1. Before Energy Reform

Transcription

1 CFE on the right track September 2018

2 1. Before Energy Reform

3 In 2012, there was a significant gap in the average industrial rate between the United States and Mexico. In 2012, the rate in Mexico, on average, was 84% higher than in the United States. National 84% 2012 California 13% 2012 Texas 83% 2012 Florida 34% 2012 Source: USA Energy Information Administration (EIA) / CFE 3

4 On the other hand, in 2012, the National Gas Pipeline network had a length of 11,347 km. By then, the Network was not interconnected and did not have elements of redundancy, so there was limited access to natural gas in most of the country. Red de gasoductos antes de

5 In 2012, the pipeline network in the United States was 43 times larger than the National Gas Pipeline System in Mexico. Only the state of Texas had 8 times more kilometers of gas pipelines than Mexico. 5

6 In 2012, CFE presented technical and non-technical energy losses of more than 15% in the Distribution process. CFE takes over service in the central area of the country % 15.33% OECD avg = 6% 6

7 Additionally, in 2012 CFE registered emissions of more than 93 thousand tons of CO2 per day, as a by product of electricity generation with fuel oil. CO2 emissions related to fuel oil (thousands of tons daily) This equates to daily emissions of around 11 million vehicles

8 2. Energy Reform

9 Last year, we celebrated 80 years of our foundation 1937 Comisión Federal de Electricidad 38% of Mexico s population had access to power Total Installed Capacity 64 kw Generation Transmission & Distribution Power Supply One power plant Transmission & Distribution Clients 105, Comisión Federal de Electricidad 98.5% of Mexico s population has access to power Total Installed Capacity 55,040 MW Generation Transmisión y Distribución Power Supply 186 Power plants 157 owned, 29 IPP Transmission grid: 106,503 km Distribution grid: 801,496 km Clients 42 million 9

10 In 2013 and 2014, the Federal Government approved the Energy Reform in Mexico, which has the following main objectives: Main objectives: Reduce the costs of the electricity service Promote investment in the electricity sector Stimulate the growth of clean & renewable energies With competition and lower costs: Improve the competitiveness of industry and commerce Promote the welfare of society 10

11 CFE s transformation / Energy Reform Energy Reform: Transformation into a State Owned Productive Company CONCEPT Company Commercial Business Business Structure Company Objective BEFORE State Owned Enterprise Electricity Vertically integrated monopoly Provide public electric power services AFTER State Owned Productive Company Energy A Holding Company with 13 new subsidiaries and affiliate companies Generate value and profit to the State Goals Project Programming Service indicators Program of Works and Investments of the Electric Sector (POISE) Profitability indicators Business cases with technical, financial and commercial feasibility 11

12 The new CFE Corporate structure CFE was divided into 13 new subsidiaries and affilate companies. CFE HOLDING COMPANY Board of Directors Chief Executive Officer Legal Internal Control Strategy and Regulation P r o c u r e m e n t & H R Engineering & Infrastructure Projects C F O O p e r a t i o n s D i v i s i o n C o m e r c i a l B u s i n e s s D i v i s i o n GENERATION TRANSMISSION DISTRIBUTION COMERCIALIZATION ENERGY TRADING GenCo 1 GenCo 2 CFE Transmission CFE Distribution CFE s Basic Supplier CFE Energía GenCo 3 GenCo 4 16 Business Units CFE s Qualified Supplier CFE Internacional GenCo V GenCo VI TELECOM Nuclear Generation Legacy Contracts Administrator LAPEM PAESE Corporate Divisions Subsidiary Companies Affiliate Company Business Units 12

13 Mexico s new Wholesale Electricity Market after Energy Reform CFE is no longer the only off-taker of energy in the market GENERATION SYSTEM CONTROL AND ELECTRIC MARKET MARKETING FINAL CLIENTS Generators, CFE and privates, compete in the Wholesale Electricity Market (MEM) CENACE is established as the ISO and manager of the wholesale electricity market Energy suppliers buy energy for marketing it to the final clients million clients currently. SUBSIDIRARY COMPANIES CFE Generation SUBSIDIRARY COMPANY FOR CFE s Basic Supplier INDEPENDENT SYSTEM OPERATOR QUALIFIED SUPPLY BUSINESS UNIT Nuclear Generation CFE Other Generation private competitors AFFILIATE COMPANY FOR CFE s Qualified Supplier Other Qualified Suppliers private competitors SUBSIDIRARY FOR Transmission CFE FIXES THE RATES SUBSIDIRARY FOR Distribution CFE Participation of Subsidiaries and Affiliate Companies in the new Wholesale Electricity Market. 13

