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POWER SYSTEM TRANSFORMATIONKARLA JESSICA GASCA LARA

DIRECTOR OF RENEWABLE ENERGY

SENER, MEXICO.

JUNE 22, 2016.

AGENDA

I. KEY ELEMENTS OF THE ENERGY REFORM IN MEXICO

II. QUICK FACTS OF MEXICO’S ELECTRIC POWER SECTOR

III. ENERGY REFORM FOR POWER SYSTEM TRANSFORMATION

o ELECTRICITY INDUSTRY LAW

o GEOTHERMAL ENERGY LAW

o ENERGY TRANSITION LAW

o ENHANCED BUSINESS ENVIRONMENT

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KEY ELEMENTS OF THE ENERGY REFORM

KEY ELEMENTS OF THE ENERGY REFORM

SECONDARY LEGISLATIONSECONDARY LEGISLATION REGULATORY BODIES(CRE & CNH)

REGULATORY BODIES(CRE & CNH)

STRENGTHENINGLEGAL FRAMEWORK AND

REGULATORS

PRODUCTIVE STATECOMPANIES (PEMEX & CFE)

PRODUCTIVE STATECOMPANIES (PEMEX & CFE)

INDEPENDENT SYSTEMOPERATOR

(ASEA, CENACE & CENAGAS)

INDEPENDENT SYSTEMOPERATOR

(ASEA, CENACE & CENAGAS)NEW ELECTRICITY MARKET

NEW TAX REGIMENEW TAX REGIME NEW FUNDS*NEW FUNDS*FINANCING MECHANISMS

NATIONAL INVENTORY OFRENEWABLE ENERGY

NATIONAL INVENTORY OFRENEWABLE ENERGY VUERVUERINFORMATION AND

TRANSPARENCY

* FUNDS: MEXICAN PETROLEUM FUND, PUBLIC TRUST FOR THE PROMOTION AND DEVELOPMENT OF NATIONAL ENERGY INDUSTRY SUPPLIERS AND CONTRACTORS, SENER-NAFIN FUND, AND UNIVERSAL POWER SERVICE FUND

December 22th, 2013Constitutional Reform

August 11th, 2014Legal Reform

February 2016Revenue Regulation for PPP‐Transmission

January 28th, 2016Day Ahead MarketStarts Operations

February 11th

Clean Energy Certificates and Penalties Guidelines 

March 31th,2016First Long TermAuction Award

July 31th, 2015First national Power Development Plan

June 2th, 2015New interconnection Guidelines

March 2016 New Grid Code

SOME MILESTONES ON REFORM IMPLEMENTATION

KEY ELEMENTS OF THE ENERGY REFORM

AGENDA

I. KEY ELEMENTS OF THE ENERGY REFORM IN MEXICO

II. QUICK FACTS OF MEXICO’S ELECTRIC POWER SECTOR

III. ENERGY REFORM FOR POWER SYSTEM TRANSFORMATION

o ELECTRICITY INDUSTRY LAW

o GEOTHERMAL ENERGY LAW

o ENERGY TRANSITION LAW

o ENHANCED BUSINESS ENVIRONMENT

QUICK FACTS OF MEXICO’S ELECTRIC POWER SECTOR (2015)

Capacity

28.32%71.68 %

MW MW

Hydro 64.8%W ind 14.6%Geotherm al 4.8%Solar 0.3%Bioenergy 3.9%N uclear 7.8%Efficient cogeneration 3.0%Distributed generation 0.7%Regenerative brakes 0.04%

100%

Com bined cycle 49.3%Conventional therm al 26.1%Coal fired 11.0%Gas fired 10.1%Internal com bustion 2.4%Fluidized bed 1.2%

100%

Modality Generation (GWh) %

CFE 171,984 55.55

Independent producer

89,157 28.80

Self-supply 23,983 7.74

Cogeneration 15,920 5.14

Exports 7,157 2.31

Continuous Own Uses

1,036 0.3

Small production 153 0.06

Distributed generation

161 0.1

Generation

Population 119 million

Electricity Consumers 40.2 million

Installed capacity: 68 GW

Peak demand: 40.7 GW

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Generation

2015

Source: Programa de Desarrollo del Sistema Eléctrico Nacional 2016 - 2030, Secretaría de Energía.

Generation

2030

Conventional. 79,66%

Clean. 20,34%Conventional. 59%

Clean. 41%

GWh/ yearConventional 261,728Clean 181,878

443,606

QUICK FACTS OF MEXICO’S ELECTRIC POWER SECTOR

AGENDA

I. KEY ELEMENTS OF THE ENERGY REFORM IN MEXICO

II. QUICK FACTS OF MEXICO’S ELECTRIC POWER SECTOR

III. ENERGY REFORM FOR POWER SYSTEM TRANSFORMATION

o ELECTRICITY INDUSTRY LAW

o GEOTHERMAL ENERGY LAW

o ENERGY TRANSITION LAW

o ENHANCED BUSINESS ENVIRONMENT

Generation

CFE

IPPs

Self Supply

Cogeneration Export/Import

Dispatch, Transmission, and Distribution

CFE

CFE Public Utility Mostly Vertically Integrated +

Restricted Private Participation in Generation 

All regulated Users

Self supplyusers

BEFORE: MOSTLY A VERTICALLY INTEGRATED SYSTEM

ELECTRICITY INDUSTRY LAW

Transmission*

CFE Subsidiaries

+Private Sector

Distribution*

CFE Subsidiaries

+Private Sector

Commercialization

Pure Commercializati

on

Suppliers of Regulated Consumers

Generation

CFE Split into Gencos

Private Generators

System and Market Operations

CENACE OSI/OM

Open Access

Final Consumers

Qualified Users

Regulated Users

Suppliers of Qualified Users

Policy Making

Regulation

Short, Medium, and Long Term MarketsClean Energy Auctions & CE Certificate Market

