Solar & Wind Technology Vol. 6, No. 2, pp. 105-109, 1989 0741-983X/89 $3.00+.00 Printed in Great Britain. Pergamon Press pie

PERSPECTIVES FOR ENERGY DIVERSIFICATION IN MEXICO

MANUEL MARTINEZ Laboratorio de Energia Solar, Universidad Nacional Aut6noma de M6xico, Apdo. Postal 34,

62580 Temixco, Morelos, M~xico

(Received 26 April 1988 ; accepted 23 August 1988)

Abstract--The national balance of energy up to the year 2020 is studied by using a simple model. The historical trend in commercial energy consumption shows an inconsistent pattern for the future. Exceedingly large internal energy demands are forecast: 18 and 76 EJ/yr, for the years 2000 and 2020, respectively. Before the end of this century the maximum level of hydrocarbon production could be reached. The amount of hydrocarbon exported should decrease and very large amounts of energy from alternative sources could be needed. If the goals of the national energy program are reached, the above mentioned crisis would be postponed by only five years. Quantitative data are obtained to establish an energy diversification policy, in order to achieve a smooth energy transition in the long term.

INTRODUCTION

The first successful attempt to analyse the Mexican energy sector was in 1980 [1]. It was an important step for the planning of social and economic development, due to the importance of the oil industry. However, the resulting projections had to be modified after- wards because they were based on large economic growth rates, considered possible at that time.

Another national energy program has been pub- lished [2], which considers the economic crisis and its possible medium and long term effects. The energy sector in Mexico contributes 5% of the Gross National Product and produces 75% of export income. This sector has grown quite fast recently. From 1970 to 1983, the internal energy demand increased by a factor of four and the installed capacity for power generation increased by a factor of three. Also, 90% of the internal supply is from hydrocarbons and the national income elasticity of energy demand is about 1.7.

The purpose of this paper is to present the actual national policy towards energy diversification and to propose new ones, which could ensure a smooth energy transition. The non-commercial energy sub- sector is not considered in this study.

MODEL

An energy balance is defined as the method used to present the statistical information about the energy supply, conversion and demand of a given system.

The national energy balance shows the flow of

energy of the whole country ; including not only the activities within its boundaries but also interactions with other countries. The total internal energy supply must be equal to the total internal energy demand, plus the total exports of energy, minus the total energy imports and plus (or minus) the total variations in stocks. The internal supply corresponds to the sum of all the primary energy produced by the different sources : hydrocarbon, hydroenergy, coal, geothermal and solar, among others. The internal demand cor- responds to the energy needs of the various economic sectors, such as energy, industry, transport, agri- cultural and domestic.

The elaboration of proper national energy balances requires a large amount of reliable data, which are difficult to obtain in the majority of the developing countries. For Mexico, in the present case [3], the following simplifications have been made : on a yearly basis, the total imports of energy, the variation of energy stocks and the total exports of energy other than hydrocarbons have been omitted from the accounts; because, as is shown later, they are small quantities.

Under these assumptions, the total internal energy supply is taken as equal to the total internal energy demand plus hydrocarbon exports.

To study different policies to diversify the sources of energy, the energy demand was divided into elec- trical and thermal needs, and the energy supply was divided into hydrocarbon and alternative sources of energy. Then, the national energy balance equation is given by: electrical demand (A), thermal demand (B) and hydrocarbon exports (G) are equal to hydro-

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106 M. MARTINEZ

carbon supply for thermal demand (C), hydrocarbon supply for electricity demand (D), alternative energy for thermal demand (E) and alternative energy for electricity demand (F).

In order to validate this simplification, data for 1980 were used [1], in units of PJ per year: A = 740, B = 3614; G = 2044: C = 5662: D = 529: E = 74: F = 2 1 1 .

In this case, the difference between energy supply (C+ D + E+ F) and the internal demand plus exports (A + B+ G) is only 1.2% : which is considered accept- able, even though it corresponds to the value of the alternative energy supply for thermal demand.

Also, it was considered that a maximum limit exists for the national production of hydrocarbons (due to technical and economic considerations) of about 14,000 P J/yr.

To study the time dependence of the energy balance, the starting year was 1980. It was assumed that, at the beginning, the internal energy demand and thc alternative energy supply increased at fixed annual growth rates and, also, that hydrocarbon production was used to cover the internal energy demand plus the export requirements. Depending on the values given to the energy annual growth rates, which will be identi- fied with different energy policies, there are several different options for the future energy outlook.

