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Mexico updates plans for electricity sector: Issues PRODESEN 2021-35 [free access]

August 13, 2021

Mexico’s Secretaría de Energía (SENER) or Ministry of Energy recently published the Programa de Desarrollo del Sistema Eléctrico Nacional (PRODESEN) 2021–35 or the National Electric System Development Plan 2021–35 for the expansion of the power generation, transmission and distribution networks.

 

SENER publishes its detailed annual plan for the electricity sector in PRODESEN as per the specifications of the National Energy Policy and Plan Nacional de Desarrollo (PND) 2019–2024 or National Development Plan 2019–2024. The latter is a strategic plan of the government of Mexico, which guarantees supply of electricity at affordable prices to the entire population of Mexico. It also targets ensuring the smooth functioning of the state-owned power company Comisión Federal de Electricidad (CFE) and increasing the share of renewable energy in the generation mix.

 

Under PRODESEN 2021–35, SENER has estimated that power consumption will increase at a rate of 2.8 per cent from 328 TWh to 480 TWh during the period 2021–35. To meet this rising power demand, it aims to add 21,291 MW of generation capacity between 2021 and 2024, of which clean energy sources will have a share of more than 55 per cent. Majority of this generation capacity will be added in the northern region of the country.

 

To strengthen its Red Nacional de Transmisión (RNT) or National Transmission Network, there are plans to add 1,072 circuit km of line length and 2,875 MVA of capacity under 19 expansion projects and 14 modernisation projects. In addition, there are plans to add 83 circuit km of distribution lines and 863 MVA of capacity during the 2021–35 period for RNT.

 

Existing power network

Mexico’s Sistema Eléctrico Nacional (SEN) or the National Electric System comprises nine regions of control, and a small isolated electrical system. It includes Sistema Interconectado Nacional (SIN) or National Interconnected System, which is made up of seven regions, namely, Central, Eastern, Western, Northwest, North, Northeast and Peninsular. The Baja California Interconnected System is connected to the Western Electricity Coordinating Council (WECC) of the US via two 230 kV transmission lines. The electricity systems of Baja California Sur and Mulegé are electrically isolated from each other as well as from the rest of the country.

 

Mexico also has two isolated links at 115 kV with Texas, USA, and is connected with Central America via a 400 kV link with Guatemala and a 115 kV link with Belize.

 

As of the end of 2020, the country’s power transmission network consisted of 1,05,885 km of line length and 1,14,807 MVA of transformer capacity at the 115 kV to 400 kV voltage levels. This entire transmission capacity is owned and operated by CFE. Mexico had an installed generation capacity of 83,121 MW as of December 2020, which increased to 89,479 MW by April 2021 with the addition of 3,113 MW of combined cycle power plants, 1,187 MW of wind power plants and 1,876 MW of solar photovoltaic (PV) projects. The country relies mainly on conventional sources of energy to meet its power demand; however, the share of clean energy sources has been increasing over the past few years.

 

Of the total installed generation capacity, CFE holds the majority share of 44,835 MW, followed by Productores Independientes de Energía Eléctrica (PIE) or independent power producers (16,689 MW), private players (27,034 MW) and the state-owned petroleum company Petróleos Mexicanos (PEMEX; 921 MW).

 

 

Table 1: Growth in Mexico’s electricity network

 

2014

2015

2016

2017

2018

2019

2020

Generation capacity (MW)

65,452 

68,025 

73,510 

75,685 

75,9181 

78,447 

83,121 

–Hydro

12,429

12,489

12,589

12,642

12,598

12,612

12,612

–Non-conventional

48,530

48,801

52,331

53,358

52,044

53,257

55,919

Renewables/clean energy sources

4,493

6,735

8,590

9,685

11,277

12,578

14,590

Electricity production (GWh)

2,58,256 

2,61,067 

2,63,153 

2,57,417 

3,17,278 

3,17,820 

3,12,347 

Transmission line length (km)

99,381 

99,756 

1,01,281 

1,03,905 

1,04,881 

1,05,771 

1,05,885 

–400 kV

46,115

46,147

24,714

24,746

25,455

25,921

25,922

–230 kV

1,532

1,608

28,566

29,096

29,115

29,425

29,491

–161 kV

550

522

523

519

519

519

519

–115 kV to 138 kV

51,184

51,479

47,478

49,544

49,792

49,906

49,953

Transformer capacity (MVA) at RNT

1,63,325 

1,66,140 

1,69,382 

1,09,591 

1,13,143 

1,14,707 

1,14,807 

Note: 1–As of June 2018; RNT– Red Nacional de Transmisión

Source: SENER

 

 

PRODESEN 2021–35

Under the latest PRODESEN, it is estimated that power consumption under the planning scenario will increase at a rate of 2.8 per cent from 328 TWh to 480 TWh during the period 2021–35. It also considers two other scenarios—low growth rate and high growth rate—under which power consumption is expected to grow at a rate of 2.4 per cent and 3.3 per cent, respectively.

