Fuel oil powering Mexico at the expense of renewable energy investment

SENER, the Mexican energy ministry, announced on 15 May its “Reliability Policy”, allowing it to push renewables out of the generation matrix and use thermoelectric capacity at "must run" plants. At the same time, Pemex has increased its refinery operations, producing additional high sulphur fuel oil and turning to Mexico's power sector as a potential outlet to burn the surplus. This cross-commodity insight analyses the impact of the new policy across the refining, natural gas and power sectors in Mexico. Is the increase in refinery utilisation sustainable? Will fuel oil-into-power reach 2019 levels? Is this tampered by quarantine measures in Mexico? Has natural gas the preferred baseload for generation- been impacted? What will be the impact on local marginal power prices? The analysis includes information from our Product Market Service, and Mexico gas and power monthly reports.