Huge scope for the DPG market in Mexico

A new report from Frost and Sullivan claims the potential for the distributed power generation (DPG) market in Mexico is very promising.

The market will witness strong demand from oil, gas and mining companies in Eastern Mexico, a region not served by the national grid.

New analysis from Frost & Sullivan -Analysis of the Mexican Distributed Power Generation Market, finds that the market earned revenues of more than $217.6m in 2012 and estimates this to reach $370.2m in 2017 at a compound annual growth rate of 11.2 per cent.
Insufficient centralized electricity, which has compelled several consumers to generate their own power, along with incomplete grid facilities in large isolated areas, offer huge scope for the DPG market in Mexico, according to Frost & Sullivan Energy and Environmental Industry Analyst Martin Cataife.

“Recent net metering regulations in the country have encouraged the assembly of new DPG units in households and small commerce consumers. Net metering of expensive tariffs in the industrial segment has also sustained overall DPG installed capacity growth rates.”

However, DGP providers’ reliance on electricity subsidies coupled with grid integration issues in isolated areas make market development uncertain. Energy subsidies have added to the challenge, as artificially low electricity prices for most consumers in the country reduce opportunities for DPG technologies, which have become a costly alternative to grids.

In fact, although DPG technologies reduce transmission costs and provide the benefit of local energy management and economies of scale, their startup costs are higher than that of centralized electricity production, further affecting adoption.

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