Guatemala: Electricity Market Update Institute of the Americas Webinar Session Silvia Alvarado de Córdoba Director National Electricity Commission 18/02/2016
Guatemalan Electrical Market Legal Framework 1996 Electric Power Act Amendment to the Bylaws Creation of the Regulatory Agency -CNEE- and the Wholesale Market Admnistrator -AMM-. Mandatory unbundling. Market opening and guidelines for regulation of transmission and distribution and generation competition rules. Recognize and encourage the efficiency of power plants. Long-term signals for investment (indicative planning, long term PPAs) Identification of necessary transmission expansions. Generation and Transmission Expansion Plans
Agents of Electricity Market Institutional Framework 44 GENERATION COMPANIES AGENTES 8 TRANSPORTATION COMPANIES 19 DISTRIBUTION COMPANIES 22 BROKERING COMPANIES 891 LARGE USERS DIRECT RELATIONSHIP INTERMEDIATION
Transportation Grid of Guatemala Interconnecting the Generation of Major Demand Centers (Cities). The Tramsission System of Guatemala has voltages higher than 60,000 volts. In Guatemala there are 8 Transmission companies with a total of 5,122 Km. Kilometers of Lines 3000 2,717.01 2500 2000 1,935.69 1500 1000 500 0 399.07 71.15 69 kv 138 kv 230 kv 400 kv
Distribution System The Distribution System has voltages lower than 34,500 volts and a total of 39,845 Km. of power grid. There are 19 Distribution companies, 16 of them are Municipal Companies (EEM S) which serve 7.45 % of total consumers. EEGSA (EPM), and DEOCSA DEORSA (ICPower) serve 92.55 % of total consumers. Evolution of Distribution service users Distribution service users by2015 1400000 1,400,000 1200000 1,200,000 1000000 1,000,000 800000 800,000 600000 600,000 400000 400,000 200000 200,000 0 2007 2008 2009 2010 2011 2012 2013 2014 0 EEGSA DEOCSA DEORSA EEMS EEGSA DEOCSA DEORSA
GWH (US$/MWh) MW 0 500 1,000 MW 1,500 2,000 (%) Key Indicators of Electricity Subsector (2015) 1,800 1,600 1,400 1,672.0 1,672.0 100 90 Electrification Rate 91.5 1,200 80 1,000 800 70 60 50 600 400 40 30 20 200 10 0 0 12000 10000 8000 6000 4000 2000 9792.0 200.00 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Spot Price 0
Capacity vrs. Consolidated Demand ( 3rd Quarter 2015) 3000 2750 2500 2250 384 MW 2000 427 MW 1750 1500 1250 1000 750 500 2,600 MW 2,216 MW 1,789 MW 250 0 Capacidad Efectiva al SNI Oferta Firme Eficiente Demanda Firme Fuente: Administrador del Mercado Mayorista
Capacity vrs. Demand, by resource or type of consumers (3rd Quarter 2015) 3000 2750 2500 2250 BUNKER ENGINES 2000 1750 COAL BUNKER ENGINES DEORSA 1500 PLANTS INTERNACIONAL TRANSACTIONS COAL EEM 1250 1000 GEOTHERMAL SOLAR GEOTHERMAL PLANTS REPRESENTED LARGE USERS 750 EEGSA 500 HYDROELECTRIC HYDROELECTRIC 250 DEOCSA 0 Capacidad Efectiva al SNI Oferta Firme Eficiente Demanda Firme
4,000.00 Expected development of Capacity vrs. Demand 3,500.00 3,000.00 3,031 3,211 3,265 3,345 2,500.00 2,485 2,000.00 1,500.00 1,636 1,700 1,743 1,788 1,838 1,000.00 500.00-546 180-54 80 2014 2015 2016 2017 2018 Potencia Nueva que se agrega Capacidad Efectiva Total en el SNI Demanda Maxima
Capacity vrs. Consolidated Demand (2015-2016) 3500 3000 431 MW 2500 2000 1500 2,600 MW 1000 1,789 MW 500 0 Capacidad Efectiva al SNI Demanda Firme
