Post on 18-Feb-2018
transcript
Page 2 PRODESEN 2017-2031
Power Market Analysis - 20162 9
What you will find in this EY Energy Alert:
National Electric System Investments (2017-2031)1 5
Transmission System Assessment3 29
EY Conclusions4 39
EY Professionals5 40
Table of Contents
Page 3 PRODESEN 2017-2031
Executive Summary
► On June 1, 2017, the Mexico’s Ministry of Energy released PRODESEN, the fifteen year infrastructure development Program for the National Electric System (SEN).
► PRODESEN is a centralized planning program addressing important elements of the national electricity system, including all generation, transmission and distribution requirements.
► The program details the investment that must be made to develop and modernize the network of the national electricity system, including budgets and consumption statistics for the years 2017 through 2031.
► The program contains details about the capacity of power generation and the types of technologies or energy used to produce and satisfy demand for energy at the national level for the years 2017 through 2031.
► PRODESEN also contains vital statistics for the 2016 calendar year, including energy demand, consumption, regional analysis, fuel mix, installed capacity and pricing data and trends.
► According PRODESEN, during 2016 CFE provided electric service to 40.8 million customers, of which about 90% are classified as residential and commercial, while 58% of total sales are concentrated in the industrial sector.
Page 4 PRODESEN 2017-2031
Abbreviation English Spanish
PRODESEN National Electric System Development Program Programa de Desarrollo del Sistema Eléctrico Nacional
RGD General Distribution Network Red General de Distribución
RNT National Transmission Network Red Nacional Transmisión
CFE Federal Electricity Commission Comisión Federal de Electricidad
SENER Secretary of Energy Secretaria de Energía
SEN National Electric System Servicio Eléctrico Nacional
SIN National Interconnected System Sistema Interconectado Nacional
FIRCO Shared Risk Trust Fideicomiso de Riesgo Compartido
LIE Electric Industry Law Ley de la Industria Eléctrica
CRE Energy Regulatory Commission Comisión Reguladora de Energía
CENACE National Energy Control Center Centro Nacional de Control de Energía
PIIRCE Indicative Program for the installation and retirement of ElectricGeneration Facilities Programa Indicativo para la Instalación y Retiro de Centrales Eléctricas
PIB Gross Domestic Product Producto Interno Bruto
CENEGAS National Control Center for Natural Gas Centro Nacional de Control de Gas Natural
PEF Expenditure Budget of the Federation Presupuesto de Egresos de la Federación
LMP Locational Marginal Price Precio Marginal Local
CEC Clean Energy Certificates Certificados de Energía Limpia
Abbreviations
Page 6 PRODESEN 2017-2031
PRODESEN estimates 110 billion USD investment over the next 15 years for power related infrastructure projects
► 81% corresponds to generation projects, 11% totransmission projects, and 8% to distributionprojects.
► Total investment is 9% less than 2016 PRODESENprojection
*FX rate = 18.5 MXN
Generation
Transmission
Distribution
Estimated Investment For Electric Sector
110,265 billion USD
Transmission11,863
Generation89,472
Distribution8,931
Source: EY with data of PRODESEN
Page 7 PRODESEN 2017-2031
Generation• PRODESEN estimates around 29.5 billion USD for the installation of new generation plants within the first 5 years• 74% of the investment in PIIRCE projects is aimed towards clean energy projects
Transmission• 97% of the estimated investment is aimed towards projects that expand the transmission network and increase voltage and
compensation support, while the remaining investment is aimed at modernizing the RNT• 47% of RNT investment will be directed to transmission lines, while 48% is for transformation and 6% is for compensation
projects on the RNT
