CFE Announces Gas Supply Projects, Hydropower Overhaul

Mexican state-owned electric utility CFE is investing in two significant areas to ensure reliable energy for the country: natural gas storage projects and hydroelectric power production. By investing US$4.5 billion CFE hopes to supply Yucatan with natural gas.

In addition, the company has invested in gas-fired capacity for Baja California and a matching supply contract. In terms of Hydropower, CFE awarded a near US$900 million renovation contract to a consortium led by Austrian company Andritz Hydro.

CFE is working together with private industry in order to secure gas supplies for Mexico’s two peninsulas, which struggle to access reliable energy sources due to their partial isolation from the nationally interconnected grid system. As such, access to natural gas can greatly contribute to the competitiveness of both Yucatan and Baja California.

The utility is to collaborate with SENER and CENAGAS to carry out the US$4.5 billion-dollar project that would secure a 120 to 300bcf/d supply of natural gas coming from the south of the US to Yucatan. This flow would benefit gas-fired combined cycle power plants Merida and Valladolid, as well as the new gas pipeline constructed along the isthmus and the Dos Bocas refinery.

In regard to Baja California, CFE signed a natural gas supply contract with New Fortress Energy for a supply of up to 20bcf/d to be used by the CT Punta Prieta and CCI Baja California Sur power plants, which can run on diesel as well as natural gas. Earlier this year, aeroderivative gas turbines were used by CENACE.

In a different announcement, CFE reported that it will begin renovating 9 out of 14 hydropower plants during the next three years. A consortium led by Austrian hydroelectricity expert Andritz Hydro and furthermore including GENERMEX, Hydroproject De Mexico and SEISA have won the contract, amounting up to US$892.9 million.

The hydropower plants to be considered first in the revamp are El Caracol and La Villita in Guerrero, Humaya in Sinaloa, Mazatepec in Puebla, Infernillo in Michoacan, Zimapan in Hidalgo and Chiapas’ Peñitas, Malpaso and Angostura.

In the current version of the plan, CFE considers around US$208 million additional funds to upgrade a further 7 hydroelectric power plants. With the total investment, CFE aims to increase its yearly hydropower production by over 1,860GWh and extend the useful life of these power plants for another 50 years. The hydro dams not mentioned in this announcement should still be modernized before 1Q24.