Energy Efficiency and Energy Demand Modelling Mexico

In December 2015, Mexico issued the new Energy Transition Law (Ley de Transición Energética), which provides a new regulatory framework that allows all energy sector participants to coordinate long-term efforts to reduce polluting emissions.

In this context, Fraunhofer-ISI was mandated by GIZ-Mexico and CONUEE to analyze the future development regarding energy requirements of final demand sectors industry, transportation, residential, commercial, non-energy and agricultural. Further, the modeling exercise provided estimates of energy efficiency saving potentials across all final demand sectors. Based on an in-depth study of saving potentials in the European Union, potentials that are achievable for different type of end-uses at a detailed level were identified in the Mexican context.

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Objectives

The project pursued four main objectives:

To analyze the available energy consumption data and previous modeling exercises and to determine the future energy development of final energy by sector.
To provide first estimates of existing energy saving potentials by sectors.
To contribute to the strengthening of the local capacities by outlining the chosen modeling methodology, the model´s structure and the assumptions and expressions used to implement the energy demand calculations into LEAP.
To provide recommendations on how this and future modeling exercises must be approached in order to turn this sort of modeling exercises into a robust basis for policy decision making.

Methodology

The methodology combines a top-down, econometric approach, with a detailed bottom-up sector modeling, in order to compensate the lack of data for a detailed bottom-up analysis. The top-down approach consists in deriving historical relationship between the final energy demand as well as socio-economic indicators. It´s output are econometric equations, which relate the total final energy consumption of the sectors industry, transport, residential, commercial, agricultural to the GDP development, as well as the crude oil price development. These equations are used to forecast the future energy development in-line with the future economic growth and oil-price development as determined in the Mexican´s government official forecasts. Next to the econometric approach, the residential, industrial and transport sector were modeled at a sub-sectoral level, allowing analyzing the drivers and structure of energy consumption with a higher degree of detail.

Results

BAU: These future energy requirements are determined in-line with the future economic growth and oil-price development as defined by the Development Program of the National Electric System by SENER. In particular, SENER expects a rapidly expanding economy, growing at an average yearly rate of 4.12%. Aligned with this expectation, SENER expects a quickly recovery of the oil price reaching 80 USD per barrel in 2018 and heading towards 120 USD per barrel in 2030. As a result, the final energy demand will grow considerably among all sectors, from about 5000 PJ in 2014 to just below 8000 PJ in the 2030. The transport sector is the highest contributor in terms of its total share within final energy demand (44% in 2014, 52% in 2030, while also showing the highest growth rate of all sectors), followed by the industrial sector (31% share in 2014, 30% in 2030).

Moderate growth: Next to the BAU-scenario and in light of the uncertainty of key assumptions such as the future economic growth and the crude oil price development, a sensitivity analysis was carried out. Of particular relevance is the energy demand calculation using a moderate economic growth of 2% GDP growth per year, roughly corresponding to the observed historical growth between 2000-2014 and hence constituting a more realistic future development: The results show that energy demand would grow more moderately, by a total of 23% in 2030 as compared to 2014 levels, corresponding to a total final energy demand of approximately 6000 PJ in 2030.

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