On June 30, 2021, the Ministry of Energy (“SENER”) unveiled the new Program for the Development of the National Electricity System 2021-2035 (“PRODESEN”).
PRODESEN is an instrument that sets out the annual planning of the National Electricity System, establishing how national energy policy will be implemented in the electricity sector over the next fifteen years. In principle, it is aligned with the National Development Plan, as well as with various plans and programs of relevant sectors within the electricity industry, such as the Indicative Program for the Installation and Retirement of Power Plants (PIIRCE) and the Program for the Expansion and Modernization of the National Transmission Grid and the General Distribution Grids. Among the most relevant aspects of PRODESEN, the following, among others, may be identified: • It maintains the guideline established in the National Development Program regarding the prioritization and strengthening of the State productive enterprises, specifically the Federal Electricity Commission (“CFE”). We consider that this will continue to place private-sector projects that are in the process of development, construction, interconnection and operation in second place. • It establishes that, no later than 2026, 131 transmission and distribution line construction projects under the responsibility of SENER and CFE Transmission/Distribution will begin operating, the purpose of which is the expansion of the National Transmission Grid and the General Distribution Grids, adding a total of 3,349.7 km of Transmission and Distribution Lines. The main projects will be developed in the states of Baja California, Hidalgo, Guanajuato, State of Mexico and Quintana Roo. These projects will be extremely important in order to avoid disruptions and incidents in the short and medium term in the National Electricity System, since for the time being the critical operating conditions of the System persist, placing at risk the reliability and security of the energy supply in various regions of the country, for which reason we hope they can be carried out on time and without setbacks. • SENER estimates that in the period comprising 2021 to 2024, new power plants belonging to both CFE and the private sector will be incorporated, corresponding to a total of 19,219 MW, with such plants being approximately 50% combined cycle and 50% photovoltaic and wind energy. These projects will be complemented by the projects currently in the process of being tendered through the CFE Master Trust (6 combined-cycle plants). • For the year 2025, the installed capacity of distributed generation is estimated to reach up to 5,941 MW and by 2035 it could reach 13,869 MW. From the foregoing, a clear growth in the distributed generation sector can be observed, so that in the short and medium term we consider that various business opportunities will open up, allowing for a more active participation of private developers, builders, generators and suppliers in this sector. • It establishes that the installed capacity of clean energy power plants grew 12.19% with respect to its installed capacity in 2020. This indicates that the positive effects derived from the clean energy generation projects awarded in the Long- and Medium-Term Auctions convened by the National Energy Control Center from 2016 to 2018 still persist. PRODESEN acknowledges that there is a deficit in the infrastructure of the National Transmission Grids and General Distribution Grids. The document itself establishes that, between 2018 and 2019, investments in these areas increased by only 1.40% and, from 2019 to 2020, by 0.10%, so it will be important that the projects in these areas be executed in accordance with the provisions of PRODESEN itself, in order to avoid disruptions to the security and reliability of the National Electricity System. Likewise, PRODESEN acknowledges that compliance with the goal of transitioning to 35% of total electricity generation through clean energy sources established in the Energy Transition Law for the year 2024 will be met precisely within that timeframe; however, the data foreseen in PRODESEN itself anticipate that from 2022 to 2024 there will be a reduction in the percentage of the total installed generation of energy through clean energy sources, including renewables, which we consider contradictory and which is highly likely to make it difficult to meet the aforementioned goal. The foregoing would also affect compliance with the greenhouse gas reduction goals foreseen in the General Climate Change Law, including the goal of generating 35% of energy through clean energy sources by 2024, which is also foreseen in this Law. Finally, as has occurred in recent times, we will monitor any call for projects on the part of SENER and CFE, in which the participation of developers, generators, suppliers, builders and, in general, any participant in the electricity industry is permitted, mainly in connection with transmission line and general distribution grid projects, which are extremely important to maintain the reliability and security of the National Electricity System, as well as power plant projects. This is in order to be able to inform you of any business opportunity or project that may be of interest to you. For additional information about our firm and our team, you may contact our experts: Edmond Grieger, Partner: +52 (55) 5258 1048 | egrieger@vwys.com.mx Ariel Garfio, Counsel: +52 (55) 5258 1048 | agarfio@vwys.com.mx Roberto Flores, Associate: +52 (55) 5258 1048 | rflores@vwys.com.mx
