Oaxaca-Valley of Mexico HVDC Transmission Line

Oaxaca’s majestic hills are adorned with hundreds of windmills, producing more than 2,360 installed MW. This accounts for more than 81 percent of the country’s installed wind capacity. But what good is it to have so much wind power if it cannot be transferred to cities that really need it?

A highly-anticipated project will address that dilemma after CFE sets the rules for the construction of its first “electric highway,” the High Voltage DIrect Current (HVDC) transmission line to be tendered in early 2017. This direct high-voltage line will be 630km long, running from Isthmus of Tehuantepec, Oaxaca to the Valley of Mexico. It will have a tension of 500kV, a capacity of 3GW, two converter stations of 3GW each and 332km of alternative currents.

With an estimated required investment of US$1.2 billion and a deadline for 2020, the private sector was wary about bidding for the project. Due to the high risk and level of necessary investment, the Ministry of Energy decided to allow the private sector to form a PPP with CFE to accomplish the task under the new schemes introduced by the Energy Reform. This partnership will be split into two sections, the first being a 25-year-long Build, Operate

and Transfer (BOT) contract, done through conditioned payments that will be given to the winner of the bid at a minimum price for each of the works constructed.

The second is the construction of the alternating current lines, which will have an average voltage of less than 69kV because it will pass through different transformers, through a Build, Lease and Transfer (BLS) contract. These lines are expected to add an additional investment of US$500 million. The details of the tender were released in November 2016, with a deadline to submit proposals by February 2017 to have the results by April 2017.

Siemens has expressed its interest in building the line. With experience developing various HVDC projects around the world, it has projected that it could significantly boost the number of industrial developments in that area by 25 percent. The project will also help CFE keep more money in its pockets. HVDC transmission lines can decrease technical energy losses by up to 8 percent compared with alternating current technology, drastically reducing expenses and saving approximately 82MW. The stakes are high but so are the rewards and companies are ready to take on the challenge. So far there are 24 businesses interested in constructing the line.