MEXICAN GEOTHERMAL ACTIVITIES

AND THE NEW ELECTRICITY MARKETAND THE NEW ELECTRICITY MARKET.

Magaly Flores Armenta Miguel Ramírez Montes andMagaly Flores Armenta, Miguel Ramírez Montes and Heber Didier Diez León.

heber.diez@cfe.gob.mx

Sacramento CaliforniaOctober 2016

OUTLINE1. MEXICO IN THE WORLD GEOTHERMAL CONTEXT2. INSTALLED CAPACITY IN MEXICO3 GEOTHERMAL ELECTRICITY GENERATION3. GEOTHERMAL ELECTRICITY GENERATION4. MEXICAN GEOTHERMAL POTENTIAL5. NEW COMMISSIONING PROJECTS6. PROJECTS UNDER CONSTRUCTION6. PROJECTS UNDER CONSTRUCTION7. MEXICO´S SCHEDULED PROJECTS8. THE NEW ELECTRICITY MARKET9. AUCTIONS, IN THE NEW MARKET: GEOTHERMAL PARTICIPATION10. CONCLUSIONS

1. MEXICO IN THE WORLD GEOTHERMAL CONTEXT

THE ACTUAL INSTALLEDTHE ACTUAL INSTALLED CAPACITY IN MEXICO IS:

957 MW

Source: Annual U.S. & Global Geothermal Power Production Report, http://www.thinkgeoenergy.com/map, CFE Files. 

2. INSTALLED CAPACITY IN MEXICO

DISTRIBUTION OF POWER STATIONS TECHNOLOGY IN MEXICO

Combined cycle

TECHNOLOGY % CAPACITY 2015

Combined cycle 35% 24,043Thermoelectric conventional 19% 12,711Electric coal 8% 5,378

4%

1% 0%0%

2%

1%1%

0%

Combined cycle

Thermoelectric conventional

Electric coal% ,

Turbogas 2/ 7% 4,904Internal combustion 2% 1,163Fluidized bed 1% 580Hydroelectric 18% 12,489Eolic 4% 2 805

35%18%

Turbogas 2/

Internal combustion

Fluidized bedEolic 4% 2,805Geothermal 1% 926Solar 0% 56FIRCO y GD 3/ Programs GOV and small privates 0% 131

Nuclear 2% 1,510 19%8%

7%2%

1%

Hydroelectric

Eolic

Bioenergy4/ 1% 760Efficient cogeneration 1% 583KERS (Kinetic Energy Recovery System) 0% 7

Geothermal

Solar

Source: PRODESEN

2. INSTALLED CAPACITY IN MEXICO

Cerro Prieto Geothermal Field YearInstalled Capacity

Effective Capacity

MEXICAN GEOTHERMAL FIELDS

(MW) (MW)Cerro Prieto, BC. 1973 570 570

Los Azufres, Mich. 1982 247.9 225Los Humeros, Pue. 1990 93.6 68.6Las Tres Vírgenes BCS 2001 10 10

Tres Vírgenes

Las Tres Vírgenes, BCS. 2001 10 10

Domo San Pedro, Nay.* 2015 35.5 25.5

TOTAL 957 899.1Source: CFE GPG‐Headquarters generation.

* Private investment

Tres Vírgenes

Los HumerosAverage National capacity

f t 85 91%

Domo San Pedro, Nay.

*Private

factor 85.91%

Los Azufres*Private

Source: CFE Files, SDG, http://www.piensageotermia.com/grupo‐dragon‐ponto‐pondra‐en‐marcha‐la‐unidad‐3‐de‐255‐mw‐en‐domo‐de‐san‐pedro‐mexico

CFE GEOTHERMAL 2015

3. GEOTHERMAL ELECTRICITY GENERATION

CFE GEOTHERMAL, 2015Geothermal Field Cerro Prieto Los Azufres Los Humeros Las Tres 

Vírgenes Totales

Producers Wells 158 42 22 3 225

Injectors Wells 23 6 2 2 33

Steam poduced(106 tons)

34.885 15.487 5.147 0.525 56.045

Brine produced(106 tons)

62.005 6.073 0.62 1.641 70.339

Generation (GWh) 4028.27 1700.17 408.22 47.98 6184.63Source: CFE control boards.

