- 13% of Mexico’s existing power fleet is facing retirement
- Loss of capacity will tighten the market and boost prices
Mexico’s grid planners expect 10GW of capacity (13% of the current installed base) to retire in the next decade. Most of the 96 retiring generators burn fossil fuels, and all of them are owned by Comision Federal de Electricidad (CFE).
Shedding outdated capacity is a step toward modernizing Mexico’s electricity grid. On average, the outgoing plants are less efficient and run less often than the remaining fossil fleet.
But the loss of capacity creates an uphill battle for Mexico, which is seeking to keep wholesale power prices in check while confronting rampant load growth. Upcoming retirements – if they occur – will put pressure on the development queue. Replacement capacity will be needed to ward off excessively high wholesale power prices – particularly in the summertime, when supply-demand conditions are tightest.
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