/
Analysis

Transmission Infrastructure Development in Mexico

Wed, 02/19/2014 - 12:04

For decades, Mexico’s key player in the electric industry, CFE, has been tasked with the exclusive development of transmission infrastructure. As economic activity increases, population grows and energy demand rises, more energy has to be generated to fulfill the country’s needs. However, as generation increases, the capacity of the transmission infrastructure needs to increase along with it. In order to allow electricity to travel from distant locations to where it needs to be consumed by the Mexican domestic, commercial and industrial sectors, CFE has to develop enough transmission lines, substations and distribution infrastructure to make power available to these users.

CFE operated the national transmission grid, consisting of 43,000km of high voltage lines, 45,000km of medium voltage lines, and 600,000km of low voltage distribution lines, through CENACE. Following the recent Energy Reform, CENACE is scheduled to become an independent grid operator, as opposed to the CFE division it has long been.

Limitations in the transmission capacity have created bottlenecks that impede taking advantage of the energy coming from regions with generation surpluses. These situations are also closely tied to weather conditions, such as the increased energy demand of the northern part of the country to power air conditioning during summer. At the same time, transmission infrastructure connecting the southern part of the country with the Mexico City area is a major hurdle for the development of Oaxaca’s wind power.

graph1

The priorities for CFE, as established in the National Energy Strategy, are increasing efficiency, availability, reliability and security in the transmission and distribution system as well as incorporating smart grid technology. Increasing efficiency and reducing energy losses during transmission and distribution may lead to a reduction in the need to install additional generation capacity in specific areas. Increasing the flexibility of the grid implies that it should be able to handle double contingencies, changing the current methodology from handling single contingencies, as long as it is economically viable. Also, the increased flexibility will allow issues regarding gas availability and extreme weather conditions to be successfully managed. Furthermore, the fact that 48% of Mexican substations are over 26 years old and 47% of transmission lines are over 21 years old has also contributed to power losses. Degradation of the equipment is affecting transmission capabilities and an important percentage of this equipment may be reaching the end of its useful lifespan.

graph1

Differing from fossil fuels, wind, solar and hydroelectric energy have to be generated where the resource is located, and there are frequently no nearby transmission lines available to transport the generated electricity elsewhere. In other cases, substations that are located near the proposed renewable energy projects do not have the capacity to handle numerous projects in an area with a high concentration of resources, such as the Isthmus of Tehuantepec. The availability of sites that are located near substations is decreasing and the investment costs for new projects are, consequently, going up. Increasing transmission capacity is a key driver to ensuring the development of the renewable energy sector in Mexico and is a priority area in the National Energy Strategy.

Investment in smart grid infrastructure will add to the previously mentioned grid development, making it possible to acquire data that can improve decision making, help identify trends and improve strategic planning. The development of new technologies to implement smart grids can bring different solutions to the challenges that renewable energies cause for electricity management. These new technologies can create self-healing systems and would increase the efficiency of transmission and optimize energy use. Consumers are provided with greater information and can choose their source of supply, while energy management would also be facilitated. These innovative systems can optimize the performance of the electric distribution system by providing bi-directional flows of power and information. They can balance supply and demand in the network and could significantly reduce the intermittency challenges that renewable energies create. Smart grid technologies automatically monitor and manage energy use, generating important savings by using real-time information on power demand. With automatic responses to energy demand, long-haul transmission losses are reduced by improved management of the electricity supply.

Mexico is planning to develop an increased network of transmission lines that will provide alternative routes to distribute electricity from generation zones to demand points. Once built, renewable energies would gain easier access to interconnection points and investment costs are destined to be reduced significantly. However, one of the main challenges that slows down the development and expansion of the Mexican electric grid is the resistance of communities to allow transmission lines to traverse their lands. Obtaining right of way through ejidos is a highly complex matter that must be solved in order to be able to fully make use of electricity generated in regions with a high concentration of renewable energy sources. Programs to reach agreements between the government and the communities owning these lands must be implemented to remove this barrier that stagnates the development of the grid and to ensure that rights of way are respected.

Transmission infrastructure development is a key matter for the expansion of the Mexican electricity sector. The availability of interconnection points and the flexibility of the grid are essential to support the development of the renewable energy industry and will mitigate technical issues caused by intermittency. However, as a difference to the past, CFE will no longer be the sole entity responsible for the construction and operation of transmission infrastructure due to the modifications to the Mexican Constitution by the Energy Reform. But it will remain as the strategic planner of the system while the private sector is expected to become a key driver for the development of projects.