Mexico policies continue to help dominate thermal power

21st October 2021

GlobalData

Tom Anstee

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Mexico was among the first countries globally to announce the phase out of coal power by 2030. However, the country has retracted from the plan and does not have any phase out policy presently. As a result, the coal power capacity in Mexico is likely to marginally decrease from 6.02 GW in 2020 to 5.67 GW in 2030. Despite this minor dip, the thermal power generation will continue to dominate till 2030, says GlobalData.

GlobalData’s report, ‘Mexico Power Market Outlook to 2030, Update 2021 – Market Trends, Regulations, and Competitive Landscape’, reveals that thermal power was the major source of power generation in Mexico in 2020 as well. Here on, the thermal power capacity is expected to rise at a compound annual growth rate (CAGR) of 2% from 55.3 GW in 2020 to 67.2 GW in 2030 and thermal power generation is projected to increase at a CAGR of 0.9% from 251.7 TWh in 2020 to 274 TWh in 2030.

Rohit Ravetkar, Power Analyst at GlobalData, says: “In 2020, thermal power generation held a share of 76.9% in Mexico’s total generation. Although this share is expected to decline to 63.3% in 2030, thermal power will continue to dominate Mexico’s generation mix. In 2017, the country became a member of the Powering Past Coal Alliance, a group of numerous countries, cities, regions, and organisations that aim to accelerate the phase out of coal power. Mexico committed to phase out coal power generation by 2030, however, the government that came into power in 2018, has promoted the use of thermal power generation. This has led to the slow growth of the renewable sector in Mexico.”

In March 2021, the Mexican Government passed an energy bill that favors government-owned generating plants that majorly run-on fossil fuels. Under this bill, electricity will be bought first from state-owned hydroelectric plants and those that run on coal and oil.

Mr. Ravetkar concludes: “Steps taken by the Mexican Government such as not raising their targets for reducing CO₂ emissions under the Paris Agreement, passing an energy bill that favors electricity generation from fossil fuels and the purchase of two million tons of coal for power generation shows that power generation from fossil fuels is there to stay in the country for a long period of time. The government’s lack of support for renewable technologies is expected to reduce the interest and investment of foreign companies in the country’s renewable sector.”