Mexico Renewable Energy Policy Handbook Power

Transcription

1 Mexico Renewable Energy Policy Handbook 2017 Report Code: GDAE1108P

2 1 Table of Contents 1 Table of Contents List of Tables Introduction Renewable Energy Policy GlobalData Report Guidance Renewable Energy Policy, Mexico Overview Electricity Industry Law Mexico Renewable Energy Program Energy Transition Law (Ley de Transición Energética, LTE) General Law of Climate Change (Ley General de Cambio Climático) Special Program for the Use of Renewable Energy Resolution on Net-Metering National Energy Strategy National Commission for the Efficient Use of Energy Large-Scale Renewable Energy Development Project Accelerated Depreciation for Environmental Investment Wheeling Service Agreement for Electricity from Renewable Energy Sources Methodology to Establish Service Charges for the Transmission of Renewable Electricity Grid Interconnection Contract for Renewable Energy Renewable Energy Outlook Vision for 2030 on the Use of Renewable Energy in Mexico Renewable Energy Promotion-PromovER Integrated Energy Services Project, Light in the House Program (Luz en Casa Oaxaca) Light for Mexico Program Financial Incentives and Policy Support for Wind Resolution on Interconnection of large hydro plants Geothermal Energy Act Law for the Promotion and Development of Bioenergy Sustainable Rural Development Project for the Promotion of Alternative Energy Sources in Agribusiness Value Added Agribusiness Risk Sharing Schemes Program for Financing of Electric Energy Saving Guidelines establishing and issuing Clean Energy Certificates Law for the Sustainable Use of Energy (Ley para el Aprovechamiento Sustentable de la Energía, LASE) 16 2

3 3.29 Law for Sustainable Use of Energy and the National Program for the Sustainable Use of Energy (PRONASE) Compact Fluorescent Lamp Market Solar Water Heaters Program Green Mortgage Program Nationally Determined Contribution (NDC) to the Paris Agreement (COP21) Appendix Market Definitions Installed Capacity Electricity Generation Electricity Consumption Thermal Plant Hydropower Plant Nuclear Renewable Energy Resources Abbreviations Methodology Coverage Secondary Research Primary Research Modeling and Forecasting Contact Us Disclaimer List of Tables Table 1: Abbreviations

4 2 Introduction 2.1 Renewable Energy Policy Renewable energy represents a possible solution to two major global issues: global warming and diminishing fossil fuel reserves. It is sustainable and clean, generally emitting no or very little CO 2, and these factors have led major countries to shift their focus toward the development of renewable energy sources. Renewable energy has the potential to boost the global economy. However, the most important challenge in the deployment of renewable energy is that it is more expensive than conventional fuels. In order to make renewable energy competitive, it is necessary for governments to provide support in the form of favorable policies and incentives. Various governments are establishing regulatory frameworks, policies, and incentives to develop the renewable energy sector, as they increasingly recognize its importance. Renewable portfolio standards, or quota obligations, and Feed-in Tariffs (FiTs) are the two most prominent support mechanisms used to drive the development of the renewable energy market, and most of the countries that recognize this offer one or both of these policy measures. Other incentives, such as capital subsidies, grants, rebates, tax credits, tax exemptions, loans at reduced interest rates, net metering, Renewable Energy Certificates (RECs), and public competitive bidding, are also offered variously by major countries to promote renewable energy capacity building. 2.2 GlobalData Report Guidance The report begins with an introduction to renewable energy policy and its importance in making renewable energy sources competitive with conventional energy sources. It then discusses the major renewable energy policies in Mexico. 4

5 3 Renewable Energy Policy, Mexico 3.1 Overview Mexico possesses substantial reserves of coal, oil and gas, and its power sector is dominated by these sources. Mexico s power sector was deregulated in 1992 when the government announced the introduction of an independent power producer program, a move that was intended to increase private sector involvement. Under the current structure, the Ministry of Energy (Secretaría de Energía, SENER) acts as the regulatory body. Transmission and distribution is in the control of the government, and generation has both private and public participation. Iberdrola, EDF, Gamesa, Enel, Union Fenosa and Mitsubishi are some of the key private participating companies. However, the government-owned company Federal Electricity Commission (Commission Federal De Electricidad, CFE) dominates the market. 3.2 Electricity Industry Law The Electricity Law was established in 2014 and is among the 21 Secondary Laws passed by the government after the constitutional reform. It includes regulations for the integration of renewable energy into the national grid. According to the law: The generation market is opened for business to private players New wholesale power market will be established by SENER Grid operation will become independent Private commercialization will be allowed The clean energy generation target (35% by 2024) will be enforced through a Clean Energy Certificates system Transmission and distribution monopolies are kept under state-owned enterprises, but with new elements that allow a private sector through association or contracts with the CFE Social impact assessments are required for all generation projects Government strategies for the electrification of rural and peri-urban areas will promote the use of renewable energy A legal framework will be created for the Universal Services Fund (Fondo de Servicio Universal Electrico), which will finance the electrification of rural communities and marginalized areas. In 2012, the government introduced the National Energy Strategy ( ), which set the specific goal of generating 35% of domestic power from non-fossil fuel sources in order to reduce greenhouse gas (GHG) 5

