Mexico to stay the course on cleaner generation: CFE
Mexico's state-owned power company CFE denied a move towards greater coal use, confirming its commitment to natural gas and renewable energy.
'It is completely false that we are going to increase coal use. We want to prioritize natural gas and renewable energy," CFE director Manuel Bartlett said this morning.
President Andres Manuel Lopez Obrador sees coal as a way to increase power generation in the short-term and has pledged to build a new coal-fired power plant. Lopez Obrador has also criticized Mexico's dependence on natural gas imports from the US and cancelled the long-term power auctions that CFE previously used to purchase renewable energy.
But the recent tender for 360,000t of coal from Coahuila state producers does not represent an increase in coal use, but merely feed stock for existing power plants, Bartlett said.
Mexico has three coal-fired power plants that generate 10 Twh/year of electricity and consume 17.3mn t/year of coal, Carlos Morales, CFE operations director said today.
But coal-fired generation represents just 7pc of total installed power generating capacity, compared with 60pc for natural gas-fired generation.
Mexico will continue to focus on gas-fired generation, said Miguel Santiago Reyes, head of CFE's fuel import division CFEnergia.
Mexico imports over half of its natural gas needs from the US as domestic production levels declined following the 2014 energy reform and cheaper imports were favored. Pemex produced 4.9 Bcf/d in February compared with 6.6 Bcf/d in February 2014.
"Our hope is that all the pipelines will start working and, while we are reviewing the transport contracts, it is with a view to strengthening the use of natural gas in Mexico," Reyes said.
The previous administration tendered the construction of 25 new gas pipelines that were designed to add 6.2 Bcf/d in import capacity to the network, but a handful remain mired in local opposition, unable to start operations. CFE is required to make fixed capacity payments despite not receiving any natural gas, a situation that Lopez Obrador has roundly criticized.
Bartlett said CFE was attempting to renegotiate the contracts, "for the good of the country," and would not rule out their cancellation in the event of a failure to agree new terms.
US pipeline imports into Mexico were around 4.5 Bcf/d in December, compared with around 2.1 Bcf/d in December 2014, according to the latest information from the US Energy Information Administration (EIA).
As CFE attempts to take more control over the natural gas transport contracts it is also seeking to recover its role in power generation.
"CFE's purpose is to generate electricity, not to buy it," Bartlett said today.
CFE was responsible for just over half the nearly 330,000GWh generated domestically at the end of 2017, the most recent data show, compared with 60pc of the roughly 290,000Wh produced in 2011.
In order to increase generation, CFE is rolling back the previous separation of generation subsidies, re-centralizing them in order to improve efficiency and economies of scale, Morales said.
The amendment to the previous regulation was carried out without public consultation as is normally required.
The desire to generate electricity rather than buy it from IPPs is one of the main motivations for cancellation of the long-term power auctions that were designed in order to meet Mexico's target of generating 35pc of electricity from "clean" sources, mainly wind and solar, by 2023, said Bartlett.
While the government professes to be in favor of clean energy, Bartlett remains unconvinced about the economics.
"Wind and solar power are very expensive. It is not true that they are cheap. We have the right to complain because we do not want to subsidize our opponents," Bartlett said.
The cost of balancing the grid due to the intermittent nature of renewable energy and the low transmission tariffs paid by renewable power generators are costs absorbed by CFE and so the renewable energy generators are not competing on an even field, Bartlett said.
Related news posts
Q&A: RAG says EU lacks clear hydrogen storage rules
Q&A: RAG says EU lacks clear hydrogen storage rules
Brussels, 4 July (Argus) — RAG Energy Storage has been one of the front-runners in hydrogen storage, and established the first operational commercial underground hydrogen storage (UHS) in a depleted gas field in April 2023. Argus spoke to its managing director Georg Dorfleutner, who is calling for a clear framework. Are you OK with the EU apparently scaling back from 10mn t/yr of hydrogen imports? We base the modeling of the report for HeartforEurope more or less on 2030 projections from the RepowerEU strategy. The assumptions on our modelling to identify an investment gap for hydrogen storage were rather conservative — that the only demand would come from industry, thus a rather flat profile over the year without seasonal-shift needs yet. From our side we have multiple potential hydrogen storage projects throughout Europe, but the hydrogen market development and support regimes for infrastructure investments will define the timely realisation. How might any scaling back affect your report's projected 36 TWh H2 storage gap? Whatever happens infrastructure needs to be in place very soon. Our report really underlines the need for a clear framework for hydrogen storage. And we come with a toolbox of different possible measures to support this. Storage tariffs alone won't solve the issue of market ramp-up. Policymakers may feel relieved that the gas and hydrogen decarbonisation package was finished before the EU elections. But our report is more or less saying that this alone will not do the trick. Could a strict EU definition of low-carbon hydrogen hinder growth? The wider and more pragmatic the definitions of low-carbon hydrogen are, the easier market ramp-up will be. Market ramp-up is enormously important for infrastructure. You don't build infrastructure just for demand over the next two years but for the next 10-15 years. Do we need more tailored financial support for UHS, at EU and state levels? There's simply no tailored financial support right now. There's a little aid for hydrogen storage research projects. Currently, policy-making appears focused on whether or not hydrogen infrastructure has to be unbundled. As for financial support, we're completely out of the picture for now. And there's this idea that regulated tariffs make commercially viable projects. But that's not true. It's only booked capacity based on a cost-covering approach that delivers a financially viable project. You don't build infrastructure just to have nice infrastructure without customers. Do we need