MEXICO: Blackouts cause concern
Thank you for reading LatinNews' chosen article from the Latin American Weekly Report - 16 May 2024
Mexico’s national electricity system (SEN) has been struggling to generate enough energy to meet demand. A combination of operational flaws and climatic factors led to power outages in multiple states on 7 May, with the national grid operator (Cenace) declaring a state of emergency the same day and emitting states of alert in the days following. The blackouts have sparked concerns around the national grid’s capacity to meet growing demand and scepticism over President Andrés Manuel López Obrador’s nationalist energy policies.
Cenace declared the emergency on 7 May, after it recorded a maximum demand of 49,887 megawatts (MW) per hour and an operating reserve margin of 3%. The grid needs a minimum reserve margin of 6% to operate as per national regulations. As a result, power outages were reported in around 20 of Mexico’s 32 states.
Cenace stated that generation capacity had been affected by two combined cycle plants going out of service and a drop in wind and solar energy generation due to weather conditions. Simultaneously, demand was higher than usual as the use of air conditioning units and fans increased due to the heatwave that afflicted most of Mexico from 3-13 May.
While more alerts were issued in the days following the state of emergency, on 11 May Cenace announced that there had been sufficient generation resources to meet demand “continuously and safely” the previous day, with the same conditions expected for the following two days. Cenace said the alert status was a preventative measure that did not imply restrictions in the supply of energy, as it said some media had “wrongly” reported.
President López Obrador has similarly downplayed the issues that the national grid has been experiencing. On 8 May, he said the power outages were the result of “exceptional” and “unexpected” circumstances and emphasised that the national grid had enough generating capacity to meet demand.
López Obrador also noted that the state-run electricity firm Comisión Federal de Electricidad (CFE) only controlled around half of the energy market share, with the remaining 50% in the hands of private companies. He said that, by the end of his term, the CFE would control over 60% of the market share, suggesting this would solve any electricity generation issues.
López Obrador has sought to prioritise the dispatch of power from the CFE throughout his presidency. He has attempted to implement both a legal and constitutional reform of the electricity sector to favour the CFE over private operators, both of which have been struck down.
López Obrador has since said he will propose another constitutional electricity reform following congressional elections in June, in which he hopes the ruling left-wing Movimiento Regeneración Nacional (Morena) and its allies will gain enough seats for a supermajority, ensuring the reform’s approval. In February, the government completed the purchase of 13 power plants from Spanish energy company Iberdrola, boosting the CFE’s market share.
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Some believe that is precisely the increase in the CFE’s market share that has caused the current problems. Coparmex, Mexico’s leading private sector lobby, has stated that the blackouts are the result of the government’s policy of limiting private investment in the electricity sector in order to prioritise the CFE. Coparmex stated this had led to a lack of new supply from power generation plants and low investment in transformation and transmission capacity by the CFE.
Meanwhile, Xóchitl Gálvez, the presidential candidate for the main opposition coalition Fuerza y Corazón por México, denounced the blackouts as “criminal negligence” on the part of López Obrador’s government. Gálvez has pledged to open up more of the energy market to private companies in order to satisfy demand if elected president in June.
New heatwave
The national electricity system (SEN) is likely to face more tests in the coming weeks. Although the national meteorological service (SMN) declared the end of the heatwave on 13 May, it warned that temperatures would remain above 40 degrees Celsius in 10 states and above 45 degrees in five. Another heatwave is also forecast for later this month.
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