Distribution• 83% of the estimated investment is aimed at projects that will expand and modernize the distribution network• 13% is directed to Smart Grid projects• Compared with PRODESEN 2016, projected investment in distribution sector drops by approximately 30%
*FX rate = 18.5 MXN Source: EY with data of PRODESEN
Most of the investments across the value chain are aimed at developing, extending or modernizing the entire electricity network
Page 8 PRODESEN 2017-2031
Bill
ion
US
D
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Distribution
Transmission1/
Generation
Estimated Investment by Category 2017-2031($ Billion USD)
Concept 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 TOTAL 2017-2031
Generation 3,749 9,860 7,835 5,545 2,849 1,901 5,893 5,379 4,695 5,226 3,769 6,698 9,977 7,468 8,626 89,472Transmission1/ 1,338 1,474 2,384 2,412 1,939 1,037 336 169 212 202 149 87 54 38 32 11,863Distribution 729 876 809 835 764 702 636 561 407 414 420 432 442 449 456 8,931Total 5,816 12,210 11,028 8,792 5,553 3,639 6,865 6,109 5,314 5,842 4,338 7,217 10,472 7,955 9,114 110,2651/Includes Expansion and Modernization
*FX rate 18.5 MXN
Source: EY with data of PRODESEN
Estimated Investment Evolution By Concept 2017-2031
Page 10 PRODESEN 2017-2031
In 2016, total generation was 319,364 GWh, or 3.2% more than2015, maintaining the same proportion of conventional (79.7%)and clean technologies (20.3%)
Electricity generation from conventional technologiesincreased by 3.2% in 2016 as compared to 2015, primarilydriven by increased energy output from internal combustion(18.5%) and turbogas (8.2%) units
Compared to 2015, generation of electricity from clean sourcesincreased 3%. This was mainly due to a 20% increase in wind anda 33% increase co-generation units
Power Generation by CFE
2015 2016 Category
55.2% 54.7% CFEs’ power plants
28.8% 27.8% Independent Production
16.0% 17.5% Others
Dependency on natural gas grows50% of Mexico’s power demand was satisfied with natural gas combined-cycle units
Source: EY with data of PRODESEN
50%
13%
11%
4%
10%
3%9%
Electric Power Generation by type of Technology for 2016
Combined Cylce
Conventional Thermal
Coal
Turbogas
Hydropower
Eolic
Others
Power Generation Statistics for 2016
Page 11 PRODESEN 2017-2031
2016 Installed Capacity AnalysisGeneration Fleet expands 7.2% to 73,510 MW
► Fossil fuel units comprised 71% of the generation fleet
► Natural Gas combined cycle units grew by 13.4 % and now represent 37% of installed capacity
► Wind adds 930 MW (a 33% increase)
► Solar doubles, with utility scale increasing from 56 MW to 145 MW, and distributed solar increasing 114% (from 114 MW to 244MW)
► Hydroelectric equals 12,589 MW, a slight increase over 2015 (0.9%)
► Efficient co-generation more than doubles (from 583 MW to 1,036 MW)
► Reliance on internal combustion units increases by 22.5% (from 1186 MW to 1,453 MW)
► Nuclear capacity at the Mexico’s sole Laguna station expands 6.5% to 1,608 MW
Key Observations:
Combined Cylce38%
Conventional Thermoelectric
17%
Coal7%
Turbogas7%
Internal Combustion
2%
Hydropower17%
Wind5%
Nuclear2%
Geothermal, Solar, FIRCO, GD
and FR2%
Bioenergy and Efficient
Cogeneration 2%
Source: EY with data of PRODESEN
Page 12 PRODESEN 2017-2031
GROSS GENERATION BY SOURCE 2016
Modality Total Generation(GWh)
Participation(%)
Sources according to LSPEE1/
CFE 490 0.2Independent production 88,675 27.8
Self-supply 29,650 9.3Small production 115 0.0
Cogeneration 17,489 5.5Export 6,312 2.0
Continuous own use 1,049 0.3Sources according to LIE2/
CFE - Generator 174,228 54.6Generator 1,262 0.4
OtherFIRCO and GD3/ 93 0.0
Total 4/ 319,364 100.0
1/ Electricity Act Public Service Electric Power. 2/ Electricity Industry Act. 3/ Shared Risk Trust (FIRCO) andDistributed Generation (DG). 4/ Totals may not add due to rounding. Preliminary 2016 information.
Source: Developed by SENER with data from CFE, CRE and Undersecretary of Planning and Energy Transition.