Total generation during 2015 including Domo San Pedro:

6331 GWh

Source: PRODESEN, CFE files.

3. GEOTHERMAL ELECTRICITY GENERATION

CONTRIBUTION OF GEOTHERMAL ENERGY TO THE NATIONAL ELECTRICITY SYSTEM

TECHNOLOGY % GENERATION 2015

Combined cycle 50% 155,185Thermoelectric conventional 13% 39,232

3%

2% 0%

0%

4%

0%1%0%

Combined cycle

Thermoelectric conventional

Electric coal 11% 33,599Turbogas 2/ 4% 11,648Internal combustion 1% 2,651Fluidized bed 1% 4,286Hydroelectric 10% 30,892 1%

1%10%

4% Electric coal

Turbogas 2/

Internal combustion

Eolic 3% 8,745Geothermal 2% 6,331Solar 0% 78FIRCO y GD 3/ Programs GOV and small privates 0% 161

50%

11%

4%Fluidized bed

Hydroelectric

EolicNuclear 4% 11,577Bioenergy4/ 0% 1,369Efficient cogeneration 1% 3,795KERS (Kinetic Energy Recovery System) 0% 4

13%Eolic

Geothermal

Solar

Source: PRODESEN, CFE files.

CFE’S GENERATION 2016

3. GEOTHERMAL ELECTRICITY GENERATION CFE S GENERATION 2016

Source: CFE-SDG Aug. 2016

4. MEXICAN GEOTHERMAL POTENTIAL

POTENTIAL

Estimated potential from conventionalhydrothermal resources withtemperatures > 150oC. Of these 125MWe correspond to proven reserves,245 MWe to probable reserves 75 MWe245 MWe to probable reserves, 75 MWeto measured, 655 MWe to indicated and1,210 MWe to inferred resources. FromGutiérrez‐Negrín, L.C.A. (2012).h d f dThere is no recent data for directgeothermal energy use in Mexico;outdated estimates are for 156 MWth ofdirect geothermal heat utilization,g ,mainly for balneology. The number ofbalneology sites utilizing geothermalheat is around 165, distributed in 19t t

Source: http://inere.energia.gob.mx/version4.5/, Country Report IEA (validating source).

states.

4. MEXICAN GEOTHERMAL POTENTIAL

SENER Resolution, july 22th 2015

ENERGY REFORM

•13 Geothermal areas assigned to the CFE to continue exploration,representing about 1,591 square kilometers with an estimatedpotential of 448 MWe.

Energy

ReformSENER

•It gave to CFE as the concessionaire by the Ministry of Law,on the four geothermal fields (150 km2):

•Cerro Prieto 570 0 MWeReform •Cerro Prieto 570.0 MWe•Los Azufres 225.0 MWe•Los Humeros 68.6 MWe•Las Tres Vírgenes 10.0 MWe

•It ruled in favor of the CFE geothermal concession forexploitation in an area of 23 square kilometers in the geothermal

Total* 873.6 MWe

p q garea of Cerritos Colorados, Jalisco.

Source: CFE files. SENER.

4. MEXICAN GEOTHERMAL POTENTIAL

POTENTIAL PROJECTS

PERMITS AND CONCESSIONS GRANTED IN GEOTHERMAL ENERGY.

Privategenerator

Concession for exploitation

Permits for exploration

Source: Elaborated by SENER with CFE data and Subsecretary of Planning and Energy Transition.

