National Forum on Renewable Energy Regulation. MEXICO,D.F March

Transcription

1 National Forum on Renewable Energy Regulation MEXICO,D.F March Regulation, Mexico, March

2 General information on power and energy purchasing agreements in Guatemala PPAs Presented by: Engineer Sergio O. Velásquez M. Managing Director Comisión Nacional de Energía Eléctrica Guatemala, C.A. 2

3 Background The first plants are built and all distribution companies are private Empresa Eléctrica de Guatemala EEGSA- is established The first state-owned electricity company is created. The National Electrification Institute INDE is created, as a monopoly in the electricity sector s The Electricity Law is enacted EEGSA is acquired by the State. INDE monopolizes generation, carrying and distribution in Guatemala. monopoliza la generación, el transporte y la distribución en el interior de Guatemala. EEGSA takes control over distribution in central Guatemala. -World oil crisis. EEGSA s financial decline. The government decides the rates 3

4 Electricity sector legal framework LGE Law regulations and AMM Technical and coordination marketing and operating guidelines CNEE resolutions Electricity Law (LGE) (13/11/1996) LGE regulations (3/4/1997, amendment 6/3/2007) Rules from the wholesale market administrator (2/6/1998, amendment 6/3/2007) ( ) (2001) Technical guidelines Coordination marketing and operating guidelines 4

5 Guatemala s electricity market evolution

6 Guatemala s Electricity Sector Elabora Políticas Energéticas Ente Regulador del Sub Sector Eléctrico, con funciones de planificación Coordinación de la operación del Sistema Nacional Interconectado Generadores Grandes Usuarios Transportistas Comercializadores Distribuidores 6

7 Electricity market rates Spot market average power price: US$ MWh Highest power demand recorded: 1468 MW Highest daily energy recorded: : 25 GWh System s installed capacity : 2,178 MW( sugarcane harvest season) System s installed capacity : 1908 MW(no harvest season) System s load factor: 63.28% In 2011, 87% of power was traded in the forward market (agreements) and only 12.27% in the opportunity market (spot) 7

8 Energy production insni Winter Summer 8

9 Background At the beginning of the 90 s, Guatemala s electricity sector underwent a crisis, and electricity public companies virtually cancelled their investment projects to generate electricity. In order to overcome the crisis, the electricity sector in Guatemala is modified, through PPAs contracting schemes to meet the growth in demand and to ensure the supply during the reform and transformation of the electricity industry. Empresa Eléctrica de Guatemala S.A.(privatized in 1998) and the Instituto Nacional de Electrificación INDE- (National Electrification Institute) were the companies entering into PPAs agreements in Guatemala 9

10 PPAs and their transfer to end users PPAs are agreements with a capacity charge in $ / kw and an energy charge in $ / kwh. Features such as take or pay. 15 to 20-year terms and other special features. The cost of PPA s generation agrrements is transferred to end users 10

11 PPAs charges and price fixing The procedures to determine charges and prices are very similar, and are the result of a binomial formula, including capacity power charges (fixed charges) and energy charges (variable charges). Besides these formulas, there is a price upgrading, including the following variables: Consumer Price Index in the United States and in the country and fuel price variations. 11

12 PPA s legal framework in force Existing agreements (LGE): these are energy supplying agreements between generators and distribution companies, entered into before enacting the Law and in force upon the enactment of the Rules. Existing agreements (RAMM). The existing agreements will be considered as part of the term market and will be managed according to the provisions therein, including energy compulsory buyins. Regulation, México 6-7 marzo

13 Renegotiation of PPAs original conditions Original conditions Term: 15 años Separate payment for power and electricity. Annual breakdown for the payment of power in an average period of 10 years. Compulsory purchase of all the power. Compulsory purchase of 50% of the energy that the facility can generate. Power can vary up to 15% and the total will be paid. Modified conditions ( year 2000) Discount in power charges Elimination of power charge breakdown. Payment for power actually distributed. Reduction of energy buy-in compulsory purchases. A total profit of US$ 73 millions was determined for the agreement duration. 13

14 Existing agreements (PPAs) signed by Empresa Eléctrica de Guatemala S.A. (EEGSA) Company Date Duration Expiration Capacity (MW) No harvest (MW) TERMICA 1 14-Sep years 14-Sep TERMICA 2 19-Jan years 19-Ene TERMICA 3 17-Feb years 17-Feb Ingenio 1 01-Mar years 01-Mar Ingenio 2 28-Apr years 28-Apr Ingenio 3 28-Apr years 28-Apr Ingenio 4 28-Apr years 28-Apr Ingenio 5 28-Apr years 28-Apr Ingenio 6 28-Apr years 28-Apr Most of the agreements entered into by EEGSA had a duration of 15 years, and the term was extended for some of them.