POWER GENERATION BREAKDOWN(GWh)
78.3%
79.7%
79.7%
21.7%
20.3%
20.3%
2014
2015
2016
Conventional Clean
301,463
309,553
319,364
Source: EY with data of PRODESEN
Gross Generation
Page 13 PRODESEN 2017-2031
Electric Energy Balance by State 2016
PRODESEN analysis indicates that in 2016 the Northeast, South and Central Control regions produced more than 65% of the total generation of electricity in Mexico. More than half of Mexico´s electricity was generated in only seven states: Tamaulipas, Veracruz, Coahuila, Guerrero, Nuevo Leone, Chihuahua and Baja CA. In contrast, the seven smallest producing states (Aguascalientes, Morelos, Quintana Roo, Zacatecas, Tlaxcala, Queretaro and CDMX) produced only 3% of Mexico’s electricity.
Tamaulipas, Veracruz, Coahuila, Guerrero, and Baja California
43.1%
Aguascalientes, Morelos, Quintana Roo, Zacatecas and Tlaxcala
0.3%
Others56.6%
Northeast, South and Central Control
regions62.3%
North, Western, Northwestern and Peninsular regions
30.7%
Baja California, Baja CA Sur and Mulegé
7.0%
Production by Regions
Production by States
Source: EY with data of PRODESEN
► Coefficient = (Generation minus consumption) divided by consumption
Energy Balance Mapping in 2016 –State by State Analysis
Page 14 PRODESEN 2017-2031
► Central and Northwest control zones exhibit strongest growth, with consumption increasing 10.2% and 8.1%, respectively
► Consumption in Southern Baja CA zone grew approximately 6%
► Only one zone experienced decreased consumption (Western, at -2.8%)
► All other zones exhibit moderate growth ranging from 2.5% to 4.5%
Control Zones for the electrical energy Consumption (Gigawatt per hour)
Control Zones Consumption 2015
Consumption 2016 AGR (%)1 Maximum Demand
Central 53,649 59,103 10.2 8,567
Oriental (South) 46,587 47,642 2.3 7,128
Western 65,220 63,407 -2.8 9,351
Northwest 21,642 23,389 8.1 4,350
North 23,734 24,696 4.1 4,258
Northeast 50,114 52,297 4.4 8,710
Peninsular 11,610 12,129 4.5 1,893
SIN – Total 272,557 282,662 3.7 40,893
Baja California 13,122 13,438 2.4 2,621
Baja California Sur 2,400 2,541 5.9 442
Mulegé 146 151 3.4 28SEN – Total 288,225 298,792 3.7 43,984
1 Annual Growth Rate
Source: EY with data of PRODESEN
Current trends on consumption and demand for electric energy by control zone
Page 15 PRODESEN 2017-2031
Source: EY with CENACE data
Demand2016 2015
Demand On January 1, 2016 at 9:00 pm, the minimum level of
demand was observed in the SIN at a level of 18,723MWh/h.
In 2015, the minimum level of demand in the SINoccurred on August 14th at 9:00 pm, at a level of 18,341MWh/h.
Maximum Coincident Demand
In 2016, the maximum coincident demand recorded in theSIN occurred on July 8, at 17:00 with a level of 40,893MWh/h. This was an increase of 2.6% over 2015. If weinclude the power demands from the Baja Californiasystems recorded on the same hour, the peak coincidentdemand for all of Mexico was 43,448 MWh/h, which is 2%greater than 2015.
In 2015, the maximum coincident demand recorded inthe SIN was on August 14th, at 17:00 at a level of39,840 MWh/h. Adding the highest demands recordedon the Baja California systems on the same hour of theyear, the peak coincident demand for all of Mexico42,649 MWh/h.
Maximum Integrated Demand
In the summer, the highest levels of demand are recorded in nine regions mainly during high temperatures, when the useof air conditioners is maximized.
In the Central region, the peak demand occurs during the winter season primarily driven by increased use of lightingsystems.
Maximum Immediate Demand from SIN
In July 2016, the maximum instantaneous demand andintegrated demand for SIN was registered a month earlierthan the registered peak in 2015. The maximuminstantaneous demand reached 41,899 MW, a 2.9%increase over 2015. The second highest value occurred inJune, at 41,872 MW.
