CHP/cogeneration could be applied on a significant scale across industries such as petrochemicals, chemicals, sugar mills, and paper and pulp Credit: Alpek

 

CHP’s expansion at Mexico’s refineries and other industrial sites looks set to accelerate, reports Richard Baillie.

Although Mexico’s power system was opened up to private-sector combined heat and power (CHP) in 1992, national installed capacity now only totals around 3.4 GW, according to a 2012-26 strategy from its Secretariat of Energy. Yet the country’s potential CHP capacity could top 15.5 GW, according to a 1995 study by Mexico’s National Commission for Energy Conservation, which based its figure on industrial demand for heat.

A similar figure emerges from a more recent study on cogeneration potential in industrial sectors by the National Commission for the Efficient Use of Energy, part of Secretariat of Energy.

Mexico’s CHP potential

In terms of regulation, CHP is regarded as a renewable energy and therefore benefits from the Renewable Energy Development and Financing for Energy Transition Law (2009), under which the Comisión Federal de Electricidad (CFE) – the state-owned electricity utility – has a purchase priority on generation from self-supply surplus, small producers and independent producers using renewable energy sources or efficient cogeneration.

In 2008, the Mexican Congress passed energy reform legislation as part of a national commitment to halve greenhouse gas emissions from their 2002 levels by 2050. The government is promoting CHP or cogeneration, as an energy efficient option to help meet energy goals.

Cogeneration could be applied on a significant scale across industries including petroleum, petrochemicals, chemicals, sugar mills, and paper and pulp. But a recent government study singled out sugar production and the state-owned oil company Petróleos Mexicanos (Pemex) as offering exceptional potential for CHP.

In oil, Mexico is a major player with an average daily production of 3.8 million barrels, so cogeneration could offer substantial savings. Pemex alone is embarking on 10 GW of projects under Mexico’s National Development Plan and its Energy Sector Program. Joint cogeneration projects in the oil company’s facilities by Pemex and CFE could provide the utility with low-cost electricity and help Mexico’s oil giant meet its demands for process steam.

Commercial interest grows

Mexico’s cogeneration market is attracting increasing interest from companies such as Rolls-Royce, GE, Abengoa, Iberdrola, Siemens and Wartsila, all now involved in CHP projects here.

Mexican companies that received cogeneration permits in 2011–12 include Atlatec, Asociacion de Colonos del Fracccionamiento Valle Real, Bio Pappel, Destileria del Golfo, Energía MK KF, Grupo Celanese, Huixtla Energía, Minera Metalúrgica del Boleo, Pemex Gas y Petroquímicos Básicos, Sigma Alimentos Centro and Tlalneplantla Cogeneración.

However, the role of Mexico’s grid is crucial. If excess power from new CHP capacity is allowed onto the grid, cogeneration capacity in energy-intensive industries such as paper or chemicals could top 6 GW. Without this outlet for excess energy, the theoretical potential drops below 3 GW, given the grid’s current 20 MW limit for power from private CHP projects.

Pemex’s installed CHP/cogeneration capacity tops 2000 MW and the company is already developing a 300 MW project at its Nuevo Pemex gas-processing complex in Tabasco state. The firm is also studying a 550 MW cogeneration project for its Salamanca refinery in Guanajuato state.

Based on estimates of heat demand from the industrial sector, Mexico’s CHP capacity has the potential to exceed 15 GW Credit: Alpek

In the longer term, Pemex could develop cogeneration projects at its Tula refinery in Hidalgo state (350 MW), Salina Cruz refinery in Oaxaca state (350 MW), Morelos and Cangrejera petrochemicals complexes in Veracruz state (400 MW and 350 MW respectively), Madero refinery in Tamaulipas state (350 MW), Cadereyta refinery in Nuevo León state (350 MW) and Atasta gas-processing centre in Campeche state (100 MW).

Initially, Pemex could use CHP for self-supply to increase efficiency and replace old installations. The firm could then begin injecting power into the national grid through joint projects with CFE.

Another major opportunity for CHP is in the sugar industry, where potential cogeneration from bagasse is estimated to total 979 MW. As each company’s capacity would be less than 20 MW, sugar producers would face no restrictions on injecting excess power into the grid, while also standing to increase their profitability by replacing fuel oil with waste pulp as a feedstock.