6 emissions over the next 15 years. The National Energy Strategy for also maintained the same target. In 2012, the Law for the Use of Renewable Sources of Energy (Ley para el Aprovechamiento de las Fuentes Renovables de Energía, LAFRE) was reformed. The target under this law was to limit the generation share accounted for by fossil fuel technologies to 65% by 2024, 60% by 2035, and 50% by This law was superseded in 2014 by the Energy Transition Law (Ley de Transición Energética, LTE) which changed the targets for non-conventional fuels to 25% for 2018, 30% for 2021, and 35% for The targets for 2035 and 2050 are no longer effective. Mexico has good wind power potential, especially in the Oaxaca region. The main driver for the development of the wind industry is the income tax law, although the Large Scale Renewable Energies Project, implemented by the Global Environment Facility (GEF), is also a significant driver. 3.3 Mexico Renewable Energy Program The Mexico Renewable Energy Program (MREP) was implemented in The MREP was handled by Sandia National Laboratories and was assisted by the US DoE Solar Energy Technologies Program and the US Agency for International Development s Mexico Mission. The program, which was voluntary, expired in The aim of the program was to develop the appropriate and feasible use of renewable energy technologies in Mexico, in order to achieve the following goals: Increase the quality and reduce the cost of renewable energy technologies by analyzing the markets, and giving feedback to the energy industry in the US and Mexico Increase the use of clean energy sources in order to combat global climate change Enhance economic, social, and health standards in rural, off-grid households and communities by using renewable energy systems for advantageous applications The program supported its partners in a number of areas related to the use of renewable energy technologies, including the following: Technical training via workshops and courses Feasibility assessments for specific projects Development of system requirements Technical reviews of the bids received from vendors Post-installation evaluations and monitoring Financing schemes Technical specifications 6

7 Resource and site assessments Demonstration pilot system installations Training materials Promotional materials Development of new applications 3.4 Energy Transition Law (Ley de Transición Energética, LTE) This law superseded the earlier LAERFTE. The objective of the new law was to provide a framework for implementing clean energy measures, energy efficiency, and GHG emission reductions. The LTE established four planning mechanisms: a national strategy to set clean energy and energy efficiency goals; two special programs to implement that strategy; and another program for smart grids. The national energy efficiency goals are: The strategy to achieve the energy efficiency goals are outlined in Article 27-I of the law as well as the National Program on Sustainable Energy Use or PRONASE (Article 11). The clean energy goals for the long term ( ) were abandoned and replaced with goals for the medium term (up to 2030). The goals for clean energy are: 25% by % by % by 2024 The law also sets an objective to set a strategy for achieving clean energy and energy efficiency goals for 30 years (long-term). 3.5 General Law of Climate Change (Ley General de Cambio Climático) Effective since 2012, the law reinforces the LTE. Three agencies have been established under the aegis of this law: The National Institute of Ecology and Climate Change The Climate Change Council The Inter-secretariat Commission for Climate Change Several GHG mitigation targets have been outlined in the law which have directly incentivized the development of renewable energy sources: 7

