CFE CEO: Economic situation delaying generation investments

Friday, December 12, 2008

Mexico's power generation sector will suffer from delayed investments due to the country's mid-term economic outlook as well as projected demand patterns and energy prices, according to state power company CFE CEO Alfredo Elias Ayub .

The company had nearly completed its 2009-18 investment and works program (Poise), but was forced to revise the program with the energy ministry (Sener) given the new conditions.

CFE now will add 14.0GW new capacity in 2008-17, while fellow state power company Luz y Fuerza del Centro (LyFC) will add 761MW, according to Sener's forecast for the period. Cogeneration and self-supply projects will account for another 2.49GW in the period.

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While the total 17.3GW capacity is brought online, another currently operational 4.75GW will be taken out of service due to inefficiency or obsolescence.

Total installed capacity in the country will be 63.6GW at the end of the period, up from 59.0GW at the end of 2007.

By comparison, when Sener released its 2007-16 forecast in December 2007, the ministry said installed capacity would reach 67.6GW by the end of the period.

Under the new forecast, national investment in generation will total 259bn pesos (US$19.7bn) from 2009-17, or an annual average of 28.8bn pesos. Of the total, private investment will account for 48.3%.

Consumption of energy will increase 3.3% annually to 282TWh in 2017, up from 210TWh in 2008.

Sener anticipates some short-term power shortages in the north and center of the country as a result of growing demand, according to the forecast.

Taking into account new capacity and demand increases, the generation reserve margin in the national SIN grid will drop from 45.8% in 2008 to 25% in 2017.

Operational reserve margin, which takes into account planned maintenance and other service outages, will be 6% in 2017, down from 23.7% in 2008.


There is an opportunity to upgrade older generation capacity and improve transmission and distribution networks, Elias said

"Coming out of the crisis we will have a power system that is more modern, more efficient, more reliable and more competitive," Elias said.

The efficiency of thermo generation is expected to reach 47.4% in 2018, up from 36.9% in 2003, according to the Sener forecast.

National investment in transmission from 2009-2017 will reach 133bn pesos, of which private investment will account for 43.3%.

Distribution investment will total 151bn pesos, of which 19.4% will correspond to private players.

Investment in maintenance will be 73.9bn pesos in the nine-year period.