(1) If the maximum level of hydrocarbon pro- duction is reached, then to sustain the internal devel- opment, the hydrocarbon exports should decrease accordingly.

(2) If hydrocarbon exports are exhausted, with full production needed to cover the internal demand, then for the following years the alternative energy supply must be increased to cover internal needs.

(3) The maximum amount of alternative sources of energy would be used to supply the internal needs for electrical or non-electric demand, or both. If the demand is not covered by the alternatives, then the hydrocarbons should cover the gap left and could be exported, if possible. Another possibility is when the alternatives cover the whole demand, then hydro- carbons could only be exported.

SCENARIOS

Given the present economic crisis of Mexico, it is very difficult to select a given set of macroeconomic variables for the medium and long range.

The Government has published national devel- opment goals [4] for the period 1985 1988. The most important related indexes are: GNP annual growth, 5 ~ % ; electric sector annual growth, 6.2--7.2%, and

hydrocarbons sector at growth rates below those of the GNP.

Taking into account the above mentioned data, the Energy Ministry published the following related indexes up to the year 2000 [2]. If the energy sector develops according to historical trends, i.e. without any major efforts pursued for saving energy or for diversifying sources, the annual growth rates arc: internal electrical needs, 7.9%: internal thermal needs, 7.2%. Nevertheless, for this type of long range studies the improvements in the energy efficiency of plant and use must be considered. If estimated energy consumption savings of 24% and 20%, for electric and thermal needs, respectively, are considered lbr the year 2(100, the annual growth rates for internal electrical needs are 6.2% and for internal thermal needs are between 5.6 and 6.1%. Also, the diver- sification program establishes an annual growth rate for alternative energy supply, of electrical needs, between 8 and 9%.

The energy elasticities for the national income are given in the National Energy Program: during the beginning of the 1970s, 1.2 ; during recent years, 1.7 : the present average trend of the energy sector, 1.3 1.5, and for the year 2000, about 1.0.

There are two independent papers with information about the perspectives of the energy sector. The one published by the end of 1983 [5], considers annual growth rates of 5, 6.8 and 8%, for the internal electric demand and 3.2, 4.7 and 6.2%, for the internal ther- mal demand, respectively. The other, published by the middle of 1984 [3], took into account two possibilities, based on the national development goals. On one hand, according to historical trends, it considered annual growth rates of: internal electrical demand, 6 7% ; internal thermal demand, 4 5%. On the other hand, if an appropriate program could be established for the year 2000, a total energy saving of 30% could bc accomplished and, also, an oil substitution of 58% for electric needs and 6% for thermal needs could bc achieved, the corresponding annual growth rates could be : internal electrical demand, 4 5% : internal thermal demand, 2 3%, alternative energy supply, 8 9%.

For this long term study, the above mentioned data were reduced to three possible global scenarios, as shown in Table I. First, according to present trends, scenario T, the income elasticity for thermal demand is 1.3, the income elasticity for electric demand is 1.5 and the average annual growth rates are: internal electric demand, 8.3%; internal thermal demand, 7.2%; alternative energy supply for thermal use, 0.5% ; alternative energy supply for electric use, 10%. Second, considering the national program with low

Perspectives for energy diversification in Mexico I07

Table 1. Global energy scenarios for Mexico : T, trend ; PL, national program low economic growth ; G, proposed goals

Annual growth rate Elasticities (%)

Scenario Thermal Electric A B E F

T 1.3 1.5 8.3 7.2 0.5 10 PL 1.0 1.0 5.5 5.5 0.5 8 G 0.8 1.0 5.5 4.4 10 10

economic growth, scenario PL, the income elasticity for non-electric demand is 1.0, the income elasticity for electric demand is 1.0 and the average annual growth rates are: internal electric and thermal demand, 5.5% ; alternative energy supply for thermal use, 0.5% ; alternative energy supply for electric use, 8%. Third, scenario G, which presents the proposed goals for the Mexican energy sector, the income elas- ticity for thermal demand is 0.8, the income elasticity for electric demand is 1.0 and the average annual growth rates are: internal electric demand, 5.5%; internal thermal demand, 4.4% alternative energy, 10%.

For all the above mentioned scenarios, it was assumed that the starting hydrocarbon export quota was 3500 PJ/yr.

3C~

2c

B

E

j j c

1980 1990 2000 2010 2020 Year

RESULTS

The time dependent behavior of the energy situ- ation was obtained from 1980 to 2020, as shown for each scenario in Figs 1-3.