5. NEW COMMISSIONING PROJECTS

DOMO SAN PEDRO, POWER PLANT (the first private company in geothermal generation in Mexico)

Grupo Dragon´s Project (Private)

Domo San Pedro

Capacity 25.5 MW

Date of start up Oct‐2014

Date of commercial operation

Apr‐ 2016

Location NayaritLocation Nayarit

Source: http://www.piensageotermia.com/grupo-dragon-ponto-pondra-en-marcha-la-unidad-3-de-255-mw-en-domo-de-san-pedro-mexico/

6. PROJECTS UNDER CONSTRUCTION

CFE Project Los Humeros III Phase A

Capacity 25 MWp y

Date of Start up Oct‐2013

Date of commercial operation

Nov‐2016p

Location Puebla

CFE Project Los Azufres II PhaseII

Capacity 25 MW

Date of Start up Dic- 2015

Date of commercial operation

Jun‐2018p

Location Michoacán

Source:CFE files.

7. MEXICO´S SCHEDULED PROJECTS

MEXICO´S Geothermal Projects (Source: PRODESEN 2016‐2030)Project  Capacity  

(MW) Status   Operation Located

CG CFE 02 27 On construction 2016 PUECG CFE 03 2 Next to bidding 2007 BCSCG CFE 03 2 Next to bidding 2007 BCSCG CFE 04 27 On construction 2018 MICHCG CFE 05 27 Next to bidding  2019 JALCG GCO 01 226 New project 2020 MEXCG PP 02 1 New project 2020 PUECG CFE 09 27 New project 2020 BCp jCG GCO 03 36 New project 2021 PUECG GCO 04 191 New project 2021 NAYCG CFE 06 27 Next to bidding    2021 PUECG GCO 05 11 New project 2022 NAYCG AUT 03 25 Next to construction 2022 JALCG PP 01 30 On construction 2022 NAYCG CFE 07 27 New project 2023 JALCG GCO 06 27 New project 2023 NAYCG GCO 07 15 New project 2024 JALCG GCO 08 1 New project 2024 NAYCG AUT 01 25 Next to construction 2024 HGOCG GCO 09 1 New project 2025 JALCG AUT 04 25 Next to construction 2025 JALCG GCO 10 44 New project 2026 JALCG GCO 11 11 New project 2026 JALCG CFE 08 27 New project 2027 JALCG GCO 12 36 New project 2027 JALTOTAL 896

Source: PRODESEN

8. THE NEW ELECTRICITY MARKET

Source: Geotermia Magazine, Vol. 29., SENER, CENACE, CFE files.

ELECTRICITY MARKET OPERATED BY CFE

8. THE NEW ELECTRICITY MARKET

ELECTRICITY MARKET OPERATED BY CFE

GENERATIONOPERATIVE CONTROL

CONSUMPTIONCOMERCIALITATIONSelf-supplypp y(consumer)

Remote self-supply

(generator)

National Energy National Energy Control Center Control Center

(CENACE, PART (CENACE, PART OF CFE)OF CFE)

CFE Users

OF CFE)OF CFE)

PIEHired by

PPHired by

TRANSMITION DISTRIBUTION

PP: Small producer, PIE: Independent Power Producer

Source: 9th Internal Meeting Continuous Improvement of the CFE (RIMC IX), Forum “Subastas de largo plazo, un mecanismo del nuevo mercado eléctrico” Geotermia Magazine, Vol. 29.

OPERATIONS AND ACTORS IN THE NEW ELECTRICITY MARKET

8. THE NEW ELECTRICITY MARKET

OPERATIONS AND ACTORS, IN THE NEW ELECTRICITY MARKET.

Source: PWC, Forum “Subastas de largo plazo, un mecanismo del nuevo mercado eléctrico” Geotermia Magazine, Vol. 29.

8. THE NEW ELECTRICITY MARKET

THE MARKET CHANGESELECTRICITY MARKET OPERATED BY CFE

ENERGY REFORMIndustrial Electric Law

(Published August 11th, 2014)

New Electricity Market

Wholesale Electricity Market• Clean Energy Certificates• Cumulative electrical energy

Products:

Cumulative electrical energy• Electrical power

Source: 9th Internal Meeting Continuous Improvement of the CFE (RIMC IX),Forum ‘’Subastas de largo plazo, un mecanismo del nuevo mercado eléctrico” Geotermia Magazine, Vol. 29.

