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Renewable Energy and Energy Efficiency in Mexico

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Renewable energy potential in Mexico and national energy balance ... High levels of insolation. Large potential for small hydraulic plants ... – PowerPoint PPT presentation

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Title: Renewable Energy and Energy Efficiency in Mexico


1
Renewable Energy and Energy Efficiency in Mexico
  • Edinburgh, Scotland
  • October 8th, 2005
  • Manuel Enrique Ovalle Araiza
  • Secretary of the Energy Commission

2
Topics to be covered
  • Renewable energy potential in Mexico and national
    energy balance
  • Mexicos CO2 Emissions and policy to reduce
    Greenhoiuse emissions
  • Incentives and promotion of renewable energy
    projects
  • Political context and final remarks

3
  • Renewable energy potential in Mexico and national
    energy balance

4
Renewable energy potential in Mexico
  • Large availability of renewable energy sources in
    Mexico offers a big potential for the development
    of power generation projects, since Mexico has
  • High levels of insolation
  • Large potential for small hydraulic plants
  • Geothermal fields to be developed
  • Regions with high wind intensity
  • Large volume of agricultural waste products
  • Urban and farm organic waste that should be
    sustainably disposed

5
Solar energy
  • Solar radiation in Mexico is one of the highest
    in the world, allowing for an average solar power
    generation of 5 KW /m2.
  • Mexico receives on average more solar radiation
    than countries with more intensive use of
    photovoltaic cells for power generation.

6
Hydroelectric potential
  • The estimated potential for hydroelectric power
    generation is 80 TWh. Existing hydroelectric
    plants are capturing 35 of this potential.
  • There are more than 100 sites that have been
    identified for small hydroelectric plants.
  • In the states of Veracruz and Puebla alone, the
    estimated hydroelectric power generation
    potential from small power plants is 3,500 GWh,
    equivalent to 400 MW of plant capacity.

Chicoasén, Chi.
El Infiernillo, Chi.
7
Geothermal potential
  • Mexico occupies the third place worldwide in
    geothermal power generation.
  • Over 1400 locations in 50 geothermal zones have
    been identified.
  • There is a proven reserve of around 1,300 MW and
    additional probable reserves of 4,500 MW, in the
    15 most promising sites.

8
Eolic potential
Oaxacas eolic potential Wind speed
  • The state of Oaxaca has an estimated wind
    potential of over 10,000 MW.
  • The states of Baja California, Zacatecas,
    Quintana Roo and Yucatan also have significant
    wind potential.

9
Biomass potential
  • If properly modernized, the sugar cane industry
    could generate 1,000 MW of excess power capacity.
  • There is a large potential for power generation
    from pyrolysis of urban organic waste 400 MW in
    Mexico City, 150 MW in Guadalajara and 300 MW in
    other 13 medium-size cities.
  • Estimated power generation potential of biogas
    from existing landfills is on the order of 150
    MW.

10
Mexicos National Energy Balance
  • Despite of this potential, only a small fraction
    of Mexican total primary energy requirements are
    presently satisfied with renewable energy
    sources.
  • In 2003, Mexico had a total energy of 10 PJ, with
    6.1 from renewable energy (including wood and
    cane bagasse).

National Energy Balance 2003
11
  • Mexicos CO2 Emissions and policy to reduce
    Greenhouse emissions

12
Developing countries will have to moderate its
CO2 emissions in the future
DOE/IEA/IPCC
13
Mexicos hydrocarbons dependence is high in
comparison with other countries
Primary energy for power generation (2003)
14
Mexicos path to cleaner fuels for power
generation
  • Current electricity planning foresees an increase
    in the dependence on (imported) natural gas.

Electricity generation capacity
70
Undefined
60
GW
50
Natural gas
40
30
Conventional thermal
20
Coal
Nuclear
Geothermal
10
Hydro
0
1993
1995
2001
2004
2011
1994
1996
1997
1998
1999
2000
2002
2003
2005
2006
2007
2008
2009
2010
2012
2013
Source SENER, Prospectiva del Sector Eléctrico
15
Mexicos energy intensity is expected to improve
Energy intensity in selected countries
México
16
  • Since 1990, emissions intensity is dropping while
    GDP is growing. Mexicos energy efficiency is
    improving.