For scenario T (energy developments according to historical trend) there are three important situations, as shown in Fig. 1 : by 1995, the maximum technical and economical level of hydrocarbon production could be reached (14,000 PJ/yr) and it will be necess- ary to gradually decrease export volume ; by 2000, the

60-- B

40 - E / A u

,,-I, 2 0 - -

, ID 1980 1990 2000 2010 2020

Year

Fig. 1. Energy development for economic scenario according to historical trend.

Fig. 2. Energy development for economic scenario according to national energy program with low economic growth.

growth of the internal energy demand is so large that hydrocarbon exports will have to be nil, keeping the maximum production level, and finally, by 2020, not even the alternative sources of energy can fulfil the internal energy needs.

The energy development results according to the national program with low economic growth are shown in Fig. 2. The main features are : by 2000, the maximum technical and economic level of hydro- carbon production could be reached, making necess- ary the gradual decrease of export volume ; by 2005, the growth of the international energy demand is such that hydrocarbon exports will have to be nil, and

B 20

15 C

o

~o

1980 1990 2000 2010 2020 Year

Fig. 3. Energy development for economic scenario according to proposed goals.

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Table 2. Internal demand of energy for given scenarios (EJ/yr)

M. MARTINEZ

Year T PL G

1985 6.2 5.7 5.4 1990 8.9 7.4 6.8 1995 12.7 9.7 8.6 2000 18.2 12.7 10.7 2005 26.0 16.6 13.4 2010 37.2 21.7 16.9 2015 53.3 28.4 21.1 2020 76.3 37. I 26.5

finally, by 2020, not even the alternative sources of energy can fulfil the internal energy needs, even by keeping hydrocarbon production at maximum levels.

For scenario G, which presents the proposed goals, the results are shown in Fig. 3. The main features are : by 2005, the maximum technical and economic level of hydrocarbon production could be reached, making necessary the gradual decrease of export volume; by 2015, the growth of the internal energy demand is such that the hydrocarbon exports will have to be nil and the alternative sources of energy could cover the internal demand of electricity, and finally, by 2020, not even the alternative sources can cover the internal thermal energy demand, keeping the hydrocarbon production at maximum level.

The amount of hydrocarbons needed to fulfil demand, from 1980 to 2020, for each scenario are (in EJ): T, 516 (or 84,3000 million barrels of oil equi- valent) ; PL, 500 ; G, 478. If it is considered that the Mexican volume of proven reserves, at the end of 1987 are 420 EJ (or 69,000 million barrels ofoil equivalent), then all the scenarios presented here are not restricted by the viability of hydrocarbons.

The internal energy demand, for each scenario, is shown in Table 2. For the year 2000, the values spread from 18.2 EJ/yr, according to present trends, to 12.7 14.2, according to the present national energy pro- gram, or to 10.7, according to proposed goals. The

aimed energy savings, related to actual trends, are 30 and 41%, for scenarios PL and G, respectively. These savings correspond to the established rational use of energy, through the assumed variations in the income elasticities of energy use. Beyond the year 2000 it is difficult to justify that the average annual growth rates will be kept as in the last years of this century. Never- theless, the needed economic growth of developing countries, the population growth or the growth in the creation of jobs warrant the wish to, at least, continue with the established rates. So, for the year 2020, the energy savings, related to actual trend, are 51 and 65%, for scenarios PL and G, respectively. It must bc stressed that the assumed income elasticities of total energy are 1.35, 1.00 and 0.84, for scenarios T, PL and G ; values that are not even close to 0.5 (already achieved by the industrialized countries).

The values of the internal energy demand just obtained are compared with values previously pub- lished elsewhere, as shown in Table 3. Data published before and after the year 1980 are quite different, due to the perspective given by considering the long term effect of the present economic crisis ; as an example, see the results published by the World Energy Con- ference. It is obvious, also from Table 3, that develop- ment of the Mexican energy sector according to the present trend is not possible: there would not be an economic basis to sustain this large demand of energy. Finally, it must be stressed that the National Energy Program predicts larger requirements of internal cnergy demand than other studies.