8 Energy development from clean sources to reach 24% of total energy by 2024 Emissions to be reduced by 30% by 2020 and by 50% by 2050 compared to 2000 levels 3.6 Special Program for the Use of Renewable Energy This program targets 23,345 MW of renewable energy capacity to be installed by The overall target is split into technology targets: Hydropower: 13,030 MW Wind: 8,922 MW Geothermal: 1,018 MW Bioenergy: 784 MW Solar PV: 627 MW. 3.7 Resolution on Net-Metering In May 2010, the resolution was issued technical specification for grid connection and includes a template for power production contracts for Renewable Energy Sources and Medium size Cogeneration Systems. The resolution allows net metering for small-scale (10 kilowatt (kw) residential and 30kW commercial; low voltage, less than 1kV) and medium scale (greater than 500kW; medium-voltage 1 69kV) generators. Net metering balances over a period of 12 months. 3.8 National Energy Strategy In 2012, the Chamber of Deputies of the Mexican Congress approved the National Energy Strategy (Estrategia Nacional Energetica, ENE), which set a specific goal for the generation of 35% of power from nonfossil sources in order to reduce GHG emissions over the next 15 years. The ENE focuses on two main objectives: firstly, establishing the sector as a driver of development and economic growth, and, secondly, increasing the access to and consumption of energy. In 2013, the government ratified the National Energy Strategy for the period. This strategy establishes a roadmap on the energy policies that are to be implemented over the next 15 years. The roadmap aims to prevent Mexico from becoming a net oil importer by Furthermore, the strategy identifies gradual adjustments in subsidies and energy prices, so that prices better reflect the real cost of energy generation. The attempt to generate 35% energy from clean sources by 2026 remains in force. 3.9 National Commission for the Efficient Use of Energy 8

9 On November 28, 2008, the National Commission for the Efficient Use of Energy (Comisión Nacional para el Uso Eficiente de la Energía, CONUEE) replaced the National Commission for Energy Saving (Comisión Nacional de Actividades Espaciales, CONAE), created on September 28, 1989, as a consultative technical body of the departments and agencies of the federal government, the governments of states and municipalities, and the private sector. The CONUEE, an agency within the Secretariat of Energy, has as its main objectives promoting energy efficiency and serving as a technical body on sustainable use of energy Large-Scale Renewable Energy Development Project The Large-Scale Renewable Energy Development Project (Projecto de Energías Renovables a Gran Escala, PERGE) was implemented on June 29, The project aims to promote grid-connected renewable energy, thereby contributing to emission reductions. The total cost of the project amounts to an estimated $150.35m, with a closing date of April 30, The project has a $70m GEF grant from the World Bank and is to be carried out in two phases. The first phase will involve $25m of spending, of which $20m will be assigned to la Venta III, a 101 MW wind energy project, and the remaining $5m will be used for technical assistance activities. The second phase will involve $45m of spending. As of September 2012, only 1% had been disbursed, and a mid-term review was planned for June Essential requirements for the second stage are: The fund should be operated under clear market rules. At least 70 MW of renewable energy must have been installed during the first stage. The CFE must have put in place an accurate approach to determining fair values for new plant capacity. The maximum incentive provided to new projects in the second stage should not exceed $0.01 per kwh. As of December 17, 2015, the most relevant achievements of the project are: Generation Capacity of Renewable Energy constructed (target of 100MW): MW Increase electricity supply to the national system from renewable energy sources (target of Gigawatt hours (GWh) per year): 94% of target in 2013, 104.5% of target in 2014 and on track to achieve 106% of target in 2015, for an accumulated electricity supply of 846 GWh (October 2012 to October 2015) Avoided emissions (target of 166,769 tons CO 2 equivalent per year): 94% of the target in 2013, 104.5% of target in 2014 and on track to achieve 106% of target in 2015, for accumulated avoided emissions of 522,000 tons CO 2 equivalent (October 2012 to October 2015). 9

10 CFE will pay the avoided costs, and the incentive will be granted to suppliers through the Green Fund. In April 2005, SENER requested that the CFE include five wind energy projects, of 101 MW each, in its expansion plan. The financial mechanism of the Green Fund program seeks to recognize the real value of renewable energy in terms of its contribution to the reduction of the risks involved in energy supply and energy price stability, for its contribution to the capacity of the National Electric System and for its potential to reduce regional and global environmental impact. Resources will be offered as performance incentives. Instead of a capital subsidy, each project will receive a fixed incentive per unit of energy produced for a period of five years Accelerated Depreciation for Environmental Investment The policy for accelerated depreciation for environmental investment came into effect in early 2005, allowing investors in the field of environmentally friendly technology, including renewable energy, to take advantage of accelerated depreciation. Investors in renewable energy projects are permitted to subtract up to 100% of their investment in a single year as defined in articles 21, 22, and 23 of the General Law for Ecological Equilibrium and Environmental Protection. According to the regulation, the plant should be operational for at least five years and should fulfill productive purposes, following the tax deduction declaration Wheeling Service Agreement for Electricity from Renewable Energy Sources The wheeling service agreement for power from renewable energy sources introduces the process, terms of reference and conditions that must be complied with for the wheeling of power generated from renewable energy sources. This agreement was implemented in The regulation applies to self-suppliers of power generated from renewable energy sources whose generation facilities are situated away from the premises of the self-supplier where the power is used. For this purpose, the self-electric producer must sign an interconnection agreement with the national electric utility, either the CFE or The Legislative Finance Committee, which is the utility serving the metropolitan Mexico City area Methodology to Establish Service Charges for the Transmission of Renewable Electricity This methodology establishes service charges for the transmission of power from renewable energy resources to be followed by the CFE and the and Light Company. The regulation was introduced in 2003 and aims to improve the overall efficiency of the transmission system, allow for cost recovery by the transmission system operator, and introduce an expected, transparent and variable regime to prevent overcharges for the producer Grid Interconnection Contract for Renewable Energy 10

