Mexico’s renewable plans

OAS- REEEPLas Vegas, March, 2007

Private participation update. Mexico’s electricity sector

The legal framework allows for privateparticipation in generation of electricity but notin transmission nor distribution for publicservice purposesGovernment Utilities provide wheeling andback up services as well as purchasing of excess electricity from permit holders

Capacity = 23,248 MW = 100 %

Importación228 MW

1.0%Usos Propios

Continuos576 MW

2.5%

Cogeneration1,852 MW

8.0%

Exportación2,231 MW

9.6%

IPP12,557 MW

54.0%

Self supply5,804 MW

25.0%

Permits update

Export2,231 MW9.6%

Imports228 MW1%

Self supply(old kind)576 MW2.5%

Installed Capacity, MW

Previous permits556 MW

1.0%

Cogeneration1,510 MW

2.8%

Exports1,330 MW

2.4%

Self supply3,930 MW

7.2%

Comisión Federal de Electricidad(Government Utility)

37,448 MW68.2%

Independent PowerProducers9,277 MW

16.9%

Capacity = 23,220 MW = 100 %

Operación En Construcción Inactivos Por iniciar obras

Permits update

556

9,841

1,330

1,514

4,002

225

2,716

901148

858

2

201902

2915

17,467 MW75.2%

4,625 MW19.9%

213 MW1.0%

915 MW3.9%

ImportaciónAutoabastecimiento

CogeneraciónExportación

Producción Independiente

Usos Propios Continuos

Operating UnderConstruction

Idle To be built

IPP

Cogeneration

Self supply

Export

Import

Potential Generation, per year = 146,306 GWh

IPP Self supply

(old kind)

Potential Generation (GWh/year)

1,8881.3%

Self supply Export Cogeneration

GWh 87,77860.0%

11,1907.6%

16,13711.0%

29,31220.0%

12,91011,3179,509

81,970

73,300

52,496

33,993

17,125

136,401135,083

93,842

106,993

124,410

68,589

42,806

22,600

17,50513,89113,669

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

GWh

AuthorizedGeneration

Actual Generation

/e

Private Generation

Renewable legislation

Renewable legislation being discussedin Congress. Highlights of Proposalinclude the following:

Ministry of Energy must elaborate andcoordinate a nationwide Program topromote renewables with mandatorygoals and specific dates to reachthese goals

Ministry of Energy must establish a Government Trust to manage severalfunds

“Green Fund” will provide incentives to promote grid connected electricitygeneration

“Emerging Technology Fund” to supportthe development of technologies not yetcommercially competitive but that may help industrial development or energysources diversification

“Rural Electrification Fund” to promoteprojects aimed at supplying electricityto isolated or low income communities; Government Utilities may participate.

“Biofuels Fund” to provide incentives for biofuels marketing“R&D Fund” for technologies that may be specially suitable for Mexico in thefuture

“Renewable Energy General Fund” forthe development of technologies otherthan the generation of electricity

Renewable legislation

The Ministry of Energy shall publishan electricity generation projectevaluation methodology that mustinclude aspects such as the benefitsof long term generating cost stability

CRE would have legal powers to issuestandards, methodologies, modelcontracts and any other administrativeorder for the generation of electricitywith renewable energy

The Finance Ministry shall providefiscal incentives for renewable projectsThe Economy Ministry shall issuepolicies to promote that local industryenter into the production of renewableenergy equipment.

The national program to promoterenewable energy shall set goals forthe use of biofuels in gasoline

Wind regulation

Main features:System operator should takerenewable energy unless system is atstakeAncillary services charges ( voltageand frequency regulation) multiply by plant factorEnergy supplied to the system duringemergencies paid at 1.5 times publicservice rates

Energy exchange

Base Intermediate Peak

Energydemand

Surplus energy

Plantcapacity

Energy deficit

Powergeneration

Capacity creditIntermittent renewables capacitycontribution to the system is measuredaccording to the monthly average of itspower generation during peak hours onworking days

WheelingWheeling charges for renewables are calculated as in the case of firmcapacity sources but multiply by plantfactor

Wind projects

In order to foster wind projects in thearea of Oaxaca Open Season processeshave been carried out to builttransmission capacity in the area

As a result of the open season, some2500 MW of transmission capacityfacilities will be built and entercommercial operation by the end of 2009.Private participants have alreadysubmitted initial guarantees for 1911 MW. On top of this capacity the GovernmentUtility shall probably reserve transmission capacity for its ownprojects.

Other projects

• CRE has issued 78 permits toinstall 1,925 MW of generatingcapacity based on renewableenergy.

• 60 permits already in operation, for a total of 534 MW.

• Most new projects are windpower projects

Self supply renewable energy permits

Self supply permits (MW)

Status In operation Development Total

Hydro 58.58 125.14 183.72Wind - 1,226.2 1,226.2Biomass 454.83 40.0 494.8Biogás 20.30 20.3Total 533.71 1,391.34 1,925

Mini-hidráulica 183.72

Biogas20.3Biomasa

494.8

Eólica1226.2

Future regulation

Promotion of small renewable energyprojects (1-10 kW).New net metering (1:1) regulation isexpected to foster electricity generationin homes and small businesses.First 230 homes already generatingsolar power in Baja California

Proposal for renewable energy projectsregulation under study. All energyproduction (up to 30 MW) to be supplied to Government Utility under a long term contract. Avoided cost basedpayment

www.cre.gob.mx