14 Reform Pre-Reform Institutional Roles after Energy Reform Generation Control/Dispatch Transmition Distribution Supply Expansion plan Dispatch Rules Expansion plan Final rates Reliability standards Interconnection of power plants Advisor on Generation Type Approves expansion plan Approves expansion plan Participation in final rates Permits Participation in final rates Short and long term market operation Independent System Operator ISO Planning and interconnection studies Sets Minimum consumption to be a Qualified User Requirements for Clean Energies Initial Market Rules Approves expansion plan Sets Service quality requirements Sets Final rates Contract requirements Reliability standards Regulated rates Manages CEL s Market Supervisor Interconnection supervision 14

15 3. First results

16 New infrastructure promoted in Projects promoted by CFE in the last six years represent an investment of more than 35 billion dollars. Since 2012, CFE has promoted the most ambitious electricity infrastructure program in the history of Mexico. 26 PIPELINES POWER PLANTS CONVERTIONS 24 NEW POWER PLANTS RENEWABLE POWER PLANTS (LONG TERM AUCTIONS) TRANSMITION PROJECTS DISTRIBUTION PROJECTS 16

17 By the end of 2018 and during 2019, all of the 26 gas pipelines promoted by CFE are scheduled to begin operating, thus expanding the National Gas Pipeline Network by 75%, with over 7,400 kilometers of new infrastructure National Pipeline Network 2012 Pipelines promoted by CFE

18 By the end of 2018 and during 2019, due to projects currently under construction, our combined cycle power plants will have increased almost 28% since New proyectos installed de distribución capacity: 6,235 MW Investment: 3.4 Billion USD 10

19 From 2012 to 2018, CFE has reduced its CO 2 emissions by 39%, which is the equivalent to removing 5 million vehicles from circulation during the same period CO 2 emissions related to fuel oil (Thousands of tons per day) % % CO 2

20 Percentage of Techincal and Non-Techical Energy Losses in the Distribution Process CFE has decreased its electricity losses since taking control of the region that supplied the Valley of Mexico, from around 15% in 2012 to 11.24% in August Real 17% 16% 16.10% 15.86% 15% 14% CFE takes over service in the central area of the country 15.33% 14.64% % 13.85% % 13.11% 13% 12.46% % 11.79% 12% 11.62% 11.70% 11.55% 11.01% 11.22% 11% 10.60% OECD avg = 6% 12.36% 11.77% 11.24% Aug-18 10% NOV Goal

21 From 2012 to 2017, the gap between the average industrial rate in the United States and in Mexico narrowed. In 2012, the rate in Mexico was 84% higher than in the United States. As of September 2017, the Mexican industrial rate was in average only 24% higher. National 84% % 2017 California 13% % 2017 Texas Florida 83% % % % 2017 Fuente: USA Energy Information Administration (EIA) y CFE 21

22 CFE generates more than 75% of the renewable energy in Mexico. During 2017, CFE generated 257, GWh of electricity, 18.99% of which came from clean energy sources. Hydroelectric plants accounted for 62% of clean energy generation. Since 2012, CFE has increased its generation capacity from renewable energies by more than 6%. *Other clean sources: Nuclear. Source: Dirección Corporativa de Operaciones/SNNR, Comisión Federal de Electricidad. Diciembre v v v v Fossil fuel Gross generation: 208, (GWh) 81.01% Renewables Gross generation: 37, (GWh) 14.76% Other clean sources Gross generation: 10, (GWh) *4.23% Generation: GWh v Solar Power 0.027% Renewable Energy Generation 100% v 4.0% 61.5% 12.1% Wind Power v Nuclear Generation: 10, GWh Hydroelectric Generation: 30, GWh v Geothermal Generation: 5, GWh Generation: 1, GWh Other Clean Generation 22%

23 Thanks to the Three Long Term Auctions, renewable energy projects are being developed that will represent an installed capacity of more than 7,600 MW, developed by companies from 13 different countries. These projects will be located in 16 states, for an investment of almost 8,970 million USD. 66 new renewable energy plants: 47 photovoltaic Parks 19 wind farms PV FIRST AUCTION SECOND AUCTION THIRD AUCTION Wind Average price per energy and CEL (USD) 48 Dollars MWh 33 Dollars MWh 21 Dollars MWh 65% Savings 38% 45% CFE works so that Mexico generates, in 2024, 35% of its energy from renewable energy sources.

24 On March 15 th 2018, CRE and CENACE announced the Fourth Long Term Electric Auction. The deadline for presenting offers is set for October

25 Next steps Consolidate CFE transformation. Finalize regulatory framework. Strengthen institutions.

26 Comisión Federal de Electricidad