8. THE NEW ELECTRICITY MARKET

WHOLESALE ELECTRICITY MARKET

• Energy Market Short‐Term

‐ Market Day in Advance‐ Real Time MarketReal Time Market‐ Market One hour Advance

• Market for the Balance of Power

• Market of Clean Energy Certificates

• Auctions Financial Transmission Rights

• Auctions to allocate electricitycontracts for coverage medium and

Auctions Financial Transmission Rights

glong term

Source: 9th Internal Meeting Continuous Improvement of the CFE (RIMC IX), Forum ‘’Subastas de largo plazo, un mecanismo del nuevo mercado eléctrico´´ Geotermia Magazine, Vol. 29., http://www.altonivel.com.mx/49348-sener-presenta-bases-para-mercado-electrico-mayorista.

INDUSTRIAL ELECTRIC LAW AND THE CLEAN ENERGY

8. THE NEW ELECTRICITY MARKET

Clean Energy: Those energy sources and electricity generation processes whose emissions orwaste, where they exist, do not exceed the thresholds set out in the regulations for that purposeare issued. Among the Clean Energy considered the following:

INDUSTRIAL ELECTRIC LAW AND THE CLEAN ENERGY

g gy g

Clean energy considered by the Industrial Electric LawWind

Solar radiationSolar radiationOcean energyThe heat from geothermal reservoirsBioenergyBioenergyUse of hydrogenHydroelectricNuclearMunicipal Solid Waste;Efficient cogenerationEnergy generated by sugar millsThermal power stations with processes or capture and geological storage of carbon dioxide biosequestrationTechnologies considered low carbon accordance with international standards.

Source: 9th Internal Meeting Continuous Improvement of the CFE (RIMC IX), Forum ‘’Subastas de largo plazo, un mecanismo del nuevo mercado eléctrico´´ Geotermia Magazine, Vol. 29.

9. AUCTIONS, IN THE NEW MARKET: GEOTHERMAL PARTICIPATION

Mexico has had two auctions. In both, the CFE has participated with different technologies,including 25 MWe GEOTHERMAL POWER STATION.

Auction results, 2015: CFE, contract non assigned. Auction results, 2016: CFE, contract assigned.

Source: 9th Internal Meeting Continuous Improvement of the CFE (RIMC IX), CENACE.

9. AUCTIONS, IN THE NEW MARKET: GEOTHERMAL PARTICIPATION

FORTRESS OF GEOTHERMAL ENERGY.

• It is GEOTHERMAL!!!• Clean Energygy• Plant factor (availability): More than 90%.• Strong confiability during critical hours of

the Electric National System.• Comprehensive package of products:

Clean Energy Certificates– Clean Energy Certificates– Cumulative electrical energy– Electrical power

• Competitive price

More efficient in all processes

Los Azufres U17 Power Station.

Source: CFE files.

10. CONCLUSIONS

The actual installed capacity in Mexico is 957 MW, but we are working fori i ll ff Th CFE d th lincreasing, all off us:The CFE and the new players.

Geothermal generation during 2015 was 6331 GWh, but in the next yearsi t iwe are going to increase.

The mexican geothermal potential should be actualized, but at least in CFEe hope 448 MWe in o r a thori ed areas for e ploration pl s o r newe hope 448 MWe in our authorized areas for exploration, plus our new

developments in our geothermal fields in operation.

The new power stations of Domo San Pedro Los Humeros III Phase AThe new power stations of Domo San Pedro, Los Humeros III Phase Aand the Los Azufres III Phase II, and the scheduled projects are going tocontribute with clean energy in the electricity system and increasing ourinstalled capacityinstalled capacity.

10. CONCLUSIONS

The electricity market in Mexico has changed from CFE as a uniquecontroller company to CFE as a participant among many participants (NewElectricity Market)Electricity Market).

Wholesale Electricity Market: In the second one auction, CFEparticipated with a geothermal power station of 25 MWe, becoming in thefirst power unit of this class which obtained this kind of contract.

Due to the characteristics of geothermal power plants: clean, efficient andreliable, geothermal is competitive, but we must improve all processes.

THANK YOU