In 2015, the maximum instantaneous demand wasrecorded in August, when the when the maximuminstantaneous demand on the system peaked at 40,710MW.
Source: EY with data of PRODESEN
Analysis shows steady growth of electric demand across entire system (both coincident and instantaneous peaks)
Page 16 PRODESEN 2017-2031
► The National Center for Energy Control (CENACE) analyzes the effects of seasonal demand variations and diverseoperating conditions to project future power demands at different points across the system. The network study willdefine the RNT planning associated with infrastructure upgrades and the prioritization of network reinforcements.
CENACE projects the following scenarios
based on the historical behavior registered of the
power demand and the operations in the
Control Regions.
The highest demand in the
year is registered in the regions of Northeast, North, Baja Califorina, Baja CaliforinaSur y Mulgé.
The highest nocturnal
demand occurs during June and
August in the Northwest, North
and Northeast regions.
The highest demand of the
year is registered in the Central Control
Region.
There is a slowdown
registered in the demand of the northern
regions.
SIN registers the minimum
demand of the year.
Highest demand in Summer (17:00 hrs.)
Highest Nocturnal demand in Summer (22:00 hrs.)
Minimum demand in Winter (04:00 hrs.)
Medium demand in Winter (15:00 hrs.)
Highest demand during winter (20:00 hrs.)
Source: EY with data of PRODESEN
Peak Demand Analysis by Season
Page 17 PRODESEN 2017-2031
ANNUAL AVERAGE GROWTH OF THE MAXIMUM INTEGRATED DEMAND BY CONTROL ZONE
► Based on CENACE’s planning scenarios, power consumption from the SEN is projected to grow by an average of2.9% each year between 2017 and 2031. This represents a slight decrease compared to last year´s projection of 3.4%.
► The maximum demand of the SIN is expected to increase on average by 3.0% each year between 2017 and 2031.This represents a reduction from last year´s projection of 3.7%.
► Between 2016 and 2022, the system peak within SIN is expected to increase 20% and reach 49,000 MW.
► Expected growth rates of demand and consumption in Baja California systems range from 3.7% to 4%.
NORESTE
3.1%
MLG
3.7%
BC
2.8%
OCCIDENTAL
3.3% CENTRAL
2.0%ORIENTAL
2.8%
PENINSULAR
3.8%
NORTE
3.0%
NOROESTE
3.3%
BCS
3.9%
SIN: 3.0%
NORESTE
4.2%
BCS
5.3%
BC
3.6%
OCCIDENTAL
3.7% CENTRAL
3.1%ORIENTAL
3.6%
PENINSULAR
4.1%
NORTE
3.3%
NOROESTE
4.7%
2016-2030 2017-2031
Source: EY with data of PRODESEN
Forecasts of power demand and consumption
Page 18 PRODESEN 2017-2031
PEAK DEMAND FORECAST FORMED OF SIN BY SCENARIOS
(Megawatt-hour/hour)Year Low AGR1/ 2 Medium TCA1/ High AGR1/
2016 40,893 2.6% 40,893 2.6% 40,893 2.6%2017 41,966 2.6% 42,243 3.3% 42,599 4.2%2018 42,990 2.4% 43,499 3.0% 44,168 3.7%2019 44,082 2.5% 44,816 3.0% 45,876 3.9%2020 45,190 2.5% 46.165 3.0% 47,618 3.8%2021 46,345 2.6% 47,573 3.0% 49,500 4.0%2022 47,490 2.5% 49,000 3.0% 51,387 3.8%2023 48,663 2.5% 50,464 3.0% 53,285 3.7%2024 49,870 2.5% 51,944 2.9% 55,181 3.6%2025 51,127 2.5% 53,500 3.0% 57,151 3.6%2026 52,400 2.5% 55,056 2.9% 59,157 3.5%2027 53,670 2.4% 56,643 2.9% 61,217 3.5%2028 54,928 2.3% 58,225 2.8% 63,316 3.4%2029 56,294 2.5% 59,923 2.9% 65,570 3.6%2030 57,648 2.4% 61,603 2.8% 67,848 3.5%2031 59,057 2.4% 63,318 2.8% 70,208 3.5%
AAGR2/
2016-2030 2.5% 3.0% 3.7%1/ AGR: Annual Growth Rate, 2 / AAGR: Average Annual Growth Rate (relative to 2016).Source: Developed by SENER with CENACE data.