11 In 2001, the Energy Regulatory Commission of Mexico (Comisión Reguladora de Energía, CRE) formulated special rules for transmission charges and other issues relating to feeding and transmitting intermittent power from renewable energy sources into the national grid. These rules apply to wind, solar and small hydropower installations with adequate storage capacity to generate power during domestic peak hours. The rules established by the CRE require the utility to: Assign importance to feeding power produced from renewable sources of energy into the grid Offer discounts of between 50% and 70% for power transmission and grid connection for renewable energy plants with a capacity of more than 500kW Store surplus energy produced by the utility for use at a later time, which must be provided to the supplier on demand These rules were used to devise the terms and conditions of standard contracts between suppliers feeding into the grid and the utility. The value of power in one direction or the other is determined by a set of formulas stated in the contract terms. The supplier is required to fulfill a number of legal and administrative requirements in order to gain access to this type of contract. The CRE offered a new draft agreement introducing a payment system for the supply and demand of energy. This is calculated on the basis of the monthly average of energy supplied at peak load times Renewable Energy Outlook Vision for 2030 on the Use of Renewable Energy in Mexico The first Mexican Renewable Energy Outlook, which was developed at the request of SENER, anticipated that hydropower would grow by an average of 2.3% per year, biomass and waste would grow by 3.7%, and other renewable energy sources would grow by 4.1% between 2002 and Renewable energy not used for power generation would account for only 5% of the total portfolio. Biomass and waste will reduce their participation from 8% to 4% between 2002 and 2030, due primarily to the reduced use of wood in the residential sector. Other biomass energy sources, such as agricultural and urban residues, are expected to become as important a resource as geothermal energy production Renewable Energy Promotion-PromovER Since June 2005, the German Technical Co-operation has been engaged in the Renewable Energy Promotion- PromovER project. The aim of the program is to contribute to the efficient promotion of renewable energy markets through responsible institutions. In order to achieve this goal, the program is required to maintain a close association with major bodies at the general level and develop the large-scale use of renewable energy by 11

12 focusing on the adjustment of legal and regulatory frameworks and project and market development. The program works along the following lines: Advisory role in relation to adjustment of legal and regulatory frameworks Strategy and policy growth: focused on biofuels in the first stage Project and market development: focused on solar heaters in the first stage The Mexican entities participating in the program are SENER, which is the main responsible counterpart, the CRE, the National Commission for Energy Saving, the Electrical Research Institute (Instituto de Investigaciones Eléctricas, IIE), and the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, SEMARNAT) Integrated Energy Services Project, The objective of the Integrated Energy Services Project of Mexico is to increase access to efficient and sustainable integrated energy services in predominantly indigenous rural areas and reduce GHG emissions through the use of solar power in rural areas for the provision of electricity. The project has five major components: Strengthening of strategy, policy, and regulatory frameworks Investment in rural electrification sub-projects Technical assistance and capacity-building activities necessary to ensure the success and sustainability of the project at different stages of implementation Technical assistance to increase productive use of power and co-financing on a pilot basis for a limited number of productive or micro-business activities Project management The complexity of its design resulted in delays in its implementation until a restructuring process was initiated in 2011 (concluded in October 2012). The new project will be executed by the CFE and will focus on 86 rural communities by implementing small-scale renewable energy solutions between 2012 and As of October 2015, the project helped increase access to efficient and sustainable integrated energy services in 40 extremely isolated rural communities of Mexico Light in the House Program (Luz en Casa Oaxaca) 12

