Mexico opens landmark power transmission tender

OREANDA-NEWS. October 11, 2016. Mexico's state-owned utility CFE launched a tender today for a \\$1.2bn electricity transmission line that will be the country's first high voltage direct current line and the first line to be built and operated by the private sector.

The 3,000MW line will run 600km between the Tehuantepec isthmus in Oaxaca and Yautepec, Morelos state in central Mexico where electricity demand is highest, CFE director Jaime Hern?ndez said today.

The high voltage direct current (HDVC) line is expected to reduce electricity losses by around 8pc compared to an alternating current line and is particularly suited to transmitting renewable, intermittent energy sources such as wind and solar over long distances, said Hern?ndez.

The HDVC line is also cheaper to build than alternating current as it does not require compensation infrastructure or switch stations along the length of the route, the CFE told Argus today.

Southeastern Mexico has 9,041MW of installed generating capacity, including wind, solar and hydroelectric power, but exporting that electricity has not been easy because of a lack of transmission infrastructure in the region.

"This project will ease the bottleneck for exporting electricity that we have in the region and allow for the development of additional generation projects," deputy energy secretary Cesar Hern?ndez said today.

The energy ministry will accept comments on the bid terms until November, when the final bid terms will be published. Offers are due in February 2017, with awards to be issued in April 2017.

The winning bidder will receive a 25-year Build, Operate and Transfer contract and the line is scheduled to be operational by 2020.

The transmission auction is the fruit of a 2014 energy reform that broke up the monopoly of the CFE and paved the way for the launch of two long-term power auctions and the creation of a spot market.

The most recent power auction, held in September, saw the CFE secure a total of 8.91mn MWh in clean energy supply, 9.3mn green certificates and 1,187MW of stand-by capacity.

The spot market, launched in January with four companies including the CFE, is gradually maturing and will see the integration of a further 20 companies in the coming months, energy minister Pedro Coldwell said today.

This transmission auction is expected to be the first of several with a tender for construction of a 1,000MW, 700km transmission line to link Sonora and Baja California expected later this year, Hern?ndez said at an energy forum held at the Wilson Center in Washington, DC last month.

Guillermo Garc?a, head of energy regulator CRE, said today that the government forecasts \\$15.3bn of both public and private-sector investment in transmission infrastructure through 2030.