Source: EY with data of PRODESEN
Annual growth rate for peak demand ranges from 3.4% to 4.2% - highest growth rate forecasted for 2017
Page 19 PRODESEN 2017-2031
PIIRCE represents a strategic program for retiring inefficient generation
► Between 2017 and 2031, SENER projects retirements totaling 15,814 MW
► 137 generation units are slated for retirement
► Approximately 70% of retirements are conventional thermal units
► Greatest number of retirements occur between 2018 and 2020 (approximately 5,500 MW)
► 1,400 MW of coal units slated to retire in the 2028-29 timeframe
► PIIRCE retirements are coordinated with expected generation additions from Mexico´s long term power auctions
Source: EY with data of PRODESEN
Page 20 PRODESEN 2017-2031
Generation Fleet Transformation between now and 2031
► By 2031, installed capacity is projected to reach 113,269 GW, including the 73,510 GW that exist today.
► For the next 15 years, 16 GW of capacity are expected to be retired, while 56 GW of capacity will be added.
+73Today
-16
+56by 2031
-
20
40
60
80
100
120
Existente Retiros Adiciones
55% Net Growth vs 61% of PRODESEN 2016-2030
113 GWGW
Source: EY with data of PRODESEN
Existent Retirements Additions
Page 21 PRODESEN 2017-2031
Breakdown of generation additions between 2017 and 2031
► To satisfy projected demand, an additional 55,840 MW will need to be added to the system
► 37% of additions are projected to use conventional technologies, while 63% will qualify as clean energy
► 92% of conventional generation additions will be combined cycle gas units (18,950 MW)
► Wind and solar account for 38% of additions
► Nuclear expected to increase by 4,000 MW
► 50% of generation additions will be concentrated in 6 States: Tamaulipas, Veracruz, Nuevo Leon, Oaxaca, Coahuila and Chihuahua
Combined Cylce34%
TC, IC, TG, Coal3%
Wind24%
Efficient Cogeneration
10%
Solar and Thermosolar
14%
Hydropower3%
Nuclear7%
Geothermal and Bioenergy
5%
Additional Capacity per Technology (2017-2031)
Source: EY with data of PRODESEN
Page 22 PRODESEN 2017-2031
System Reserves in the SIN System Reserves in Baja Systems
31.1%27.2%
23.9%27%
23%
55.8% 54.8%51.3%
46%
39%43.40%
SIBCSIBCS
34% 35%37%
31%
27%
24% 23% 23% 22% 23% 22%24% 25% 24% 23%
Source: EY with data of PRODESEN
Mexico’s reserve margins in SIN remain robust throughout the 15 year PRODESEN period, while somewhat lower in the Baja Californian Systems
Page 23 PRODESEN 2017-2031
► 7 pipeline projects awarded with in-service dates 2017 and 2018
► 2 more projects out to bid► 3 additional projects still under
consideration► Total additional pipeline length: 5,216
kilometers► Total projected investment: $8.1 billion
(USD)► Multiple projects interconnect to US gas
pipeline systems
Source: PRODESEN 2017 & SENER’s 5-year Strategic Plan
Natural Gas Infrastructure Expands with Growing Dependence on Gas in the Power Sector
Page 24 PRODESEN 2017-2031
Snapshot of Mexico’s Generation Profile in 2031
► In 2031, total installed capacity projected at 113,269 MW, representing a 55% increase over fleet capacity as of 12/31/16
► In 2031, the fleet is expected to have a capacity of 456,683 MW, of which 54% will be conventional and 46% clean energy
► Projection assumes 8% growth rate for clean energy capacity
► Energy derived from wind is projected to grow at an average annual rate of 12%
► Solar is expected to increase at an average annual rate of 29%
► Reliance on combined cycle gas units remains constant over the 15 year period (approximately 40%)
Source: EY with data of PRODESEN
Combined Cycle45%
TC, CI, TG, Carboeléctrica 1/
9%
Hydropower9% Wind
15% Efficient Cogeneration
5%
Solar and Thermosolar
3%Nuclear
8%
Geothermal and Bioenergy
6%
Total Capacity per Technology by 2031
Page 25 PRODESEN 2017-2031
Clean Energy Goals
► Mexico has very ambitious renewable energy targets.