13 This program aims to facilitate access to electricity by supplying small solar lighting systems to households in towns with less than 100 inhabitants in the state of Oaxaca, benefiting 9,000 households, or around 25,000 beneficiaries up to Users received funding under an agreement between ACCIONA Microenergía México and Kiva, a leading US crowdfunding organization. Through its investors, funds were raised to cover the user s loan applications ($ per user), which will be repaid in 12 monthly installments. This enabled low-income families to purchase PV systems Light for Mexico Program This program s objective is to electrify the homes in 1,000 communities with over 100 inhabitants. This is to be facilitated through grid coverage or isolated solar system installations. Projects under this program have been carried out at Guásimas del Metate and Tierra Blanca del Picacho, both located near the mountains in Tepic, Nayarit, and at Sierra Norte, Sierra Negra, and Mixteca in Puebla Financial Incentives and Policy Support for Wind Mexico has excellent wind resources, especially in the Oaxaca region, and the government has introduced a number of initiatives to promote the use of renewable energy. The main driver for the development of the wind industry is the income tax law, which provides a 100% deduction incentive for taxpayers who invest in renewable energy equipment, including wind technology. The other major program contributing to the development of wind power is the Large-Scale Renewable Energies Project, implemented by the GEF Resolution on Interconnection of large hydro plants The resolution number RES/065/2010 sets the rules for interconnection of large hydropower plants (greater than 30MW). These power plants are not considered in the Law on the Use of Renewable Energies and Financing of Transition (Ley Para El Aprovec Hamiento De Energías Renovables Y El Financiamiento De La Transición Energética, LAERFTE) and thus require a separate regulation. This resolution includes methods of calculating payments obliged by the contract Geothermal Energy Act The Geothermal Law is defined to be one of the 21 Secondary Laws passed after the constitutional reform. The law: Provides a legal framework for identifying, exploring and exploiting geothermal sites Provides a clear definition of hydrothermal geothermal fields Defines geothermal concessions and regulates prospection and exploration 13

14 The concessions can last up to 30 years and cannot be sold but can be transferred after formal notification. According to the law, explorations permits require the deposit of a refundable guarantee of 1% of total planed exploration budget. Exploitation concessioners require the deposit of a guarantee of 0.5% of total investment required until commercial operation, at which point it is refundable Law for the Promotion and Development of Bioenergy This law provides for the growth of bioenergy in order to achieve energy diversification and viable development. The law aims to fulfill the following objectives: Boost agribusiness cane and corn for ethanol production Develop the use of bioenergy as part of the CDM, as well as the dissemination of information for its use Increase the use of ethanol in gasoline oxygenation Ensure satisfactory air quality in all settlements and regions of the country, by reducing and controlling the emissions of air pollutants Increase the production, distribution and marketing of renewable energy from biomass by providing the technical and budgetary support required for renewable energy development Recognize the production of bioenergy as a productive activity that will contribute to energy diversification, provide employment options in rural areas, increase production, and generate foreign exchange Strengthen scientific and technological research and consolidate this research as an essential tool for the definition and implementation of policies, instruments, measures, mechanisms and decisions regarding the sustainable use of resources related to Bioenergy Encourage the production of feedstock for bioenergy from agricultural waste, forestry, algae, and biotechnological and enzymatic processes in rural Mexico, limited by the principles of food security and sovereignty, in accordance with Articles 178 and 179 of the Rural Sustainable Development Law, Develop production, marketing, and efficient use of biofuels in order to contribute to the strengthening of the rural sector, generating employment and improving quality of life, Promote regional development in disadvantaged rural communities, Reduce atmospheric pollution and GHGs by using international instruments contained in the treaties to which Mexico is a party, Co-ordinate activities amongst federal, state and municipal authorities. 14