17
Mexicos CO2 emissions are expected to remain low
Mexicos CO2 emissions (Tons of CO2 per capita
per year)
Years reported to the United Nations Years reported to the United Nations Years reported to the United Nations Governments Forecast Governments Forecast
1994 1998 2001 2005 2013
CO2 emissions as result of fossil fuel burning 3.8 4.0 3.7 4.0 4.5
18
Mexicos CO2reduction potential and economic
benefits
  • Mexico has a potential for green house gas
    emission reductions in the order of 81 million
    CO2 tons per year for the first commitment period
    (2008 - 2012)
  • In the CDM market this would imply an economic
    benefit of around 500 million dollars per year
  • Those benefits may help, together with the actual
    programs and initiatives, to promote more
    effectively the development of Renewable Energy

19
  • Incentives and promotion of renewable energy
    projects

20
Fiscal incentives
  • December 2004 modifications of the Income Tax
    Law.
  • tax payers that invest in machinery and equipment
    for power generation based on renewable sources
    may deduct up to 100 of the total investment in
    a single year.
  • In order to avoid using this as a loop-hole to
    avoid taxes, this law establishes the obligation
    to maintain the acquired machinery and equipment
    in operation for a minimum period of five years.

21
Promotion fund for large-scale renewable energy
projects (World Bank)
  • In 2003, the Mexican Government, with the support
    of the World Bank, received final approval from
    the Global Environment Fund (GEF) for a 70
    million dollar grant to establish a new fund to
    promote large-scale renewable energy projects.
  • It is expected that the Fund will be in operation
    in 2006.
  • The strategy of the Fund will be based on
    providing a temporary incentive for power
    generated with renewable energy sources and
    delivered to the public service network under an
    Independent Power Production Agreement .
  • The incentive is expected to bridge the gap
    between the required return per delivered KWh and
    the price CFE is allowed to pay under existing
    regulations.

22
Promotion fund for large-scale renewable energy
projects (World Bank)
  • 25 million dollars will be available for the
    first stage and 45 for the second stage.
  • Essential requirements for the second stage are
  • Operation of the Fund under clear market rules
  • A minimum of 70 MW of renewable energy installed
    during the first stage
  • CFE must have put in place a methodology to
    recognize a fair value for new plant capacity
  • Maximum incentive granted to new projects in the
    second stage must be less than 1.0 US/KWh.
  • During the second stage, an additional 400 MW
    are expected to be put in place

23
Promotion fund for large-scale renewable energy
projects (World Bank)
Installed capacity vs. Cummulative incentives
24
Renewable energy legislation for small projects
  • A new Law for Renewable Energy is currently under
    discussion in the Energy Commission of the Lower
    House.
  • The law will require the installation of at least
    3,600 MW of new generation capacity powered by
    renewable sources between the date of approval
    and the last day of 2012.
  • This capacity will include plants dedicated to
    public service as well as those installed for
    self-supply from renewable sources based on wind,
    solar, geothermal, biomass, wave energy, and
    small hydro of less than 30 MW or the re-vamping
    of existing hydroelectric installations of
    greater than 30 MW.

25
Renewable energy legislation for small projects
  • This initiative contemplates the following
  • The Ministry of Energy will elaborate a Renewable
    Energy Program with established specific
    objectives and goals
  • Excess power generated from renewable sources and
    delivered to the public network should be paid as
    a percentage of the short-term generation cost
  • The Regulatory Commission of Energy should
    establish specific norms, regulations and
    contract models for power generated from
    renewable sources, including the methodology for
    the recognition of capacity
  • A trust fund for the promotion of renewable
    energy will be coordinated by the Ministry of
    Energy and resources for this fund will be
    allocated by Congress in the Federal Budget.

26
Trust fund for small projects
  • GOAL Increase the installed renewable energy
    capacity by 3,600 MW, and the generation in
    12,500 GWh/year by 2012.
  • 7.8 million Ton CO2/year will be avoided.
  • The Main Instrument is a Trust Fund

27
  • Political context and final remarks

28
Political Context
  • Renewable sources confront an unfavorable
    political context
  • The electricity law compels the National Utility,
    CFE, to follow a least cost principle
  • 1992 reform of the electricity law opened a small
    window for private participation (self-supply and
    IPPs), but widespread opposition to private
    participation in the energy sector makes it
    difficult to introduce further changes in the
    electricity law
  • Belief that there is a lot of oil and gas
    underneath (then why bother with renewables?)
  • Widespread social sensitivity regarding
    electricity tariffs prevents transferring to
    final consumers the additional costs of renewable
    energy

29
Policy Rationale
  • Mexico needs to increase the penetration of
    renewable energy
  • Due to a number of factors, private participation
    in this field is required
  • Policy instruments need to be compatible with the
    Constitution and the electricity law

30
Final remarks (1)
31
Final remarks (2)
  • Mexico is promoting a sustainable development in
    its energy industries CFE, LyFC and PEMEX.
  • The active role of Mexico in the Climate Change
    arena is strengthened by the participation in the
    CDM, in which Renewable Energy, energy efficiency
    programs, and cleaner fossil fuel based
    technologies will play a very important role by
    attracting foreign investments, increasing
    economical viability of projects and encouraging
    technology transfer
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