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News Article

Transformation Begins with Power Generation

Wed, 02/24/2016 - 16:06

Aligned with its mandate to efficiently generate electricity at lower costs, CFE has a program aimed at revamping seven fuel oil-powered plants so that these can also be powered by natural gas. Between December 2014 and June 2015, CFE converted three power plants in Sonora, Colima, and Tamaulipas. The conversion of a power central in Hidalgo is expected to be concluded in the last quarter of 2015, while two plants in Sinaloa and one more in San Luis Potosi are expected to be finished in 2016. These seven refurbishments represent close to 4,600MW of installed capacity and investments of over US$200 million.

In December 2014, CFE added the finishing touches to the conversion of the Manzanillo Central plant in Colima, which now has a 700MW capacity and required an investment of US$12 million. The plant receives fuel from the LNG terminal in the Port of Manzanillo. Similarly, the conversion of the Puerto Libertad Central in Sonora was finalized in May 2015. The operation required an investment of US$50 million and the facility now has a 630MW installed capacity, receiving gas through the Sasabe-Guaymas pipeline.

In addition to upgrading fuel oil-powered plants so that they can use gas, CFE is working on the construction of nine generation facilities in areas that will have access to natural gas pipelines in the near future. Of these centrals, eight will be combined cycle plants, and one will be able to run on both fuel oil and natural gas. These nine facilities represent an investment of US$6.1 billion and an installed capacity of 6,200MW.

Moreover, in the first half of 2015, CFE tendered the construction of three combined cycle plants: Norte III in Chihuahua, Empalme I in Sonora, and Valle de Mexico II in the State of Mexico. The bidding processes for four more centrals are expected to conclude in the last quarter of 2015, while two more tenders should be completed in the first half of 2016. One of these is the Baja California Sur IV internal combustion plant, which will run on natural gas by 2018, when this fuel is made available in this state.

The savings these investments entail are not to be overlooked. In July 2015, generating 1MWh in a fuel oilpowered plant cost MX$1,388 (US$92.5). Using natural gas in the same power plant would result in generation costs of MX$587 (US$39.1) per megawatt-hour. Likewise, the cost of generating a megawatt-hour in a combined cycle plant is MX$370 (US$24.6), which is four times less than generation with fuel oil and slightly less than half the cost of generating in a converted power plant.

A combination of factors, such as the sufficient supply of natural gas and the increase of hydroelectric power generation, have helped CFE reduce its fuel oil consumption by 45%. This has allowed the parastatal to go from 201,000 barrels per day in 2014 to 111,000 in 2014. According to Centro Mario Molina, this reduction in fuel oil use also resulted in a 45% decrease of CO2 emissions in these facilities.