Key Trends identified in the electricity market Increase of Supply and Demand Environmentally-friendly changes Renewable energies development Technology Electricity sector growth Attraction of competitive prices Energy efficiency and Smart Grids
Energy Matrix Evolution (GWh) 2005 2008 2015 23.2 5.0 357.7 3,539.8 3,363.0 3,680.0 4,554.0 4,211.1 5,786.8 Capacity and renewable energy increase
Generation January 24 31, 2016 Dry Season
Energy Policy To diversify the energy matrix favoring the development of renewable resources setting a minimum target of 60% hydro generation for the year 2022. To promote investments in efficient generation projects To reduce the costs of energy supply to end users To minimize the impact of CO2 emissions on the environment To support the regional interconnection efforts Potencia Nueva Despacho Hidro-Térmico
Generation Expansion
MAY-2013 SEP-2013 ENE-2014 MAY-2014 SEP-2014 ENE-2015 MAY-2015 SEP-2015 ENE-2016 MAY-2016 SEP-2016 ENE-2017 MAY-2017 SEP-2017 ENE-2018 MAY-2018 SEP-2018 ENE-2019 MAY-2019 SEP-2019 ENE-2020 MAY-2020 SEP-2020 ENE-2021 MAY-2021 SEP-2021 ENE-2022 MAY-2022 SEP-2022 ENE-2023 MAY-2023 SEP-2023 ENE-2024 MAY-2024 SEP-2024 ENE-2025 MAY-2025 SEP-2025 ENE-2026 MAY-2026 SEP-2026 ENE-2027 MAY-2027 SEP-2027 ENE-2028 MAY-2028 SEP-2028 ENE-2029 MAY-2029 SEP-2029 ENE-2030 MW Long-Term Generation Tender Processes 08 22 20 08 12 26 20 12 10 13 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 - CONTRATOS CORTO PLAZO Licitaciones CORTO PLAZO Contratos Existentes Posible Licitación Abierta LICITACIÓN ABIERTA 2008 Estimación de Potencia por Contratar 200.0 MW 250.0 MW 619.0 MW
Performed Generation Tender Processes LP LP 2012 2011 TS / 320 MW TS / 230 MW TS / 44 MW TS / 90 MW LP TS / 175 MW TS / 42 MW TNS / 233 MW 2010 TS / 11 MW TS / 197 MW 2009 TS / 237 MW TS / 5 MW TNS / 15 MW 2008 2007
MW Power capacity awarded in Long-term bidding process CODs between MAY 2015 AND 2017 700 637 600 500 942 MW Renewable 416 MW NON Renewable 400 276 300 200 100 101 73 88 45 120 20 0 Hidráulica Eólica Hidráulica GDR Solar Biomasa Carbón Gas Natural Bunker
Features of Generation Tender Processes TORs are issued by the Regulator. Suitable balance of Profitability / Risk The process is directed to facilitate projects financing and reduce the risk for lenders. Simple and transparent rules. Legal certainty is a key driver. Compliance and performance bonds attached to investment milestones, operation and maintainance of projects. It is designed to attract as many bidders as possible, and to award to those who offer the lowest prices. Indexation of capacity. PPAs according to technologies. The methodology has been standarized to promote participation
Transmission Expansion: PET-1-2009 The purpose of this process was to expand the transmission infraestructure. Awarded bid at a cost of US$ 370 millons, including the following milestones: Design, Building, Acquisition of rights of way, Supervision Operation and Maintenance for up to 50 years Km lines of 230 kv S/E New Expansions or adjustments 845 12 15 It was awarded at the lowest Annual Fee (cannon) (US$ 32, 349,900) to provide the Transmission Service.