 

Region-wise, the majority of this growth will be in Peninsular and Northeast Gerencia de Control Regional (GCR) or Regional Control Management, with 4.2 per cent and 3.6 per cent, respectively. The agriculture and medium enterprise sectors represent higher growth rates of 3.5 per cent and 3.4 per cent, respectively, followed by large industry and residential (3.1 per cent). The power consumption of the service and commercial sectors will grow at the rate of 3 per cent and 2.9 per cent, respectively, for the studied period.

 

The peak demand in SIN is experienced from June to August every year. Under the planning scenario, the peak demand during 2021–35 will increase at a rate of 3 per cent from 49 GWh/h to 72 GWh/h.

 

The loss of electrical energy during transmission and distribution (T&D) of electricity is one of the major challenges faced by suppliers, distributors and operators of an electrical system. The government is putting greater emphasis on reducing these technical and non-technical losses through higher investment in infrastructure, the detection and elimination of illicit uses, and the modernisation of measurement systems. With these initiatives, SENER expects to reduce T&D losses to international standards of 8 per cent by the end of 2035 from 12 per cent in 2021.

 

Upcoming generation capacity

PRODESEN includes the Programa Indicativo para la Instalación y Retiro de Centrales Eléctricas (PIIRCE) or Indicative Program for the Installation and Removal of Power Plants, under which SENER plans the power generation network for the studied period.

 

SENER has set a target to achieve a 30 per cent share of clean energy sources in the generation mix by 2021, and increase it further to 35 per cent by 2024. Following this, under PIIRCE, 21,291 MW of new generation capacity will be added during 2021–24. This will increase the share of clean energy sources in the energy mix to 55.5 per cent from the current share of 20 per cent. The country will also invest in hydrogen turbines, energy storage capacity, solar projects, harnessing ocean energy, etc.

 

During the same period, 1,331 MW of thermal power plants will be replaced by flexible natural gas-based power plants.

 

SENER also plans to pursue the development of CFE power plants, for which the incorporation of combined cycle plants is proposed in the medium term. For the long run, the focus will be on the habitation and modernisation of some operational hydroelectric plants.

 

Figure 1: Planned capacity addition by type of technology during 2021–2024

 

 

Source: PRODESEN 2021–35, SENER

 

Upcoming transmission and distribution projects during 2021–26 for RNT

SENER had allotted CFE Transmission 144 projects for the expansion and modernisation of the national transmission network to be executed during 2015–21. Of these, 35 projects entail construction of transmission lines, 43 projects include installation of transformation banks in RNT, 37 include reactive power compensation equipment and the remaining 29 involve modernisation projects. As of June 2021, CFE had completed four expansion projects of RNT, five projects were cancelled, and four projects were on hold.

 

The rest of the 131 projects, which entail 3,349.7 circuit km of line length and 13,158 MVA of transformer capacity, will come into operation during the period 2021–26. Majority of the line length capacity will be constructed in the states of Baja California, Hidalgo, Guanajuato, State of Mexico and Quintana Roo. In addition, 40 circuit km of existing 400 kV transmission lines and 71.3 circuit km of 115 kV transmission lines will be modernised in the states of Veracruz, Puebla, Durango and Sinaloa during the period as well as 1,661.6 MVA of transformer capacity in the states of Baja California, Coahuila, Nuevo León, Tamaulipas and Veracruz.

 

To support this transmission network expansion, 91 power distribution projects including 417.5 circuit km of medium-voltage line length and 2,681.3 MVA of transformer capacity are expected to come into operation during 2021–26 at the 69 kV to 115 kV voltage levels, which will be connected to RNT. Majority of the line length capacity will be added in Chihuahua, Chiapas, Tabasco, Jalisco and Hidalgo regions.