15 The law calls for the establishment of tariff exemptions for the import of equipment required for the assembly of alcohol refineries or other facilities and the improvement of crops and infrastructure for the production of bioenergy. The law also calls for an exemption from payment of VAT for people who derive income from activities involved in the production of bioenergy in Mexico Sustainable Rural Development Project for the Promotion of Alternative Energy Sources in Agribusiness The goals of the project are helping to implement commitments made by the country in terms of climate change and aiming to reduce GHG emissions through the incorporation of renewables in the production processes of agribusiness. The program will be funded by external funding supplemented by the GEF, negotiated with the Mexican Secretariat of Property and Public Credit and the Secretariat of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales, SEMARNAT). The credit will be made available as part of the mechanism for the reimbursement of investment and will be available to agribusiness producers promoting renewable energy and energy efficiency in their production processes. It is expected to have been implemented within five years. Complementary to the project, the government is also supporting a program to use animal excreta from dairy farms and pig farms by using biodigester facilities to produce biogas, which can then be used for power generation and/or heat energy. The installation of biodigesters involves three areas of development: Complementing the biodigestion systems installed by private sellers of carbon credits so that they support motor generators to generate power Initiation of an instrumentation program through a CDM project, which will incorporate pig and dairy farms that wish to participate. This will allow a transaction costs reduction of up to 90%, and the CO 2 emissions saved can be sold on the international market through the carbon credit system Incorporating farms and stables where pollution is a serious problem: this option provides for the installation of separate biodigestion systems, whereby incentives are provided under the rules of operation of the Secretariat programs, and producers are required to provide a substantial share of the cost 3.25 Value Added Agribusiness Risk Sharing Schemes The objective of this program is to apply risk-sharing schemes for the implementation of projects, in order to encourage the use of renewable energy. The amount and type of support provided will be awarded as a supplementary financing investment project under a risk-sharing scheme. The project provides support for biodigesters, biofuel production and the production of biofertilizers. 15

16 The project also provides support for investment in infrastructure and equipment relating to the acquisition, construction or improvement of fixed facilities, the purchase of transportation equipment, the installation and testing of new machinery and equipment, including systems and renewable energy equipment necessary for supplying or marketing goods, and the provision of services to agribusiness. It also serves to initiate or improve operations and help consolidate and improve the business environment Program for Financing of Electric Energy Saving The Program for Financing of Electric Energy Saving was established by the Trust for Electric Energy Savings (Fideicomiso para el Ahorro de Energía Eléctrica, FIDE), along with the CFE. The program finances the replacement of old, inefficient refrigerators and air-conditioners with efficient and new equipment. It also provides financial support for more efficient lighting through a credit paid on power bills. The thermal insulation of houses is also provided for under the program, which is divided into two phases: The first phase spanned the period. In this phase, approximately 30,000 homes were insulated, and approximately 130,000 refrigerators and 623,000 air conditioning units were replaced. The second phase spanned the period. A new informational operational system was established in order to rationalize interactions between manufacturers, distributors, and collectors. The FIDE label identifies energy-efficient products in the Mexican market; it certifies that the product bearing the label has met certain standards and identifies it as a FIDE certified energy-efficient product Guidelines establishing and issuing Clean Energy Certificates The Clean Energy Certificate Guide defines the criteria of obtaining the Clean Energy Certificates and helps Mexico achieve its clean energy goals at an economical cost and participate in the power sector. The government determines the requirements for clean energy certificates on a yearly basis three years in advance of the compliance period. The first compliance period will be As of March 31, 2015, the Clean Energy Quota for this period is set at level of 5% of total electricity consumption. All clean energy generators, defined as power plants using clean energies, developed after August 2014 will receive, for 20 years, one Clean Energy Certificate per Megawatt hour (MWh) generated. Clean energy certificates are bankable and do not expire. Penalty for non-compliance is US$ per MWh. The certificates can be purchased and sold, under monitoring of the regulatory commission of energy Law for the Sustainable Use of Energy (Ley para el Aprovechamiento Sustentable de la Energía, LASE) 16

17 The Law for the Sustainable Use of Energy (LASE) was established in 2008 to promote the concept of sustainable use of energy in all processes and operations, from exploration to consumption. PRONASE, the strategy to implement energy efficiency targets in all sectors from the federal level, was established under this law Law for Sustainable Use of Energy and the National Program for the Sustainable Use of Energy (PRONASE) The Ministry of Energy, through the CONUEE, developed PRONASE, which was approved by the Federal Executive and published in the Official Gazette on April 28, According to the Law for Sustainable Use of Energy, the PRONASE is a special program in terms of the Planning Act, linked to the National Development Plan and consistent with the Energy Sector Program , the National Energy Strategy , and the Annual Action Plan of the CONUEE. The PRONASE is the governing document of the sustainable use of energy in Mexico and will be mandatory for the Ministry of Energy. Other agencies of the federal government shall be subject to its provisions when the program touches on the field of their respective competencies. The program has six goals, 18 strategies and 66 lines of action that will achieve the optimal use of energy in all processes and activities for exploitation, production, processing, distribution and consumption. Six areas will drive and promote energy efficiency: Energy efficiency programs Regulation of energy efficiency Cooperation mechanisms Institutional capacities Culture of energy saving Research and technological development The development process included a public consultation program between October 2013 and February In November 2013, in coordination with the Ministry of Energy, the CONUEE held three consultative forums focused on the items that make up the program by involving institutions from the public, private, academic and social sectors. The CONUEE also conducted more than 30 visits to government institutions to coordinate common actions that affect the development and efficient use of energy. 17