Nuevo Pemex – the biggest cogen plant to date

Mexico has seen several cogeneration projects over the last couple of years. Subsidiaries of Abengoa, and GE Energy Financial Services, a unit of GE, are on track to develop what is described as the country’s largest cogeneration power plant through an investment of US$180 million.

The 300 MW gas-fired facility, expected to cost a total of $640 million, will be at the Nuevo Pemex gas processing complex, owned by Pemex Gas y Petroquímica Básica, a subsidiary of Pemex. Near Villahermosa, Tabasco, the plant will supply Nuevo Pemex with power and steam under a 20-year services agreement.

Large (300+ MW) and smaller-scale (>100 MW) cogeneration projects are slated for refineries and petrochemical facilities across Mexico

Abengoa subsidiaries Abener Energía and Abengoa México – which are companies of Abeinsa, the Engineering and Industrial Construction Business Group of Abengoa – and GE Energy Financial Services will own the project. Abener Energía and Abengoa México will invest $108 million and the GE unit $72 million.

A group of lenders including Banobras, Santander, Scotiabank, La Caixa, Banco Espírito Santo, Crédit Agricole, Export Development Canada and HSBC are providing $460 million in debt for the project.

The plant is expected to directly supply 55% of Nuevo Pemex’s steam demand and all of its power demand. Additional power output will go to other Pemex operations in Mexico via the national transmission system.

The Nuevo Pemex complex processes gas from on and offshore Mexican gas fields. As agreed in a separate transaction between GE Energy and Abengoa, the cogeneration facility will use two GE Energy Frame 7FA gas turbines. GE Energy has also signed a 20-year agreement to provide plant services.

Smaller projects come on line

Other cogen installations are also coming off the drawing board. Alpek’s cogeneration project at its subsidiary Petrotemex’s site in Cosoleacaque, Veracruz, is another prominent project. The plant is due to produce more than 85 MW of electricity while meeting all the site’s steam requirements.

Spanish construction firm SENER Ingenería y Sistemas is to carry out the basic and detailed engineering, and will also co-ordinate the project. Construction is set to take 23 months, so that the plant completes in February 2014. Powered by the two GE LM6000-PF units, the Alpek cogeneration plant will operate at 85% thermal efficiency.

Darryl Wilson, vice president, aeroderivative gas turbines for GE Power & Water, said low gas prices and strong government support for cogeneration are combining to increase activity in Mexico’s private industrial sector.

Meanwhile, major textile manufacturer Grupo Kaltex is building a 36 MW facility to supply electricity to its facilities. The CHP plant in Altamira, Tamaulipas State, is scheduled to operate from October 2013. One third of the electrical capacity will be used for this Kaltex facility and two thirds will be fed into the grid to supply other Kaltex facilities. The plant will meet about 40% of Kaltex’s power needs in Mexico using a Siemens SGT-750 gas turbine.

Environmental initiatives

Cogeneration plants can also benefit from specific emissions reductions initiatives. The CFE recently signed a $331 million loan with French development agency Agence Française de Développement to finance projects linked to emission reduction and energy efficiency.

The CFE will use part of the money to finance the construction of a large cogeneration plant (430 MW) located near Salamanca, a city in Guanajuato State. Iberdrola Ingeniería has started work on the cogeneration project, which also includes a substation and eight 230 kV transmission lines. The project is due to be completed over a period to 29 months. The cogeneration plant, which is estimated to cost $320 million, is located next to a Pemex-owned oil refinery.

In addition, Korea Environment Corporation, a state-run South Korean company in charge of eco-friendly energy projects recently won a $600 million order to build a waste-fired cogeneration plant in Jalisco in western Mexico by 2022. Lee Chan-hee, an energy ministry official, said the contract would help South Korean companies make inroads into the renewable energy sector in Mexico.

Likewise, France’s Orbeo, a joint-venture between Rhodia and Société Générale, is set to develop a carbon emissions reduction cogeneration project using biomass in Mexico. Orbeo will link up with a sugar producer to develop the project in the Tres Valles area of Veracruz. The new bagasse-fuelled cogeneration unit will have a total installed capacity of around 40 MW. Grupo Piasa will supply the CHP unit with all bagasse and other sugar cane solid waste.

Part of the electricity generated by the unit will be used on site and the rest exported. Orbeo will manage the project’s registration to qualify for carbon credits under the United Nation’s Clean Development Mechanism (CDM) and will buy all of the pre- and post-2012 certified emission reductions generated from the project.

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