► The goal for 2024 is to reach 35% of power generation through clean energy.
► In 2050, 50% of Mexico’s electricity will come from clean energy resources.
► The goal will be reached through the clean power auctions and the obligation to purchase clean energy certificates.
► In 2018 and 2019, CECs must equal at least 5% and 5.8% of consumption, respectively.
22.7%25.0%
27%28.3%
30.0%32%
33.3%35.0% 36% 35.9% 36.4% 36.8% 37.3% 37.7% 38.2%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Source: EY with data of PRODESEN
Page 26 PRODESEN 2017-2031
► Latest auction produces some of the lowest clean energy prices in the world
► Projects are expected to deliver 14.7 million clean energy certificates (CECs)
► Projects will cover 39% and 56% of CEC obligations in 2018 and 2019, respectively
Long-Term Power Auctions in 2016 will boost clean energy production
Observations:
Page 27 PRODESEN 2017-2031
Assignment of assets and contracts for generationProductive enterprises and subsidiaries of the CFE
43 allocated power plants Represents 11% of the
installed capacity in SEN by the end of 2016
Thermoelectric and hydropower predominate
CFE Generation I
Source: EY with data of PRODESEN
33 allocated power plants 30 are operating 3 are in project
Represents 12% of the installed capacity in SEN
CFE Generation II
34 allocated power plants, mobile units and emergency units
Represents 12% of the installed capacity in SEN
Thermoelectric predominate
CFE Generation III
Page 28 PRODESEN 2017-2031
Assignment of assets and contracts for generationProductive enterprises and subsidiaries of the CFE
Source: EY with data of PRODESEN
15 allocated power plants Represents 10% of the
installed capacity in SEN by the end of 2016
Plus 4 new generation units and other repowering
CFE Generation IV
This company administers contracts with independent generators for combined cycle units and wind projects under construction or in operation
CFE Generation V
56 allocated power plants (operating) and is developing 7 power generation projects
CFE Generation VI
Page 30 PRODESEN 2017-2031
National Transmission System
2016 Statistics► 72,450 = Total capacity of interconnections (SIN),
representing a 4% increase over 2015
► 74,208 = Total capacity of interconnections (SEN)
► 102,891 kilometers = Total length of transmission circuits within SIN
► 104,133 kilometers = Total length of transmission circuits within SEN
► 197,435 MVA = Total capacity of substations (SEN)
► Transmission voltages: 69kV, 85kV, 116kV, 230kV, 138kV & 400kV
Source: EY with data of PRODESEN
Page 31 PRODESEN 2017-2031
Transmission System Regions in Mexico
Transmission and distribution are considered strategic areas and are reserved for the Mexican Government. The transmission grid (RNT) is comprised of53 regions. 45 of those regions are interconnected by a total of 63 individual connections within the National Interconnected System (SIN). The 8remaining regions are located on the Baja California Peninsula, which is isolated from the SIN. 7 out of 8 are interconnected with a total of 6 individualconnections, leaving the Mulege region in the middle section of Baja California as the sole region without any interconnections.
53 Transmission
Regions
45Regions
Interconnected(SIN)
62Connections in
SIN
8Isolated non-SIN
Regions
7Non-SIN
Interconnections
Source: PRODESEN
Source: EY with data of PRODESEN
Page 32 PRODESEN 2017-2031
Transmission Interconnections to North and Central AmericaMexico’s Interconnection Commission (SIEPAC) continues planning and collaboration with authorities inthe United States and Central America to evaluate feasibility of additional interconnections, expandedcoordination and alignment of energy markets
Interconnections to 6 different Systems
► Total Interconnections = 13
► California ISO (CAISO) = 2
► Southwest Power Pool (SPP) = 3
► Texas (ERCOT) = 6
► Belize = 1
► Guatemala = 1
► 5 of 13 are emergency interconnections along US border
Source: EY with data of PRODESEN
Page 33 PRODESEN 2017-2031
The Expansion and Modernization Program of the RNT aims at increasing the efficiency and reliability of transmissionsystem by reducing congestion, encouraging efficient expansion of generation, and promoting, reliability, continuity andnetwork security. According to the program, the Extension and Modernization Program of the RNT has four primaryobjectives.