18 It is noteworthy that the PRONASE is linked to the Special Program for Use of Renewable Energy , which also constitutes a special program of the energy sector and the Special Climate Change Program , coordinated by the Secretariat Environment and Natural Resources. Finally, PRONASE was structured according to the guidelines and timetable stipulated in the Technical Guide for the development of programs under the National Development Plan , issued by the Ministry of Finance and Public Credit Compact Fluorescent Lamp Market The National Development Plan is the basis for energy policies. The plan establishes the country s strategies and commitments in all sectors, including the energy sector. The strategies devised by the National Energy Plan lay the foundation for a detailed energy-efficiency plan. The strategy focuses on the strengthening of government agencies for the implementation of energy-efficiency programs and projects. The major public sector agencies responsible for the formulation of policies are SENER, the CRE, and the CFE. SENER is responsible for the formulation of policies in the energy sector, CRE is a regulatory body, and CFE is the state utility responsible for the generation, transmission, and distribution of power. At an operational level, the programs are supported by the FIDE and the Trust Fund for Energy Savings via Insulation of Households (Fideicomiso para el Programa de Aislamiento Temico, FIPATERM). FIDE and FIPATERM, which were established by CFE in 1990, are key entities in the implementation of energy-efficiency programs. FIDE is managed partly by CFE and partly by other public and private organizations, operating primarily in the central region of Mexico. FIPATERM undertakes similar responsibilities in the northern and southern states of Mexico. In order to meet the growing challenges presented by the energy sector, the government of Mexico developed objectives stated in the Energy Sector Program. The following are some of the objectives of the program: To ensure reliability in energy supply at competitive prices, diversify the sources of energy used, and develop renewable energy sources To enforce proper legislation for the development of the energy sector and efficient use of energy To introduce energy-efficiency programs and promote energy efficiency in the residential sector To improve efficiency in the lighting sector, the government implemented an energy-efficiency program that aimed to replace 47.2 million incandescent lamps with Compact Fluorescent Lights (CFLs) in the residential sector over a period of three years between 2009 and The replacement was expected to cost $70m, some of which was to be provided by the International Bank for Reconstruction and Development. The current program precedes pilot projects involved in the distribution of 1.4 million CFLs. 18

19 The National Strategy for the Energy Transition and Sustainable Use of Energy, signed in 2009, and the Law for the Sustainable Use of Energy, signed in 2008, provide the framework for promoting renewable energy and energy efficiency in Mexico Solar Water Heaters Program The objective of the Solar Water Heaters Program is to develop a relevant framework for the SWH market. The program aims to install 23.5 million square meters (252.9 million square feet) of solar collectors for water heating and reduce CO 2 emissions significantly by the end of Green Mortgage Program Infonavit (Instituto del Fondo Nacional de la Vivienda para los Trabajadores or National Fund for Workers Housing), an organization promoting this program, has been doing this since January As part of the program, it extends credit for the purchase of or construction of energy-efficient homes to workers families. The incentive is in the form of a larger fund allotment than regular loans, while paperwork for developing such residences is reduced Nationally Determined Contribution (NDC) to the Paris Agreement (COP21) Mexico s nationally declared targets for reducing GHG emissions as part of the COP21 agreement are: An absolute commitment to reduce GHG emissions and short-lived climate pollutant (SLCP) emissions by 25% below business-as-usual scenario by the end of 2030 This percentage could be increased to 40% subject to global agreement on factors such as international carbon price, carbon border adjustments, technical co-operation, access to low-cost financial resources, and technology transfer. Mexico has also declared the creation of infrastructure that would protect communities from deterioration in climate conditions, and any adverse impact arising from that including extreme hydro-meteorological events, by adopting more environmentally sustainable activities and limiting deforestation to nil by Other mitigation measures include establishing early warning systems and risk management systems at every level of government. The adaptive capability of communities falling under the most vulnerable category are also to be strengthened by a minimum of 50% as part of Mexico s strategy of combating global warming. 19

