Mobilizing Investments in Commercial
or Near-Commercial Technologies
Two successful stories in Mexico:
wind energy and energy efficiency
Francisco Barnés
Make Markets Work for Climate
October 17, 2006
Amsterdam
Two Succesful Stories
1. Wind Energy
2. Energy Efficiency
Mexican Legislation
Electrical System
Generation
Transmission
Public Companies:
CFE & LFC
IPP´s
Third Parties
Self Supply
National
Transmission
Grid
CFE & LFC
Others lines
Independent
State reserved activities

Distribution
Open to private participation
At the end of 2005, Mexico had almost 54,000 MW of installed
generation capacity.
 38,200 MW belong to the two public power companies, CFE and LFC

8,300 MW correspond to IPP’s generation for public service (GCC)

7,300 MW are for self supply.
Power Generation
with Renewable Energy
 Mexico has 12,800 MW of installed capacity based on renewable
energy, 23% of total installed capacity
Renewable Energy
CFE-LFC
Hydro
10,930 MW
Mini-hydro
365 MW
Geothermal
960 MW
Self-Supply
Isolated Systems
47 MW
Biomass
465 MW
Biogas
20 MW
Solar
18 MW
Wind
2 MW
Total
12,257 MW
532 MW
18 MW
Wind potential in Oaxaca
Wind Potential in Oaxaca
Wind velocity distribution
 The state of Oaxaca has a
wind potential of at least
10,000 MW.
 Average wind velocity is
above 15 m/s
(An average of 30 empty
trucks are turned-over by
the wind every year)
 Measured plant load factor
is 52%
Renewable Energy Fund
 In 2003, the Mexican Government received final approval from the
Global Environment Facility (GEF) for a 70 million dollar grant to
establish a new fund to promote large-scale renewable energy projects.
 The strategy of the Fund is based on providing a temporary incentive
(five years) for power generated with renewable energy sources and
delivered to the public service network under an Independent Power
Production Agreement .
 The incentive is expected to bridge the gap between the required return
per delivered KWh and the price CFE is allowed to pay to IPP´s under
existing regulations.
 CFE will bid the first IPP project at the end of 2006 with a capacity of
100 MW to enter into operation in 2008.
 During the second stage, at least 300 MW are expected to be put in
place, to enter into operation between 2009 and 2012
Regulatory framework
 New regulatory measures have been issued by the Energy Regulatory
Commission (CRE) with the purpose of encouraging the development
of generation projects from intermittent renewable energy sources.
 The main elements of this regulatory scheme are the following:
 Generated energy is transmitted when available;
 Excess energy generated at any given time may be “stored” within the
power utility (CFE) and “withdrawn” when required, even in different time
periods;
 Energy exchanges are based on tariff prices;
 At the end of the year, excess energy “stored” in the system may be sold to
CFE at 85% of the short-term generation cost;
 Wheeling charges are paid in terms of the transmitted energy, not in terms
of reserved capacity.
 CFE recognizes as plant capacity the monthly average of the energy
generated during peak demand;
Fiscal incentives
 On the 1st of December 2004 a modification of the Income Tax Law
entered into effect.
 Companies investing in machinery and equipment for power generation
with renewable energy may deduct up to 100% of the investment in a
single year.
Transmission Limitations
 Existing transmission infrastructure in Oaxaca is very limited and does not allow
the evacuation of all the electric power that will be generated by the self-supply
producers.
 A new 400 KV transmission line is required for that purpose.
 CFE cannot commit public funds for the new transmision line if there are not firm
commitments of the permit holders to install the appoved generating capacity.
 The
CRE
carried
out
an
Open Season to reserve transmission
capacity on the new line.
 1,900 MW were committed by several
private companies.
 The budget for the construction of
the new line has already been
requested by CFE to Congress.
 The new line will be ready by 2009.
Nueva Línea de 400kV
Expected Results
 585 MW of new wind generation capacity, installed or
contracted by CFE for public service, will enter in operation
between 2007 and 2012.
 At least 445 MW of new capacity for self supply will be installed
in Oaxaca between 2007 and 2008.
 1600 MW of additional capacity for self-supply will be installed
between 2009 and 2012.
Two Succesful Stories
1. Wind Energy
2. Energy Efficiency
Energy Efficiency Programs
Many efforts had been developed in Mexico over the last
years to improve energy efficiency
Year
Program
Objectives
1989
CONAE
to promote energy savings through the
adoption of standards and programs
1989
FIPATERM - CFE
to promote house insulation and the
replacement of inefficient electric appliances
1990
FIDE
to reduce electric demand by reducing
barriers for energy efficiency improvement
1995
ILUMEX - FIDE
to replace incandescent bulbs with energy
saving fluorescent bulbs - GEF support
1999
FGB - CONAE
to reduce power consumption in Federal
Goverment´s buildings,
2001
PEMEX - CONAE
to reduce power and energy consumption in
PEMEX operations
Adoption of new standards
From 1993 to 2003, the energy demand for a
10 ft3 refrigerator has been reduced by 52.7%
750
700
650
- 24.5 %
kwh
600
- 38.9 %
550
500
- 52.7 %
NOM-072-SFCI-1994
450
400
NOM-015-ENER-1997
350
NOM-015-ENER-2001
300
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
MEX
USA
FIPATERM program
 FIPATERM program was initiated by CFE in 1990, in the city of
Mexicali, B.C., with summer temperatures >40°C, to reduce the
consumption of electricity through thermal insulation
 In 1996, the replacement of inefficient air conditioners was included
 In 2001 the program was extended to four Northwestern states
 In 2002 the replacement of old refrigerators was included in the
scope
 In 2003 the program was extended to all areas of the country
attended by CFE (more than 25 million costumers)
 Results up to 2005:
 120,000 houses have been insulated
 200,000 air conditioners have been replaced
 350,000 refrigerators have been replaced
ILUMEX program
 ILUMEX program was initiated in 1999, to replace
incandescent lamps by energy saving fluorescent lamps.
 It was promoted by FIDE with the support of CFE and GEF
 Results up to day:
 Over 16 million compact fluorescent lamp
Estimated energy savings
 12 % of total electricity sales (1,900 GWh) will be be saved in 2006,
when measured with 1995 baseline.
15%
25000
12.0%
10.7%
20000
11.4%
12%
Gwh
9.6%
8.4%
15000
6.5%
9%
7.2%
10000
6%
5000
3%
0
2000
2001
2002
2003
2004
2005
Summer saving time
Energy Efficiency Standards
Industrial, commercial and public service
Domestic (FIPATERM-ILUMEX)
2006
Thank you very much
[email protected]