CFE Announces Big Investments, Addresses Recent Issues

CFE’s Director General Manuel Bartlett announced new energy generation investments and large-scale transmission projects, as well as addressing recent issues with private power producers and a financial dispute with Goldman Sachs.

“The CFE is the largest company in the country, without a doubt, it is the most important, and it will continue to be despite attempts to destroy it. The CFE is stronger than ever,” said CFE Director Manuel Bartlett.

Mario Vielmas, President of CFE’s Strategic Planning Commission, said Mexico’s national electrical system (SIN) has plenty of capacity with 634 power producing plants in operation. Vielmas said that CFE is guaranteeing a reliable energy supply toward the future, as the state utility plans to invest US$2.9 billion in six new energy projects.

Updating CFE’s hydropower infrastructure remains a core part of the country’s energy transition, said Corporate Director of Operations Carlos Morales. By renewing the aging operations, hydropower damns can increase their efficiency without ramping up the amount of water the dams use. By 2050, hydropower is expected to represent 10 percent of the country’s energy mix.

CFE furthermore announced a tender for 47 projects to strengthen the country’s transmission and distribution network. The total investment required is approximately US$2.35 billion to be allocated between 2021 and 2025.

With these investments CFE hopes to meet growing electricity demand across the country, while ensuring quality of energy, reliability and safety in the SIN.

CFE directors also discussed Mexico’s only nuclear facility, Laguna Verde. The power plant has been reviewed by the World Organization of Nuclear Operators (WANO), the International Atomic Energy Agency (IAEA) and the National Nuclear Safety Commission and Safeguards (CNSNS) and is considered to run safely for years to come.

Bartlett stressed the issue with Goldman Sachs is being resolved at the moment and that the utility was taking steps to prevent such issues from happening again in the future. CFE was forced to deal with the harsh natural gas price hikes during a freeze in Texas, reaching almost 100 times the usual daily rate. As a result, Goldman Sachs argues it was owed roughly US$400 million from CFE.

In addition, Bartlett accused Italian multinational Enel, which has a sizeable portfolio in the Mexican market of participating in a so-called black market for energy. The executive alleges that Enel participates under the self-supply scheme with partners that pay symbolic amounts, and not have to pay transmission costs. “I am doing the investigation because we are going to send a diplomatic note,” said President López Obrador. Enel was privatized in the nineties, but the Italian state still holds around a quarter of the shares of the company. Mexico’s self-supply scheme has often been a target of the López Obrador administration. The scheme was established before the 2014 Energy Reform and still featured incentives for then-emerging renewable energies. Industry analysists point out that these incentives are now somewhat overblown now that renewable energy has become sufficiently competitive on its own, but some self-supply contracts were signed for long terms and are therefore still valid today.