The distributed power generation (DPG) market in Mexico is expected to grow steadily despite the monopoly of one company, which has limited market potential to an extent through subsidies and strong grid interconnection regulations. 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 (energy.frost.com), Analysis of the Mexican Distributed Power Generation Market, finds that the market earned revenues of more than $217.6 million in 2012 and estimates this to reach $370.2 million in 2017 at a compound annual growth rate of 11.2 percent.
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.
'Recent net metering regulations in the country have encouraged the assembly of new DPG units in households and small commerce consumers,' said Frost & Sullivan Energy and Environmental Industry Analyst Martín Cataife. '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.
To stay competitive, technology providers in Mexico need to focus on clients in the mining as well as oil and gas verticals. Investments in gensets, rather than in renewable energy sources such as wind, solar and small hydro power plants, will widen market scope.
'Internal combustion generating sets will remain the preferred solution,' concluded Cataife. 'Nevertheless, market revenues from renewable energy solutions are expected to increase in the medium to long term.'
If you are interested in more information on this research, please send an email to Francesca Valente, Corporate Communications, at francesca.valente[.]frost.com, with your full name, company name, job title, telephone number, company email address, company website, city, state and country.
Analysis of the Mexican Distributed Power Generation Market is part of the Energy & Power Growth Partnership Service program. Frost & Sullivan's related research services include: Southern Cone Solar Markets, Mexican Solar Power Market, and Chilean Electricity Industry. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Analysis of the Mexican Distributed Power Generation Market / NC14-14