OBJECTIVES
Source: EY with data of PRODESEN
Interconnect the National Interconnected System
(SIN) with isolated systems on the Baja California peninsula
1
Facilitate additional interconnections with the United States and Central
America
2
Meet the growing domestic demand for
electricity
Facilitate the development of large scale renewable
resources located far away from load centers
43
National Transmission Development Policy
Page 34 PRODESEN 2017-2031
Source: EY with data of PRODESEN
Transmission LinesClassification of Projects
Scheduled Projects
Projects that are fully evaluated and identified in the planning process, which are ready for execution. New requirements for bidding and construction stage are also included.
Projects under Study
Projects and works that are identified in the planning process, which are under evaluation and study. Such projects must be deemed to have a net benefit to the SEN in order to be included in later editions of PRODESEN.
Projects under Consideration
Project proposals will be subject to evaluation and planning studies in order to identify the benefits for SEN and the work necessary for execution. Projects will have to meet the net benefits test desirable above.
Page 35 PRODESEN 2017-2031
Source: EY with data of PRODESEN
1
Objectives Scheduled Projects Projects under AnalysisInterconnect the National Interconnected System (SIN) with isolated systems of the Peninsula of Baja California
Interconnection of Baja California Sur to the National Interconnected System (SIN)
Interconnect the RNT with North America and Central America
Interconnection of Baja California and Imperial Irrigation District
Review of the infrastructure of the interactions between Mexico -North America and Mexico - Central America to deepen the integration of the electric markets and competitively increase the exchange of electric energy among the participating electric systems, among which are:
- Asynchronous Link Back to Back Ciudad Juarez, Mexico - El Paso, Texas
- Asynchronous Link Back to Back Mexico - Guatemala- Asynchronous Link Back to Back in Reynosa, Tamaulipas
Addressing the needs of supply and demand of electricity
- Southeast-Peninsular Interconnection- The Arracal Banco 1- Supply Oaxaca and Huatulco- Increase of Transmission Capacity between the regions Puebla, Temascal, Coatzacoalcos, Grijalva and Tabasco- Other transmission, conversion and compensation projects
- Transmission corridor along the border with the United States of America- Change of tension in the supply network of the City of Tijuana- Applications of the Intelligent Electrical Networks in the Program of Expansion and Modernization
3
2
410 projects representing 23,772.5 km-c
Transmission
New RNT and RGD Expansion Projects
Expected Physical Targets
256 projects representing 58,099 MVA
Transformation
259 projects representing 11,930.7 MVAr
Compensation
Transmission System Expansion and Upgrades
Page 36 PRODESEN 2017-2031
Objectives
General ObjectiveSupply power to every end-user, with quality and at competitive prices, and promote greater efficiency of electric service with a high degree of safety and reliability. •Project
•Formalizing power supply in settlements• Install connections and acquire new meters• Interconnect Holbox Island to SEN
Action Item 1:Expand coverage
•Project•Strengthening actions aimed at reducing energy losses
•Ensure the reliability of the RGD•Modernizing measurement systems, billing and collection
Action Item 2: Extendthe RGD
•Project• Install smart meters (AMI) and replace obsolete equipment
•Strengthen actions to reduce technical losses at the distribution level
Action Item 3:Reduce power losses
in distribution
Incorporate Vanguard Technology Systems3
Meet the existing supply and demand for electricity distribution1
Extend distribution service2• Projects
• Feasibility study to assess solar Urban Farms• Promote rural electrification
Action Line 1:Foster Distributed
Generation
• Projects• Integrate small grids • Integrating Advanced Metering Infrastructure
(AMI)• Install SCADA technology and equipment.• Install switching and protection equipment
(EPROSEC per its acronym in Spanish)
Action Line 1: Implement systems with technology