 

Planned transmission and distribution projects under PRODESEN 2021–35

Under the Programa de Ampliación y Modernización de la Red Nacional de Trasmisión y Redes Generales de Distribución del Mercado Eléctrico Mayorista (PAMRNT) or Expansion and Modernisation Program of the National Transmission Network and General Distribution Networks of the Wholesale Electricity Market of PRODESEN 2021–35, Mexico’s Centro Nacional de Control de Energía (CENACE) or National Electricity Control Centre has identified 19 expansion projects and 14 modernisation projects of the RNT to meet rising power demand, preserve and improve the reliability of the national electric system, reduce the cost of electricity supply, contribute to the fulfilment of clean energy production goals, improve energy efficiency, minimise transmission network congestion and losses, and incorporate smart electric grids.

 

The RNT expansion projects identified in the planning exercise constitute a total of 1,072 circuit km of transmission line length network, of which the largest contribution will come from the states of Sinaloa and Nayarit. Of this, the majority of the line length capacity (904 circuit km) will be added at 400 kV, and year-wise, 2025 will witness the largest capacity addition of 865 circuit km. In addition, 66 circuit km will be modernised during the period.  

 

Further, RNT expansion projects constitute a total of 2,875 MVA of transformer capacity, of which the largest contribution will come from the states of Sonora, Querétaro, Nayarit and Morelos. Majority of the transformation capacity of 1,850 MVA will be added in 2025, followed by 525 MVA in 2027 and 500 MVA in 2026.

 

A total of 2,850 MVAr of dynamic reactive power compensation capacity has also been planned for the period 2021–35.

 

Majority of the upcoming generation projects, especially the renewable energy-based ones, will be installed in the northern region of the country. To transmit this excess generation to the north-eastern and southern parts of the country, additional transmission capacity is required. In view of this, the largest transmission project planned under PRODESEN 2021–35 has been dedicated for the same. It includes the 400 kV Choacahui–Culiacán Poniente–Mazatlán Dos–Tepic Dos–Cerro Blanco lines projects, which will have a combined line length of 782 circuit km, transformer capacity of 600 MVA and reactive capacity of 250 MVAr. It will benefit the northern, north-eastern, north-western and western regions of the country.

 

The 400 kV Texcoco–Teotihuacán line and associated work project has also been planned to meet the growing demand of Mexico City. Some other key projects are the Cerro Blanco–Vallejo line and associated work project in the states of Nayarit and Jalisco; the 230/115 kV augmentation of transformation capacity in the Querétaro area; and the 115 kV modernisation of the transmission line between Tecamachalco line to the Tlacotepec line in Puebla city.

 

In addition, three transmission projects are under study for PRODESEN 2022–36. These include the Chihuahua–Camargo–La Laguna project, which will entail the construction of 470 circuit km of line length along with the addition of 300 MVAr of reactor capacity in the Chihuahua, Camargo and La Laguna areas of Chihuahua, Coahuila and Durango states. It will transfer power from the northern region to north-eastern region of the country.

 

A total of 28 Redes Generales de Distribución or General Distribution Networks (RGD) projects at 69 kV to 115 kV have been identified in PAMRNT, with a line length capacity of 82.9 circuit km. These will be developed in the states of San Luis Potosí, Tamaulipas, Sonora, Veracruz, Sinaloa, Baja California and Tabasco, and will be connected to RNT. A transformer capacity of 862.5 MVA and reactive power capacity of 51.8 MVAr has also been planned for the distribution network under the same.

 

Table 2: Upcoming transmission capacity in Mexico

Transmission line length (circuit km)

Upcoming capacity during 2021–261

PRODESEN 2021–35

400 kV

1,338

904

230 kV

820

51

69-161 kV

1,192

117

Total

3,350

1,072

Transformer capacity (MVA)

 

 

400/230/115 kV

6,225

1,600

230/161/69 kV

6,933

1,275

Total

13,158

2,875

Capacitor (MVAr)

 

 

400 kV

3,359

1,517

230 kV

808

1,000

115 kV

2,620

334

Total

6,787

2,850

Note: 1–Projects allotted to CFE during 2015–21.

