ASDFG
Presentation of
Sharyland Utilities 150 MW
Back-to-Back HVDC Tie in
Mission-Reynosa
Opportunities for power transactions on both sides
of the border
May 2008
Current Interconnections between
Mexico-US
Miguel, Ca – Tijuana 230 KV 800 MW
Imperial Valley, Ca – La Rosita 230 KV
El Paso, Tx. – Cd. Juárez (2) 115 KV 200 MW total
Current Interconnections between
Mexico-Texas
Grid Operators
Texas
ERCOT
México
CFE - CRE
Eagle Pass– Piedras Negras 230 KV HVDC 36 MW
TEXAS
Laredo – Nuevo Laredo 230 KV VFT 100 MW
Falcon (Zapata)– Guerrero 138 KV 80 MW
Mission – Reynosa 138 KV HVDC 150 MW
Brownsville – Matamoros (2) 138 KV 120 MW
ERCOT = Electric Reliability Council of Texas
CFE = Comisión Federal de Electricidad
CRE = Comisión Reguladora de Energía
Sharyland DC Tie
• 150 MW High Voltage Direct
Current (HVDC) Interconnection
• Links Electric Reliability Council
of Texas (ERCOT) with the
Mexican national grid operated
by the Comisión Federal de
Electricidad (CFE)
• Back to back technology allows
two way flow of electricity, while
acting as firewall to isolate
disturbances
• Black start capability provides start up capacity to either side
in case of system collapse
• First of its kind to support commercial transactions between
Texas and Mexico
• Commissioned in October 2007 – entire project went
from concept to operational within five years.
Energy Flows
(Northeast Mexico Customers)
Resource
Texas
Coah.
Electricity Sales
Dispatch and wheeling
(virtual)
Cust
Energy Service
Cust
N.L.
México
Tamps.
Cust
Gulf of Mexico
Current status of the
Sharyland DC Tie
• Sharyland DC Tie is operational since October 2007. It has already
been used for at least one emergency situation along the border
• 7 US-based entities obtained export permits from DOE that included
Sharyland DC Tie as a possible cross-over point (refer to Appendix for
names)
• FERC has waived its jurisdiction over to ERCOT for this service
• CRE and CFE are modifying the Interconnection Agreement template
to accommodate the use of the DC Ties for commercial purposes. It is
expected to have a final document ready by Summer 2008
• ERCOT & CFE are finalizing modifications to operating procedures
and guidelines. It is expected that this is finished on or before Summer
2008
FERC = Federal Energy Regulatory Commission
ERCOT = Electric Reliability Council of Texas
DOE = Department of Energy
CFE = Comisión Federal de Electricidad
CRE = Comisión Reguladora de Energía
How is it expected that the bilateral
electricity trade will occur?
Venta de Electricidad
Electricity Sellers
Transacciones
privadas y
bilaterales
Recursos
Resources
Balancea la oferta y
demanda de energía
Balanced schedules of load and
resources
Private bilateral energy
Transactions
Enlace
Entidades para
despacho
Scheduling Entities
Compra de Electricidad
Electricity Buyers
Servicios de
Energía
Load Serving Entities
Clientes
Retail Customers
Major requisites to use the DC Tie
1) Customer :
9 Be an
established
legal entity in
Mexico
9 Or, via an
established
energy broker
3) CFE :
9 Sign back-up
contract with
9 Sign
interconnection
contract
9 Install smart
meter with
remote comm.
ports ***
2) CRE :
9 Import permit
• Use format CREDGE-005*
9 File for wheeling
analysis **
• Total demand
(MW)
• Estimated annual
consumption
(MWh)
* Published in Mexico Diario Oficial 3/17/2006
** Refer to annex for some cost examples
*** Customer has to pay all charges involved
Steps for setting up to import
electricity for ERCOT
• Find a energy procurement or wholesaler in Texas
° Understand and negotiate Power Purchase Agreement
• Exporter is responsible to file for DOE export permit
° Be it the end user that is filing it’s own permit,
° or use a wholesaler or broker with one (refer to the
appendix)
• File for CRE import permit
° Site and load specific; must be done by Mexican entity
° Understand wheeling and interconnection fees
• Sign interconnection agreement with CFE
° CRE and CFE will determine feasibility of best route,
wheeling costs, terms of wheeling, back up conditions.
° Function of specific Texas-based agreement with supplier
• ERCOT and CFE are the operators
° All communications occur between QSE and ERCOT, and
ERCOT and CFE
Aggregator
or Broker
US
Purchasing and
Selling Entity
2
1
Qualifying Scheduling Entity
QSE
4
Bilateral Contract
Sales Order
Commission
How the process works?
