CFE Pushes National Content in Baja California and Yucatan

CFE has established in collaboration with the Ministry of Economy to reach at least 12 percent of national content up to an optimal 25 percent for participants joining a tender for its Priority Investment Projects (PPIs). The combined cycle power plants represent an interesting investment opportunity in an environment where private participation has become increasingly difficult.

Head of CFE, Manuel Bartlett, highlighted that this national content requirement is not part of the Electrical Industry Law (LIE), but rather a tiebreaker criterion to help Mexico’s national industry.

CFE’s IPPs consist of six combined-cycle based power plants, aimed at meeting energy demand and stability in Mexico’s Baja California and Yucatan peninsulas. MBN’s energy experts often point to these peninsulas as particularly vulnerable when it comes to blackouts, as they grapple with the rapidly rising electricity demands pushed by industry and tourism. Mexico’s southern half of Baja California remains unconnected to the National Electric System (SEN) so internal stability is of the essence. Yucatan is not completely isolated, but its limited connection possibilities still create problems “One transmission tie in Yucatán operated above 90 percent of its operational capacity 50 percent of the time in 2020,” said Francisco Zurita, Director of Business Intelligence at Northland Power Energía to MBN.

To attend the peninsula’s plights, CFE aims to install 1,545MW of capacity in Yucatan and 1,714MW in Baja California Sur. Added to the PPIs is the 1,086MW Tuxpan Phase 1 power plant in Veracruz, a project abandoned by Iberdrola when it could not secure a contract with CFE to supply the natural gas needed to produce power in combined cycle projects. In total, the PPIs have a capacity of 4,345MW, estimated to create 17,574 direct and 12,890 indirect jobs.

Additionally, CFE reported it is showing further commitment to the people of Baja California by carrying out a corrective protocol, based on a CENACE tender from September of last year to contract emergency power. Now that the summer season is approaching and the pandemic’s worst peaks seem to have passed, stability and reliability will be essential to meet the peninsula’s increased tourism-based electricity demand.

Following CENACE’s tender, CFE has elected to install five Aeroderivative Gas Turbines with a total capacity of 103MW and six Mobile Emergency Units with a capacity of 11MW. The Aeroderivative units are designed to operate using natural gas but in emergencies can also burn diesel as an alternative.

In August of 2020, Baja California’s government launched a tender to contract solar energy, but the Governor of Baja California, Jaime Bonilla, quickly saw his attempts to construct the renewable power plant contested by Minister of Energy Rocío Nahle. Local media reported Bonilla had said that he felt abandoned by the federal government, knowing that his state would not be able to gather the whopping US$2 billion needed to build infrastructure that could connect the peninsula with the SEN. Nevertheless, Nahle reached out to Bonilla to stress that CFE projects were already in the works.