Between 2011 and 2012, Mexico s Gross Domestic Product (GDP) increased from $XX billion to $XX billion (IMF, 2013). The services sector is estimated to have accounted for XX% of its total GDP in 2012, followed by the industrial sector, which accounted for XX%, and the agricultural sector, which accounted for XX% (CIA, 2013). The Mexican economy has shown good progress in recent years, leading to a large increase in the generation, transmission and distribution of electricity. Mexico has an export-oriented economy, and its main exports are crude oil and manufactured goods. The energy sector is very important to its economy. The taxes and royalties paid by the state-owned oil company Petróleos Mexicanos (Pemex) fund over one-third of the government s budget. Remittances from Mexicans living abroad, mostly in the US, are also a major source of income for the government. Private sector participation is increasing in Mexico s industrial sector. The government has expanded the reach of the private sector, opening competition in electricity generation, telecommunication, railroads, seaports, airports and natural gas distribution. Mexico is a member of the North American Free Trade Agreement (NAFTA), along with the US and Canada, and has been exporting an increasing amount of goods to the US. Other than the US, Mexico has free trade agreements with over fifty countries, including Guatemala, El Salvador, the European Free Trade Association, and Japan. Mexico has large gas and oil reserves. Its proved oil reserves at the end of 2012 were XX billion tons (XX% of the world s total oil reserves), while its proved gas reserves were XX trillion cubic feet (tcf) (XX% of the world s total gas reserves) (BP Statistics, 2013). Of its gas reserves, XX% is associated with oil reserves, while the remaining XX% is non-associated. Despite its gas reserves, Mexico continues to import gas. This is partly due to the rapidly increasing requirements in the power generation industry, but also to the absence of distribution logistics in certain areas of Mexico. 10

10 Introduction The Secretary of Energy (SENER), established in 1994, is Mexico s apex electricity body and is responsible for framing energy policies. SENER manages the activities of Pemex, granting electricity-related concessions, including authorizations and permits. The Comisión Reguladora de Energía (CRE) was formed in 1993 and until 1995 functioned as an advisory body. In 1995, through the Energy Regulatory Commission Act, CRE was turned into an autonomous agency, in charge of regulating the natural gas and electricity industries in Mexico. 2.1 GlobalData Report Guidance The executive summary captures the key growth trends in the Mexican power market. Chapter three provides a snapshot of the key parameters that affect Mexico s power sector, as well as key points about the Mexican power market. Chapter four provides a power market analysis of Mexico. Chapter five details the regulatory scenario of the power market and the inward foreign investment scenario in Mexico. Chapter six provides information on Mexico s total installed capacity and annual generation trends, as a whole and by individual generation source. Chapter seven describes the power transmission and distribution infrastructure of Mexico and includes information on interconnections with neighboring countries. The section also covers its electricity imports and exports and its upcoming grid-related projects. Chapter eight describes the competitive landscape of Mexico s power market, with a complete description and SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the leading companies. Note: All 2012 market numbers provided in the report are estimates except where actual data was available. 11

11 Market Analysis 4.3 Mexico, Power Market, Financial Deals Deal Volume and Value Analysis, 2004 H The deal value and volume trends of the power sector deals market in Mexico followed similar patterns between 2004 and the first half of The total deal value was $XX billion in 2004, from XX deals, while the total deal value in 2012 was $XX billion, from XX deals. However, highest deal value and volume were recorded in 2007, at $XX billion with XX deals. Deal value and volume both increased between 2004 and 2007, before decreasing for two years. The market picked up in 2010 and 2011 but then decreased again in The behavior of the market in the first half of the year suggests that 2013 will follow the trend of Figure 2: Power Market, Mexico, Deal Value ($bn) and Deal Volume (Units), 2000 H Deal value Deal volume H Deal value ($bn) Deal volume Source: GlobalData, Power etrack, Deals Database [Accessed on September 13, 2013] 19

12 Market Analysis Break-up of Consumption by Sector, 2012 The industrial sector is Mexico s largest consumer of electricity, with a share of XX%, as of June The residential sector follows with a share of XX%. The commercial and agricultural sectors are responsible for XX% and XX% of consumption, respectively. The remaining XX% is consumed by the services sector. Figure 4: Power Market, Mexico, Break-up of Electricity Consumption (%), H Agricultural Services Commercial Residential Industrial Source: GlobalData; SENER, 2013 Table 4: Power Market, Mexico, Break-up of Electricity Consumption (%), H Sector Percentage (%) Industrial Residential Commercial Agricultural Services Source: GlobalData; SENER,