EU and member state UHS targets? We're not looking for a strict mandatory goal. But if there is a certain goal for hydrogen uptake in the market, then you should ensure that you have the necessary infrastructure in place. That said, targets may be helpful at state level in setting a framework for state aid. But we also have to recognise that Europe is very diversified. Some areas may have very well-functioning hydrogen supply while other landlocked countries might depend on longer supply chains, thus being more dependent on storage. Are markets ready for UHS? Firms are already approaching us. The market is willing, but they need to know what the costs are. The best way forward then is providing clear rules for storage and giving industry a clear pricing idea. There also need to be clear state support mechanisms until we get to cheaper hydrogen and sufficient infrastructure utilisation. In the process of creating UHS capacities we need to keep in mind the SOS for natural gas, which currently is crucial. That's why we focus on new sites — caverns, porous reservoirs and aquifers — rather than repurposing. But at some point, post-2030 with a market ramp-up, decisions on repurposing gas into hydrogen storage will need to be taken. Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India’s Hindustan Zinc seeks imported thermal coal
India’s Hindustan Zinc seeks imported thermal coal
Singapore, 4 July (Argus) — Indian private-sector metals and mining company Hindustan Zinc is seeking up to 300,000t of thermal coal imports through a tender that closes on 8 July. The company wants imported coal of any origin in cargo sizes of 55,000t, 75,000t, 100,000t, 120,000t or 150,000t of unspecified calorific value (CV) to be delivered by August or the first half of September. It is seeking offers for coal preferably priced on a dap basis, but is open to receiving offers on fob, cfr or cif basis to Kandla, Dahej or Mundra ports on India's west coast. It would take at least two cargoes of imported coal. Hindustan Zinc wants coal with a sulphur content of less than 3pc on an air-dried basis. Total moisture levels should be 8-21pc. Typical ash content for high-ash coal should be up to 24pc with rejection level at 27pc, while the typical ash content for low-ash coal is at 12pc, with rejection limit at 13pc. Volatile matter should range 20-42pc. Prospective bidders should submit their applications by 8 July, with validity until 11 July. Interested bidders have to register on the auction portal — https://hzl.supplier.ariba.com — to participate in the tender. Stock and sale Hindustan Zinc is also seeking up to 20,000t of imported thermal coal with a typical CV of more than NAR 5,800 kcal/kg coal, with a minimum of NAR 5,500 kcal/kg, from stock and sale traders through the same tender. The company would prefer the stock-and-sale coal to be of South African origin that can be supplied at the earliest. The company would try to lift the cargo from a port on west coast of India within 45 days of award of the tender. The stock-and-sale coal should have high fixed carbon and low volatile matter content. The typical fixed carbon level should be at 50pc with rejection limit at 45pc, while volatile matter should be at 23pc with rejection limit set at 26pc. Typical ash level should be at 18pc, with the rejection limit at 22pc. Total moisture should be between 5-12pc. Hindustan Zinc is seeking the imported and stock-and-sale coal cargoes for its captive power plants, which have a combined capacity of 505.5MW. By Nadhir Mokhtar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Upper Mississippi locks closed by high water
Upper Mississippi locks closed by high water
Houston, 3 July (Argus) — High water levels on the upper Mississippi River have caused several lock closures and spurred delays for barge carriers. Lock and Dams (L&D) 12, 16 and 17 on the upper Mississippi River closed 2 July and are expected to remain closed through the rest of this week and possibly into the next, according to the US Army Corps of Engineers. Locks 11, 13, 18 and 20 are expected to close on 4 July. The Corps will likely close locks 14 and 22 on 5 July, while lock 15 is expected to close 6 July. The Corps said the duration of the July 4-5 closures is unclear. Another 2-5 inches of rain fell along the western Corn Belt in the past week, according to the National Oceanic and Atmospheric Administration. High river conditions led to major flood status at Dubuque, Iowa, while other locations along the river are at moderate flooding levels. Water levels are 4-5ft below record highs on the upper Mississippi River. The outdraft at lock and dam 16 was at 211,444 cubic feet per second (cfs) on Tuesday, compared with typical flow of 41,100cfs. Major barge carrier American Commercial Barge Line anticipates 7-10 days of disruption followed by a 2-3 week catch-up. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US services contract in June, signal broad weakening
US services contract in June, signal broad weakening
Houston, 3 July (Argus) — Economic activity in the US services sector contracted in June by the most since 2020 while a report earlier this week showed contraction in manufacturing, signaling a broad-based slowdown in the economy as the second quarter came to an end. The Institute for Supply Management's (ISM) services purchasing managers index (PMI) registered 48.8 in June, down from 53.8 in May. Readings above 50 signal expansion, while those below 50 signal contraction for the services economy. The June services PMI "indicates the overall economy is contracting for the first time in 17 months," ISM said. "The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment." The business activity/production index fell to 49.6 from 61.2. New orders fell by 6.8 points to 47.3. Employment fell by 1 point to 46.1. Monthly PMI reports can be volatile, but a services PMI above 49 over time generally indicates an expansion of the overall economy. "Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," ISM said. The prices index fell by 1.8 points to 56.3, showing slowing but robust price gains. ISM's manufacturing PMI fell to 48.5 in June from 48.7 in May, ISM reported on 1 July. It was the third consecutive month of contraction and marked a 19th month of contraction in the past 20 months. Wednesday's weaker than expected ISM report, together with a Wednesday report showing initial jobless claims last week rose to their highest in two years, slightly increase the odds that the Federal Reserve may lower its target rate later this year after maintaining it at 23-year highs since last year in an effort to stem inflation. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more