by Richard Baillie

With POWER-GEN International taking place in Orlando, Florida, on 11–13 December it is easy to be lulled into thinking that the North American CHP market consists of just Canada and the US.

In fact, Mexico is also seeing significant developments, which we will be exploring in more detail in future issues of COSPP. Cogeneration’s emergence south of the Rio Grande can be traced back at least as far as 2008, when the Mexican Congress passed energy reform legislation as part of a commitment to halving the country’s 2002 level of greenhouse gas emissions by 2050. As part of these efforts, the government is promoting cogeneration as an energy efficient option.

It’s a policy that is already bearing fruit. International companies currently involved in cogeneration projects in Mexico include Rolls-Royce, GE, Abengoa, Iberdrola, Siemens and Wärtsilä.

Industries with significant cogeneration potential include petroleum, petrochemicals, chemicals, sugar mills, and paper and pulp, although the greatest opportunities lie in sugar production and in the operations of state-owned oil company Petroleos Mexicanos (Pemex), according to a recent government study. Pemex alone could hold a CHP potential of more than 10 GW, reflecting Mexico’s status as a major oil player, with a daily production of 3.8 million barrels.

Funding for cogeneration projects is available both from Mexico’s National Development Plan and its Energy Sector Programme. Pemex and the Comisión Federal de Electricidad (CFE), the Mexican state-owned electric utility, also stand to make major cost savings through joint projects delivering low-cost electricity for CFE and cheap process steam for Pemex.

Cogeneration could take off across the economy if the current 20 MW cap for feeding power from private cogeneration into Mexico’s SEN grid is lifted. If this limit is scrapped, industrial operations across paper, chemicals and other energy-intensive sectors could host more than 6 GW of cogeneration, according to government research (although if the restriction stays in place, this theoretical potential slips below 3 GW).

Over the past couple of years several cogeneration projects have got off the ground. Subsidiaries of Spain-based Abengoa and GE Energy Financial Services, a unit of GE, have invested US$180 million to help develop a 300 MW gas-fired facility at the Nuevo Pemex gas processing complex owned by Pemex Gas y Petroquimica Basica, a subsidiary of Pemex. Located near Villahermosa, Tabasco, the plant will supply Nuevo Pemex with power and steam under a 20-year services agreement.

Elsewhere, Spain’s Iberdrola Ingenieria has started work on a 430 MW cogen power plant in Salamanca, a city in Guanajuato state. South Korea’s Korea Environment Corporation, a state-run company in charge of eco-friendly energy projects, has also won a $600 million order to build a waste-fired cogeneration plant in Jalisco in western Mexico by 2022.

Meanwhile, France’s Orbeo, a joint-venture between Rhodia and Societe Generale, is set to develop a carbon emissions reduction cogeneration project using biomass in the country. Orbeo will link up with a sugar producer on the 40 MW project in the Tres Valles area of Veracruz. The new cogeneration unit will use bagasse, a by-product of sugarcane, to produce heat and electricity.

Much remains to be done and it is easy to underestimate the challenges that the sector faces, such as high initial costs and a lack of technological know-how, especially in integrating cogeneration plants to existing facilities. Nevertheless, as the Mexican economy continues to expand, further opportunities for growth are inevitable.

Richard Baillie
Managing editor, COSPP

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