13 Appendix 9 Appendix 9.1 Market Definitions Power The rate of production, transfer or energy use. It is usually related to electricity. Measured in watts and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real or active power Installed Capacity The generator s nameplate capacity (as stated by the manufacturer) or the maximum rated output of a generator under given conditions. Installed capacity is given in MW on a nameplate affixed to the generator Active Installed Capacity The component of electric power that actually performs work. It is given in kw or MW Electricity Generation The production of electric energy, achieved through the transformation of other forms of energy. This term also refers to the amount of electric energy produced. It is measured in Gigawatt hours (GWh) Electricity Consumption The sum of electricity generated, plus imports, minus exports, minus transmission and distribution losses. It is measured in GWh Thermal Power Plant A plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A plant in which the turbine generators are driven by falling water. 57

14 Appendix Nuclear Power The electricity generated by the use of thermal energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources that are limited in the amount of energy that is available per unit of time. Biomass, geothermal, solar and wind energy are all renewable resources. 9.2 Abbreviations Table 21: Abbreviations bcf billion cubic feet CAGR Compound Annual Growth Rate CCGT Combined-Cycle Gas Turbine CDM Clean Development Mechanism CENACE Centro Nacional de Control de la Energía CFE Comisión Federal de Electricidad Ckm Circuit kilometer CRE Comisión Reguladora de Energía ENE National Energy Strategy FDI Foreign Direct Investment FIDE Electric Power Savings Trust Fund GDP Gross Domestic Product GW Gigawatt IPP Independent Power Producer kv kilovolt kwh kilowatt hour LFC Luz y Fuerza del Centro MW Megawatt NAFTA North American Free Trade Agreement PFAEE Program for the Financing of Electric Energy Saving PV Photovoltaic SEN Sistema Eléctrico NacionalNational Transmission Grid SENER Secretary of Energy SWOT Strengths, Weaknesses, Opportunities and Threats tcf trillion cubic feet TWh Terawatt hour WECC Western Electric Coordinating Council Source: GlobalData 58

15 Appendix 9.3 Bibliography APEC (2013). APEC Energy Demand and Supply Outlook, 5th Edition Mexico. Asia-Pacific Economic Cooperation, February, Available from: [Accessed on September 18, 2013]. Arrubarrena, M. and Pelayo, L. (2012). Potential Development Zones for Geothermal Direct Uses in Mexico with a Specific Site Recommendation. Geo-Heat Center, Oregon Institute of Technology, August, Available from: BP Statistical Review (2013). BP Statistical Review of World Energy [database], June Available from: Review/statistical_review_of_world_energy_2013_workbook.xlsx [Accessed on September 16, 2013]. CIA (2013). Mexico: The World Factbook. Central Intelligence Agency. Available from: [Accessed on September 16, 2013]. EIA (2013a). Total Electricity Imports [database]. Available from: titlestr=total%20electricity%20imports%20(billion%20kilowatthours)&syid=2000&eyid=2012&f orm=&defaultid=0&typeofunit=stdunit&unit=bkwh&products= [Accessed on September 16, 2013]. EIA (2013b). Total Electricity Exports [database]. Available from: titlestr=total%20electricity%20exports%20(billion%20kilowatthours)&syid=2000&eyid=2012& form=&defaultid=0&typeofunit=stdunit&unit=bkwh&products= [Accessed on September 16, 2013]. Flores-Armenta, M. and Gutiérrez-Negrín, L. (2011). Geothermal Activity and Development in Mexico. United Nations University Geothermal Training Program and La Geo SA de CV, January, Available from: 59

16 Appendix Hughes, K. and O Boyle, M. (2013). Mexico unveils historic energy reform to boost foreign investment, The Globe and Mail Inc., August 12, Available on [Accessed on September 17, 2013]. IMF (2013). World Economic Outlook Database, April 2013 [database]. Available from: [Accessed on September 16, 2013]. Rosales, M. and Gerado, H (2011). TransAmerica Interconnections: Mexico strengthens and expands ties with the United States and Central America, T&D World, December 1, Available from: [Accessed on September 17, 2013]. SENER (2013). National Electricity Sector: Retail Sales of Electricity by End-Use Sector [database]. Available from: [Accessed on September 17, 2013]. Vance, E. (2012). The wind rush : Green energy blows trouble into Mexico, The Christian Science Monitor, January 26, Available from: [Accessed on September 17, 2013]. Wood, D. et al. (2012). Wind Energy Potential in Mexico s Northern Border States. The Woodrow Wilson International Center for Scholars, May, Available from: GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research, and consulting, in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports. 60

17 Appendix Coverage This report gives detailed information on Mexico s power market. It examines Mexico s power market structure and provides historical and forecast numbers for generation, capacity and consumption up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects Secondary Research and Analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources, including, but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases, including the Capacity and Generation Database, the Power Plant Database and the Transmission and Distribution Database. Further to this, the following secondary information is collected and analyzed to project Mexico s power market scenario through to 2030, analyzing factors such as: Mexico s macroeconomic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historical track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations. 61

18 Appendix Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants, to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. This report is a licensed product and should not to be reproduced without prior permission. 62