Transmission Expansion: PETNAC-2014 The purpose of this process was to build the transmission infraestructure. Awarded bid at a cost of US$ 255 millons, including the following milestones: Design, Building, Acquisition of rights of way, Supervision Operation and Maintenance for up to 50 years Km of Lines S/E New Expansions 546 21 19 It was awarded at the Annual Fee (cannon) of US$ 33, 278,153 to provide the transmsission service. It will allow the connection of 2,100 communities that currently do not have access to electricity.
Regional Electricity Market -MER-
MER 2015 Imports and Exports: Guatemala is a net exporter to the MER Imports 6.7 Guatemala GWh Imports 909.4 El Salvador GWh Imports 612.2 Honduras GWh Exports 754.5 Exports 101.8 Exports 481.1 Imports 506.4 Nicaragua GWh Imports 479.4 Costa Rica GWh Imports 193.4 Panamá GWh Exports 495.8 Exports 577.1 Exports 315.8 Fuente: Base de Datos Regional, Ente Operador Regional.
2.30 EEGSA Tariff to End-Users February 2014 - February 2016 3.80 1.80 1.30 1.77 1.70 1.70 1.60 1.44 3.30 2.80 2.30 1.19 1.15 1.15 1.13 0.80 1.71 1.64 1.64 1.54 1.42 1.80 1.30 0.30 Feb - Abr 14 May - jul 14 Ago - Oct 14 Nov - Ene 15 Feb - Abr 15 1.18 1.14 1.14 1.13 0.80 May - Jul 15 Ago - Oct 15 Nov - Ene 16 Feb - Abr 16 EEGSA TNS EEGSA TS
SOCIAL FEE NON SOCIAL FEE 2.30 2.10 EEGSA Tariff to End-Users August 2012 - February 2016 3.80 1.80 1.83 1.83 1.83 1.83 1.77 1.77 1.70 1.70 1.60 3.30 2.80 1.30 1.44 1.19 1.15 1.15 1.13 2.30 0.80 1.77 1.92 1.89 1.89 1.80 1.71 1.71 1.64 1.64 1.54 1.42 1.80 1.30 0.30 Ago - Oct 12 Nov - Ene 13 Feb - Abr 13 May - jul 13 Ago - Oct 13 Nov - Ene 14 Feb - Abr 14 May - jul 14 Ago - Oct 14 Nov - Ene 15 Feb - Abr 15 1.18 1.14 1.14 1.13 May - Jul 15 Ago - Oct 15 Nov - Ene 16 Feb - Abr 16 0.80 EEGSA TNS EEGSA TS
The Natural Gas Pipeline Mexico-Guatemala Initiative The possibility of introducing natural gas through a pipeline from Mexico into Central America through Guatemala has been under review at several levels. Two demand assessments, sponsored by the U:S. State Department and by the IDB were conducted last year. Also, a technical working group under the leadership of the Ministry of Energy and Mines has been carrying out a series of meetings with the respective counterparts from the Mexican government in order to determine the feasibility of the initiative and an action plan. The political turmoil that took place in Guatemala during 2015 slowed down the process. In the meantime, Honduras and El Salvador expressed their interest in being part of the initiative and the political process involved in broadening the scope of the initiative continued to develop. Currently, the Guatemalan Government is awaiting that the results of the respective demand and access technical analyses in regards to the integration of Honduras and El Salvador are completed. The other awaited milestone is the result of the prospect studies of the Ocultan field (City Peten) are available in order to assess the economic feasibility of the pipeline vis-a-vis the potential local explotation and use for power generation of the City Peten natural potential gas production.
Conclusions Current over supply in combination with low oil prices have significantly dropped the spot prices favoring an approx. 30% tariff reduction to end users Discos can fulfill their supply needs and comply with regulatory requirements for the next 2-4 years through short term bidding processes In compliance with regulatory provisions, future long term tender processes to add new capacity would have to start before year end to cover demand growth and expiration of the last PPAs pre-existing to the reform Those future tenders will have to follow the guidelines of the national energy policy (matrix diversification, competitive prices and reliability aspects) as well as to continue promoting exports to the MER