that contribute to the development of smart grids
(REI)
Distribution Sector: Expansion and Modernization Program
Page 37 PRODESEN 2017-2031
RNT and RDG Modernization
WEM’s measuring system implementation project Smart Grid project Storage facility with 20MW
battery bank in BCS
Reason
Coverage
Installation
Investment
Benefit/Cost relation
The tax measuring system must have billing quality and include responsibilities regarding installation, verification and maintenance
The Smart Grid will allow CFE to comply with the Energy Transition Law, in order to maintain a reliable and secure infrastructure that meets the power demand, economically, efficiently and sustainably
Facilitate the incorporation of new technologies that reduce costs in the electric sector
The BCS electrical system operates in isolation from the SIN. Generation of electric power has been dependent on importation of fuels, with higher production costs and negative environmental impacts
Storage facility will increase operational flexibility and permit integration of renewable sources
31 states 32 states Baja California Sur
150 USD millions* during 2017-2019 265 USD millions* during 2018-2021 16.4 USD millions
Smart Grid equipment to be installed during: 13 EMS/SCADA systems 1,615 modernized substations 28,974 km of optical fiber in 434 links
Measuring equipment to be installed during 2017-2019
2.52 1.52 Scenario 1: 3.54 Scenario 2: 4.78
*FX rate = 18.5 MXN Source: EY with data of PRODESEN
Page 38 PRODESEN 2017-2031
Technical and Non-Technical Line Losses Continue to Improve
► Total loss rate for 2016 = 14.7%
► Total energy lost = 18,539 GWh
► Technical losses drop to 6.3%
► Non-technical losses drop to 8.4%
► 9 point strategy being undertaken to achieve further reduction in losses
► 9.7 million advanced meters will be deployed ($100M investment)
► Meter replacement program will take 4 years (2017-2021)
Line Loss Analysis
18.0%
7.2%
10.8%
17.0%
6.8%
10.2%
16.0%
6.6%
9.4%
14.7%
6.3%
8.4%
Total of Losses Technicals Non-Technicals
Power Losses Evolution2013 2014 2015 2016
Source: PRODESEN 2017
Page 39 PRODESEN 2017-2031
Closing Observations
► The PRODESEN represents an important component of Mexico’s historic reforms in the energy sector. It documents the Mexican government’s centralized planning of the national power system.
► Much of the $110 billion of investment in generation, transmission and distribution sectors represent potential investment opportunities for global companies that possess the requisite financial and technical capabilities to construct energy infrastructure.
► The planning documents show that the majority of investment will be in the generation sector, since more than 80% of the budget is directed towards that sector. The need for new generation is driven by steady growth in power demand, along with Mexico’s ambitious transition to clean energy resources.
► By 2031, 38.2% of Mexico’s power generation is expected to come from clean energy resources.
► While projected demand decreased slightly between 2016 and 2017, electricity consumption is still expected to average 3 percent annually over the next 15 years.
► EY’s analysis shows an imbalance between supply and demand in several regions of Mexico, which will increase dependence on transmission connectivity or installment of new generation closer load centers.
► Overall, the PRODESEN reveals that the Mexico energy sector remains in a dynamic period of transformation that will provide significant investment opportunities.
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José SalasPartner - AdvisoryEY México
Tel: +52 (55) 1101 7329Email: jose.salas@mx.ey.com
Rafael AguirrePartner - Transaction Advisory ServicesEY México
Tel: +52 (55) 5283 8650Email: rafael.aguirre@mx.ey.com
Alfredo ÁlvarezPartner- Energy Segment LeaderEY North LATAM
Tel: +52 (55) 5283 1179Email: alfredo.alvarez@mx.ey.com
Paul RobertiExecutive Director - Power & UtilitiesEY México
Tel: +52 (55) 5283 8666E-mail: paul.roberti@mx.ey.com
Loic LeGallExecutive Director - Power & UtilitiesEY México
Tel: +52 (55) 4094 6488E-mail: loic.legall@mx.ey.com
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