AFTER: RENEWABLE-READY MARKET ORIENTED REFORM

ELECTRICITY INDUSTRY LAW

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ELECTRICITY INDUSTRY LAW

ENHANCED PLANNING PROCESS CLEAN ENERGY CERTIFICATES

UNBUNDLING OF CFE

VERTICAL

HORIZONTAL

Wind

Solar

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Long‐term electricity auctions: First auction results

Source: Cenace y Bloomberg

Company / PowerPlant State Power

(MW)Energy

(MWh/yr)CEL 

(CEL/yr)Precio 

(Pesos/yr)

Price (USD/MWh

)

Acciona Energy 336 585,731 585,731 434,699,412 42.85PE El Cortijo Tamaulipa

s 168 585,731 233,254,958

PE El Cortijo Tamaulipas 168 585,731 201,444,455

Alarde 76 291,900 291,900 338,331,511 66.92Parque Eólico Tizimin Yucatán 76 291,900 291,900 338,331,511

Envision & Vive Energia 90 275,502 275,502 314,423,955 65.89Energía Renovable de 

la Peninsula Yucatán 90 275,502 275,502 314,423,955

Aldesa 60 230,888 230,888 238,816,026 59.72Parque Eólico 

Chabacal Yucatán 30 113,199 113,199 117,085,926

Parque Eólico Chabacal II Yucatán 30 117,689 117,689 121,730,100

Total 562 1,384,021 1,384,021 55.33

Company / Power Plant State Power(MW)

Energy(MWh/yr)

CEL (CEL/yr)

Precio (Pesos/yr)

Price (USD/MW

h)

Enel 787 2,249,947 2,249,9471,508,189,48

2 38.70Parque Solar Villanueva Coahuila 330 972,915 972,915 597,503,346

Parque Solar Villanueva 3 Coahuila 250 737,998 737,998 489,680,736

Parque Solar Don José Querétaro 207 539,034 539,034 421,005,400

Sunpower 1,100 1,009,290 989,265 932,055,704 53.32Guajiro 2 Querétaro 100 269,155 263,815 204,932,823

Ticul 1 Yucatán 500 493,303 483,515 478,075,849

Ticul 1 Yucatán 500 246,832 241,935 249,047,032

JinkoSolar Investment 188 502,713 502,713 458,556,841 52.67Las Viborillas Aguascalient

es 100 277,490 277,490 226,975,665

Concunul Yucatán 70 176,475 176,475 178,133,177

San Ignacio Yucatán 18 48,748 48,748 53,447,999

Recurrente Energy 63 140,970 140,970 116,936,169 47.89Aguascalientes Potencia 1 Aguascalient

es 63 140,970 140,970 116,936,169

Thermion Energy 23 60,965 60,518 50,500,753 47.83Sol de Insurgentes Baja

California Sur 23 60,965 60,518 50,500,753

Alter Enersun 30 54,975 53,477 64,307,962 67.54Kambul Yucatán 30 54,975 53,477 64,307,962

Total 2,191 4,018,860 3,996,890 44.97

BEFORE ENERGY REFORM

(1959 - 2014)

ONLY 4 PRODUCTION WELLSWERE EXPLOITED 15 PERMITS FOR SURVEYING STAGE (CFE + PRIVATE)

6 REQUESTS IN THE PIPELINE (100% PRIVATE)

AFTER ENERGY REFORM

(2014 - 2015)

1 GENERATOR IN 4 STATES

4 + 2 GEOTHERMAL ENERGY CONCESSIONS50% INCREASE

5 ENTERPRISES IN10 STATES

GEOTHERMAL ENERGY LAW

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SUSTAINABLE USE OF ENERGY

GRADUAL INCREASE OF CLEAN ENERGIES

EMISSIONS REDUCTION

HARMONIZATION WITH OTHER LEGALINSTRUMENTS (LIE, LGCC)

STRATEGY PROGRAMS

(PRONASE / TRANSICIÓN ENERGÉTICA / REDES)

ROAD MAP EE / RE CONSULTATIVE COUNCIL R&D (INEEL + CEMIES) VALUE CHAINS

ENERGY TRANSITION LAW

( LAERFTE / LASE )

ENERGY TRANSITION LAW

ON-LINE PLATFORMS FOR INVESTORS

ENHANCED BUSINESS ENVIRONMENT

NATIONAL INVENTORY OF RENEWABLE ENERGIESHTTP://INERE.ENERGIA.GOB.MX/PUBLICA/VERSION4.4/

ATLAS OF HIGH CLEAN ENERGY POTENTIAL ZONES

ONE-STOP WINDOW FOR RENEWABLE ENERGY PROJECTS2016

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THANKS FOR YOUR ATTENTIONKGASCA@ENERGIA.GOB.MX