15 Power price US$/kW - month Disco 1 Agreement -Generator Contrato Original Contrato Renegociado Renegotiation2001: Power unit price reduction in 9% and 5%. A C block is created to meet missing demand. Renegotiation 2001: 5-year extension Years

16 Power price US$/kW - month Disco 1 Agreement Centrals Harvest 6 contracts, hired power 160 MW - month Contrato Original Renegotiation 2001: contract power unit price reductions of 11% and 20%. contract Electricity prices are still 0.04 indexed to Bunker price variations (NY Cargo 1% 5DRA Platts) Years Renegotiation 2001: 5-year extension

17 Power price US$/kW - month DISCO1 Agreement - Central Harvest 6 contracts, hired power 160 MW - month Contrato Original Contrato Renegociado 2001 Apoyo Generadores a Reestructuración del Mercado Years In 2005, centrals voluntarily agreed to make direct power price discounts. (Approximately anual US$ 9 millions, about 4.5 millions in harvest season) Subject to discounts in resulting cost overruns.

18 Power price US$/kW - month DISCO1 Agreement- Central no harvest season 6 contracts, hired power MW - month Contrato Original Contrato Renegociado Renegotiation 2001: contract power unit price reductions between 11% and 20% The energy price is still US$/kWh indexed to Bunker s price variations (NY Cargo 1% 5DRA Platts) Years Renegotiation 2001: 5-year extension

19 Power price US$/kW - month Disco 1 Agreement- Central no harvest season 6 contracts, hired power MW - month Contrato Original Contrato Renegociado 9.00 Apoyo Generadores a Reestructuración del Mercado Years In 2005, utilities voluntarily agreed to make direct power cost discounts (Approximately US$ 9 millions per year are equivalent to 4.5 millions in no harvest season.) Subject to disconts from other deriving market overrun costs.

20 Present situation of DISCO1 s PPAs The first PPA agreement will expire in Upon expiration of PPAs, they will not be extended. This provision was included in the Electricity Law amended in Once PPAs are expired, DISCO1 will contract its supply requirements through biddings. Presently, PPAs of DISCO1 meet about 20% of power domestic demand.

21 Expiration of existing agreements 21

22 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 Hiring demand and requirements of EEGSA and DEORSA-DEOCSA( 67% domestic demand) 1, , , , , , , , , , , , To be met with 800 MW bidding Axis name Eegsa TS Eegsa TNS Deocsa TS Deocsa TNS Deorsa TS DeorsaTNS Necesidades de contratación Demanda 22

23 transportation system expansion plan Anillo Anillo Metropacífico Ubicación Geográfica km de líneas 2 No. subestaciones ampliaciones y refuerzos Costo 1 Región Central y Sur Anillo Hidráulico Región Noroccidental Anillo Atlántico Región Nororiental Anillo Oriental Región Suroriental Anillo Occidental Región Suroccidental Otras obras Interconexión (Guatemala México) y Comp. Reactiva. 73 TOTAL Transportation system expansion works were awarded through an international bidding process. The expansion project is under construction and is expeted to start operations in

24 PPAs future in Guatemala Existing PPAs will be expiring over the next years; thus, the Generation Indicative Expansion Plan was approved. Today, PEG bidding award for 800 MW is in process. Distribution companies will be entitled to enter into agreements with generating companies for up to 15 years. 24

25 Demand growth scenarios ( ) Demand growth scenarios used in PEG 25

26 PEG bidding offers 26

27 Bidding offers (January 26 th, 2012) 27

28 28

29 Bidding summary 33 offres were made. 1555MW of the 800 required were offered. Several technologies were offered. 29

30 Remarks(1) PPAs were signed in difficult circumstances for the country, and they helped to overcome such crisis, benefiting generators, the INDE and EEGSA. These agreements have not resulted in price reductions to the final consumer; on the other hand, reforms, competition and technological improvements benefited several countries. 30

31 Experienced gained (1) To meet the electricity demand, it is necessary to make long-term plans, in order to get the most benefit from biddings. As far as it is possible, provided that the legal framework allows to do it, biddings will be for power and electricity amounts taking advantage of scale economies and combining the needs from distribution companies. The higher the contracts the better prices will be obtained. Long-term biddings allow the installation of new plants and better technologies. Signing agreements in a crisis and for the short-term generally results in high prices and conditions that do not favor effective generation prices. 31

32 Experience gained(2) The respect from Guatemala for the existing agreements, after the LGE, gave legal certainty, which is a basic element to attract new investments. The strength and independence of regulating bodies is basic to secure legal certainty and compliance of the law. PPAs agreements iunder the favorable conditions described above contribute to investments in the electricity industry. 32

33 Engineer Sergio O. Velásquez M Edificio Paladium, nivel 12, 4 avenida zona 10. Ciudad de Guatemala, C.A. 33