The possible development of the energy transition, from hydrocarbons to alternative sources, can be seen by evaluating the required annual growth rates for alternative energy supply to cover thermal (E) and electrical (F) needs, as shown in Table 4. It must be stressed again that the value of these rates is chosen, first, according to a given development scenario and, afterwards, as required by the internal energy demand and the technical and economic limit in the production of hydrocarbons. Results from scenario T (energy

Table 3. Comparison of internal energy demand for Mexico (EJ/yr)

1985 1990 1995 2000 2020

Ntl Program (1980) Ntl Program (1984) Proposed Goals A & R [51 MM [3] WEC (1978) wC (1983) IIASA Present Trend

8.3-12.6 8.5 13.4 8.9 16.8 5.7 5.9 7.4 7.9 9.7 10.6 12.7 14.2

5.4 6.8 8.6 10.7 26.5 6.5-6.9 8.7 12.3 15.7 47.7 4.9-5.4 5.5 6.7 6.2 8.3 7.1L10.3 11.5 25.0

5.4 7.8 10.3 15.9 25.1 6.6 7.6 9.0 11.7 6.1-8.5

6.2 8.9 12.7 18.2 76.3

Perspectives for energy diversification in Mexico

Table 4. Required annual growth rates of alternative energy supply (%) for thermal (E) and electric (F) needs

T PL G E F E F E F

Initial value 0.5 10.0 0.5 8.0 i0.0 10.0 1995-2000 97 16 0.5 8.0 10.0 10.0 2000-2005 29 15 68 9.2 10.0 10.0 2005-2010 15 12 37 9.4 10.0 10.0 2010-2015 11 10 15 8.1 13.0 5.5 201~2020 9.7 9.5 11 7.2 22.0 5.5

development as present trend) show the impossibility of continuing in this way, because very large annual growth rates will be needed as soon as 1995 and with- out planning. The energy development path shown in scenario PL, national program with low growth rates, will also be unsustainable, because very large diversification growth rates are needed by the year 2000. If the national program is corrected, as given in scenario G, the energy diversification rates are appropriate for many years, with problems starting to occur by the year 2015.

CONCLUSIONS

Projections of energy supply and demand have changed drastically since the begining of this decade because of the Mexican economic crisis. According to present trends, the internal energy demand would be 18.2 and 76.3 EJ/yr, for 2000 and 2020, respectively. The national energy program predicts values of 12.7 to 14.2 EJ/yr for the year 2000. It is proposed that more realistic ranges are from l l to 13 and 27 to 39 EJ/yr, for the years 2000 and 2020, respectively. The projected net electricity generated has been modified from 300 and 1500 TWh/yr to about 200 and 600 TWh/yr, for years 2000 and 2020, respectively. All results given are for the commercial energy sub-sector.

If the present trend were continued, as in scenario T, by 1995 the maximum technical and economic level of Mexican hydrocarbon production could be reached

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and by 2000, due to the internal energy demand growth, net export of hydrocarbons would cease. The goals established in the national energy program do not improve the future energy crisis: it would only postpone by five years the situations described. If the goals proposed here were reached, as in scenario G, the maximum production of hydrocarbons could be delayed to 2005 and the shut off of hydrocarbon exports to 2015.

The diversification of energy sources has not been properly planned in Mexico. If the present trend con- tinues, very large annual growth rates of alternative energy supply will be needed as soon as 1995. The present national energy program only considers the diversification of energy sources for electricity gen- eration, with needed annual growth rates of about 8 to 10%, to have a proper energy transition. Alternative energy sources for non-electrical uses will be required in very large amounts by the year 2000.

It is shown that alternative sources annual incor- poration rates of 9-10% and 14-16%, for electrical and non-electrical demands, respectively, are needed to have a smooth energy transition, to continue exporting hydrocarbons and to avoid reaching the maximum production level of hydrocarbons. It is con- sidered difficult to sustain these growth rates during the required large periods of time.

REFERENCES

1. Programa Nacional de Energia, SEPAFIN, Mexican Government Publication, Mexico City (1980).

2. Programa Nacional de Energ6ticos 1984-1988, SEMIP, Mexican Government Publication, Mexico City 0984).

3. M. Martinez, "Balances Nacionales de Energia : Posibles Escenarios Futuros", Proc. VIII Reunidn Nacional de Energia Solar, p. 56 (1984).

4. Plan Nacional de Desarrollo, Poder Ejecutivo Federal, Mexican Government Publication, Mexico City (1983).

5. A. Alonso and L. Rodriguez, "Diagn6stico y Pron6stico sobre Energia Solar, Biomasa y Energia E61ica", Intemal Report No. 2106, Instituto de Ingenieria, UNAM (1983).