20 4 Appendix 4.1 Market Definitions refers to the rate of production, transfer, or energy use, usually related to power. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in MW on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating power from other forms of energy. It also refers to the amount of power produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of power generated, plus imports, minus exports and Transmission and Distribution (T&D) losses. It is measured in GWh Thermal Plant A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A hydropower plant is a plant in which the turbine generators are driven by falling water Nuclear Nuclear power is the energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydropower, and wind are examples of renewable resources. 20

21 4.2 Abbreviations Table 1: Abbreviations CDM Clean Development Mechanism CFE Commission Federal De Electricidad (Federal Electricity Commission) CFL Compact Fluorescent Light CONUEE Comisión Nacional para el Uso Eficiente de la Energía (National Commission for the Efficient Use of Energy) CRE Comisión Reguladora de Energía (Energy Regulatory Commission of Mexico) IIE Instituto de Investigaciones Eléctricas (Electrical Research Institute) ENE Estrategia Nacional Energetica (National Energy Strategy) FIDE Fideicomiso para el Ahorro de Energía Eléctrica (Trust for Electric Energy Savings) FIPATERM Fideicomiso para el Programa de Aislamiento Temico (Trust Fund for Energy Savings via Insulation of Households) GHG Greenhouse Gas GW Gigawatt GWh Gigawatt hour MREP Mexico Renewable Energy Program MW Megawatt MWh Megawatt hour PRONASE Sustainable Energy National Program SEMARNAT Secretaría de Medio Ambiente y Recursos Naturales (Ministry of Environment and Natural Resources) SENER Secretaría de Energía (Ministry of Energy) Source: GlobalData 4.3 Methodology GlobalData dedicated research and analysis teams consists of experienced professionals in marketing, market research, consulting background in the energy industry and advanced statistical expertise. GlobalData adheres to the Codes of Practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( All GlobalData databases are continuously updated and revised. The following research methodology is followed for all databases and reports. 4.4 Coverage The objective of updating GlobalData coverage is to ensure that it represents the most up to date vision of the industry. We track hundreds of Alternative energy news sources on a daily basis. Using this news flow and regular interaction with the industry experts, we identify the key trends being witnessed by the industry. These can be market opportunity, industry consolidation, technological break-through, policy updates, etc. Our articles and reports investigate these trends in detail and evaluates the market implication of these trends. 21

22 4.4.1 Secondary Research The research process begins with exhaustive secondary research on internal and external sources being carried out to source qualitative and quantitative information relating to each market. The secondary research sources that are typically referred to include, but are not limited to: Company websites, annual reports, financial reports, broker reports, investor presentations and SEC filings Industry trade journals and other literature Internal and external proprietary databases National government documents, statistical databases and market reports News articles, press releases and web-casts specific to the companies operating in the market Primary Research A primary research effort further substantiates findings and information captured through desk research. This aspect of the research program serves both as a means of obtaining updates regarding issues such as changes in policy frameworks, power sector development, and as a quality control mechanism. GlobalData conducts hundreds of primary interviews a year with industry participants and commentators in order to validate its data and analysis. A typical research interview fulfills the following functions: Provides first-hand information on the market size, market trends, growth trends, competitive landscape, future outlook Helps in validating and strengthening the secondary research findings Further develops the analysis team s expertise and market understanding Primary research involves interactions and telephone interviews as well as face-to-face interviews for each market, category, segment and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to: Industry participants: CEOs, VPs, business development managers, market intelligence managers and national sales managers Outside experts: Investment bankers, valuation experts, research analysts and key opinion leaders specializing in the power industry Modeling and Forecasting In case of data gaps and especially while forecasting the market, we use in-house models to forecast the data. Historic data and the analysis of trends within it form the basis of all forecasting methodology. Various 22

23 qualitative and quantitative factors are usually taken into account for estimating the future growth. The forecasted data is validated through various industry experts and back-of-envelope check is also done. 4.5 Contact Us If you have any queries about this report or would like further information, please contact at the below given telephone numbers or address. North America: Europe: Asia Pacific: Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such GlobalData can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. This report is a licensed product and should not to be reproduced without prior permission. The information in this document has been extracted from etrack by a registered user. GlobalData holds no responsibility for the loss of original context and for any changes made to information following its extraction. All information was current at the time of extraction, although the original content may have been subsequently updated. 23