Source: PRODESEN 2021–35, SENER

 

Table 3: Key planned transmission projects under PRODESEN 2021–35

Project

Voltage (kV)

Line length (circuit km)

Transformer capacity (MVA)

MVAr

Project area of influence

Expected commissioning date

Solution to congestion of internal transmission links in the north-western, western and northern regions

400/230

782

600

250

North-western, northern, north-eastern and western regions

2024-2025

  • Choacahui–Culiacán Poniente line

400

216

 

 

 

 

  • Culiacán Poniente–Mazatlán Dos line

400

268

 

 

 

 

  • Mazatlán Dos–Tepic Dos line

400

252

 

 

 

 

  • Tepic Dos–Cerro Blanco line

400

46

 

 

 

 

  • Upgrade of Empalme Ciclo Combinado substation (4x150 MVA)

400/230

 

600

 

 

 

  • Upgrade of Choacahui substation

400

 

 

75

 

 

  • Upgrade of Culiacán Poniente substation

400

 

 

100

 

 

  • Upgrade of Mazatlán Dos substation

400

 

 

75

 

 

  • Other upgrades

400/230

 

 

 

 

 

Repowering of the double-circuit Teotihuacán–Texcoco line and upgrade of the Teotihuacán and Texcoco substations project

400

32.14

 

 

Metropolitan Area of ​​Mexico City

December 2025

Veracruz II–Tamarindo II double-circuit line and other upgrades

115

36

 

 

City of Xalapa and surrounding towns, state of Veracruz

April 2025

Modernisation of the Tecamachalco–Tlacotepec transmission line project

115

33.70

 

 

Municipality of Tlacotepec and neighbouring towns, state of Puebla

February 2024

Ahuacatlán Bank 1 Project—Ahuacatlán substation to Axtla substation line, Ahuacatlán substation and other upgrades 

115

23

20

1.2

Municipality of Valles, state of San Luis Potosí

April 2026

Increase in transformation and transmission capacity between the Tepic and Vallarta zones

400/230

130

500

4

Vallarta and Tepic areas, states of Jalisco and Nayarit

April 2026

  • Cerro Blanco–Vallejo double-circuit line

400

90

 

 

 

 

  • Vallarta Power–Nuevo Vallarta line to Vallejo substation double-circuit line

230

40

 

 

 

 

  • 400/230 kV Vallejo substation

400/230

 

500

 

 

 

  • Other upgrade works

 

 

 

4

 

 

Increase in transformation capacity in the Querétaro area

230/115

37.46

525

 

Querétaro area, Querétaro state

April 2027

Key transmission projects under study for PRODESEN 2022–36 

Increase in transmission capacity at the Chihuahua–Camargo–La Laguna transmission link project

400

470

 

300

Chihuahua, Coahuila and Durango states

April 2025

Increase in transmission capacity at the Moctezuma–Chihuahua transmission link project

400

25

375

115

Juárez and Chihuahua areas, Chihuahua state

April 2026

Source: PRODESEN 2021-35, SENER

 

Outlook

While the Mexican Government has been focusing on strengthening the country’s power network, increasing the share of renewable energy in the generation mix, and improving the operations as well as the financial health of CFE, several policy announcements in the recent past have cast doubts over the achievability of these targets.

 

In March 2021, the government published a decree to amend the various provisions of the Ley de la Industria Eléctrica (LIE) or Electricity Industry Law to take greater control of the electricity market. These amendments include changing the dispatch rules, giving priority to the generation of CFE regardless of its cost, changing the rules for the issuance of clean energy certificates and self-supply contracts, and allowing the government to review basic supply contracts. This has drawn severe criticism from the private sector and analysts. According to market experts, these moves will increase the cost of electricity for end-users as they favour the non-clean and expensive power plants of CFE and hurt the profitability of privately-owned generation plants.

 

It is also likely to reduce private investment in country’s power generation sector and increase the investment burden on CFE. This in turn is expected to hamper the utility’s ability to fund projects in its T&D segment, which is already suffering due to the poor operational and financial health of CFE.

 

The government continues to maintain CFE’s monopoly position in the transmission sector. In 2019, it cancelled the auction of two major high voltage direct current (HVDC) transmission projects—the ±500 kV Ixtepec–Yautepec and the ±500 kV Baja California–Sistema Interconectado Nacional (SIN) interconnection projects, after investing considerable time and money in finalising the terms and conditions to offer attractive opportunities for private investment. The government now plans to focus on strengthening the transmission network at 400 kV and below and upgrading the existing network, instead of investing in new and large network, for better efficiency.

 

Amid COVID-19 and slow gross domestic product (GDP) growth, the country requires funds to support the economy. During this time, the government needs to work towards reducing regulatory instability for the electricity sector of Mexico.