EconomyFinancialThe CFE estimates that self-supply generation will fall by...

The CFE estimates that self-supply generation will fall by half with the reform

Electricity generation through self-supply plants, one of the most criticized forms of private investment during the six-year term, could be reduced by 48% if the energy market reform is approved under current terms, according to estimates made by the state-owned CFE.

Self-supply plants have become the main target of the reform proposed by the presidency. The initiative proposes to eliminate all the contracts granted under this figure, although it is still not clear what will happen to the plants built under the permits given before the last constitutional change to the market, in 2013.

But the CFE has already made an estimate of the use that could be given to these plants, whose energy would be dispatched after the electricity produced in the CFE assets. According to his calculations, presented a few days ago in the open parliament of the Chamber of Deputies, the generation of these plants would be reduced by almost half, from 50,937 to 26,293 gigawatt hours. The first data corresponds to the generation of these plants during October of last year -which was the base case taken by the company to make the projection-, while the second data originates from a scenario around 2024, in which the park of generation of the state company is dispatched to cover 54% of the total demand.

The company’s estimate also includes the elimination of plants “that operate in an illegal self-supply scheme,” according to the document. The state company has not disclosed all the elements to be taken into account to determine the legality of one of these permits. But Mario Morales Vielmas, the company’s general director of brokerage of legacy contracts, said a few days ago that 103 of the 233 self-supply contracts that the company has accounted for would be considered illegal.

“Legal self-supply companies maintain their fixed dispatch program scheme and will be the first to be dispatched after having covered 54% of CFE,” the company reported in a presentation. Thus, these plants would not only stop providing energy directly to some companies, but would also be taken into account in the total generation park and large consumers would have to resort to the CFE to cover their demand.

Contracts of this type include plants that run on fossil fuels and clean energy. According to the estimate, the combined cycle plants – based on natural gas – are the ones that would have a greater decrease in their use, they would fall by around 60%.

The use of hydroelectric plants, under this type of contract, would drop by 53%, thermoelectric plants by 52% and wind power plants by 32%.

The figure was created in 1992 to meet the industrial demand of that time and that could not be covered by the state CFE. The model was based on the fact that private companies could have their own power plant for their own use. The 2013 energy reform decided to respect these contracts – some of them already close to expiration – but without granting new permits under this model. and it has served to give large companies access to lower generation prices than other consumers. Meanwhile, the private sector has argued that this model allowed the country to attract investment, grow jobs and achieve lower costs for consumers.

Companies such as Iberdrola, Mitsui, SAAVI, Naturgy, Mitsubishi, Abeinza and Enel mainly operate under this model, most of which have been criticized by the federal government.

The Independent Power Producers, another figure that has also been constantly criticized during the six-year term, would only see a drop of 3.6% in their generation. The wind plants, which produce under this figure, would produce 92,500 gigawatt hours in 2024, instead of the 95,568 they produced last October.

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