C OGENERATION AND SELF -SUPPLY I N MEXICO : O PPORTUNITIES , C ONSTRAITS AND P UBLIC P OLICY

Abstract

The potential for power generation through cogeneration in México
has been estimated in more than 10,000 MW. Cogeneration and self-sup-
ply are categories considered by the 1992 electricity law. However, only
a small fraction of that potential has been exploited, minimizing its many
economic and environmental benefits. Barriers for these include the price
paid for excess power—defined by law—and the uncertainty of gas
prices and supply—determined by the market. Because power sector
reform definitions remain uncertain, diminishing investment in infra-
structure, improvements in the cost of small generation, the need for
distributed generation, the activism of industry and environmental
groups and a changing political environment in México are giving higher
weight to cogeneration and self-supply as part of the power generation
portfolio. This paper explores all of those issues from the perspective of
a public policy discussion, and suggests its possible outcomes.