The federal government will use fuel oil it is unable to sell to fire old and inefficient power plants operated by the Federal Electricity Commission (CFE).
Energy sector experts charged that the plan announced by the National Energy Control Center (Cenace) last week “to improve the reliability of the electricity system” is designed to make use of excess fuel oil produced at Pemex refineries.
They also criticized a decision to suspend trials that allowed wind farms and solar parks to provide electricity for the national grid.
The state oil company produced 11.44 million barrels of fuel oil in the first quarter of the year but was only able to sell 43% of it because new environmental rules prevent tanker trucks from using the Pemex-produced derivative.
“They were processing 400,000 barrels per day [of crude] in the refineries and … 26% [of that amount became] fuel oil; now that they are planning to increase production, they will logically generate more barrels of a product that no one in the world wants. Now they’ll be able to burn it at CFE plants,” said César Cadena, president of the Nuevo León Energy Cluster, a civil society organization.
Independent energy analyst Ramsés Pech also said that the plan to re-fire or make greater use of old CFE plants is motivated by the desire to use the unwanted fuel oil. Jorge Arrambide, a lawyer who specializes in energy matters, said that CFE plants that run on fuel oil are generally expensive to operate and big polluters.
The experts told the newspaper Reforma that the fuel oil plan will allow the CFE to reopen or make greater use of inefficient power plants whose operation is harmful to the environment. They also said that their use could cause power prices to go up.
The Business Coordinating Council (CCE) was also critical of the plan, stating that it favored state-run plants over private renewable energy companies. The former pollute more and produce more expensive power, the CCE said.
The influential business group charged that without technical or legal justification, Cenace “has disregarded its legal mandate to protect the national electricity system and competition in the electricity market.”
Thousands of commercial and industrial CFE customers will be adversely affected, the CCE said.
The business group said that it would take legal action against the Cenace plan on the basis that it prevents new clean energy plants from completing the trials required to begin formal operations.
In addition to announcing that fuel oil would be used to power CFE plants, the energy control center said that trials that allowed wind farms and solar parks to inject electricity into the national grid in high demand periods would be suspended on May 3.
During the coronavirus health emergency period, the injection of additional energy from so-called “must run” power plants operated by the CFE will be prioritized to reduce the possibility of supply problems, Cenace said.
At least 28 wind and solar projects will be affected by the suspension of trials, said Víctor Ramírez of the Mexico Climate and Energy Platform, a renewable energy advocacy group.
The CCE said that Mexico’s renewable energy sector is worth more than US $20 billion and must be protected.
“The private sector will take the legal steps necessary to defend a level playing field and the right of Mexicans to a healthy environment,” it said.