Mexico urgently needs to diversify its power generation sources and increase storage capacity for both fuels and energy in order to avoid more major blackouts, according to two energy experts.
Juan Carlos García de la Cadena, CEO of sustainable energy firm Beetmann, told the newspaper El Economista that the dependence on natural gas to generate more than 60% of the energy used in Mexico implies a huge risk, as seen this week when there was a major outage in the northern states after cold weather in the United States affected the supply of natural gas to Mexico.
He said that distributed generation – a variety of technologies that generate electricity at or near where it will be used, such as solar panels – is one way that Mexico’s dependence on natural gas can be lessened.
“The most important thing is that as a sector we learn the lesson that we need a more diversified [energy] generation mix that is less linked to the United States price indices and imports from an open market that is subject to so many variables, some of them uncontrollable such as the weather,” García said.
About 95% of all natural gas imports come from the United States, mainly Texas. The heavy dependence on those imports and the energy system’s majority reliance on gas for power generation left Mexico in an extremely vulnerable position when the Lone Star state was hit by a cold snap this week.
What was a regional weather and electricity supply problem in the U.S. became a national economic problem in Mexico, El Economista said. The newspaper reported that the need to make extraordinary purchases of natural gas – Mexico has purchased shipments to be brought by sea from the United States – and to ramp up capacity at plants that use other power generation sources will cost the Federal Electricity Commission (CFE) 5% of its annual budget in the space of just a few days.
One alternative source that is seen as having enormous potential is solar but the federal government has not been supportive of the sector and is only ramping up its hostility toward the renewable energy industry.
In addition to its heavy dependence on natural gas for energy generation, Mexico’s limited storage capacity for the fuel also makes it highly vulnerable in the case of an interruption to supply.
According to independent energy analyst Ramsés Pech, Mexico needs to increase its storage capacity for a range of fuels, especially natural gas. He also said that Mexico should be exploring possibilities to build small hydroelectric projects and store energy using large batteries.
The previous federal government announced in 2018 a plan to increase natural gas storage capacity to at least 45 billion cubic feet, or almost five days’ consumption, by 2026. However, the current government hasn’t proceeded with the projects outlined by its predecessor, including two in Veracruz.
Mexico’s current storage capacity might be best measured in hours rather than days, according to Nuevo León energy industry group president César Cadena, while the newspaper Reforma described it as “practically non-existent.”
In contrast, the United States has storage capacity for 65 days’ worth of gas consumption while some European countries have capacity for 100 days.
The CFE said Monday that it plans to increase capacity but it didn’t say when or how it intends to do so.