1
5
ERCOT
DC
Tie
7
CENACE/CFE
3
Electricity Importer
Mexico
Interconnection
Agreement
Mexico
Consulting Fee
6
Summary of scheduling process
across the Sharyland DC Tie
(refer to figure in previous slide)
1.
2.
3.
4.
5.
6.
7.
PSE generates a bilateral transaction within ERCOT or CFE
PSE creates and submits an Electronic Tag (E-Tag) for
approval.
CFE validates that there is indeed a contract in place with
PSE, validates information, and checks available capacity
on Sharyland DC Tie
PSE arranges a market schedule in ERCOT to be sent to
the PSE’s QSE
QSE submits an obligation schedule to ERCOT
ERCOT approves the E-Tag if it complies with its
scheduling requirements and if there is enough capacity
across the Sharyland DC-Tie
In the Day-Ahead, ERCOT matches the obligation
schedule with the Non-ERCOT (or Mexico) E-Tags
Source: ERCOT DC-Tie Operations. ERCOT/CFE could change at any time and without prior notice the operating procedures,
so this slide and the following are depicted for ilustration of how a typical commercial operation would occur. Please refer to
ERCOT and CFE website for most current information on the use of DC Ties.
How is transmission reserved
across the Sharyland DC Tie?
• ERCOT requires:
° Purchasing-Selling Entity (PSE) that wants to
schedule power into or out of ERCOT must be
registered as a Qualified Scheduling Entity (QSE)1 or
have an agreement with a QSE
° The QSE can submit a bilateral schedule to use the
Sharyland DC Tie declaring the export as a QSE
obligation as per ERCOT Protocols and Operating
Guides
• CFE requires:
° A PSE wanting to schedule power into Mexico must
have an interconnection agreement with CFE, and
must have a valid import permit with the CRE
1 http://www.ercot.com/services/rq/qse/index.html
What happens in emergencies?
• ERCOT follows NERC specifications when:
° There is loss of generation or load
° Reduction of Available Transfer Capacity
° Mitigation of a system contingency
• ERCOT will use Last In, First Out (LIFO) for
priorizing curtailment
• IF CFE initiates curtailment:
° They will contact Sharyland DC tie operator
° They will also use LIFO to program curtailment
schedule
• ERCOT will not approve overbooking across the
Sharyland DC Tie
Advantages of using the
Sharyland DC Tie
• The Sharyland DC Tie is an open access facility
• It will enhance the power flows amongst the two regions, and will
enable markets to take advantages of market asymmetries and
regional price signals
•
It is expected that power flows will be North to South during
Mexico’s peak hours and South to North during ERCOT’s peak hours,
particularly if margin reserves continue to be challenged by demand
growth
• Because it is the first time this type of facility is available, there are
tangible arbitrage opportunities that will
be available for first
movers. Eventually, though, the markets will become efficient
The State of ERCOT
• Markets are deregulated
• Markets prefer trading with structured blocks,
example:
° 7x24 or 5x4, etc
° Unique load shapes or blocks are harder to price
• Typical price structure (US$/Mwh):
°
°
°
°
Energy:
$75
+ Ancillary:
$4
+ Line Losses: $2
= Total energy at Point of Delivery (POD) $81/Mwh
(not including wheeling, which typically varies around
$1.5-2.5 Mwh)
Pricing structure in ERCOT
• Fixed Price
° Locks in ancillary, capacity & fuel
components
• Heat Rate
° Locks in ancillary & capacity, floats fuel costs
• MCPE
° Locks in ancillary, floats capacity and fuel
costs
• Others
° Would be based on unique load shapes
Case Study
North East Mexico Case Study
Facts:
•
•
•
•
High end industrial customer with a CFE HS-L rate
Located within Monterrey, Mexico area
38.5 MW of load
Peak hour consumption estimated at 27 GWh
Assumptions:
• Load factor of 0.9
• Used March 2008 CFE Northeast region energy costs (published in
CFE website)
• Estimated wheeling costs $ 1.7 USD / mwh *
• 100% of total demand is considered as back up demand
* As per CRE wheeling simulator
All-In peak hour price comparison
$0.50
$0.45
$0.40
$0.35
$0.30
ERCOT
$0.25
CFE
$0.20
$0.15
$0.10
$0.05
$0.00
J
F
M
A
M
J
J
A
S
O
N
D
14.4% Reduction of Total Cost
45.4% of Peak Energy Cost Reduction
Conclusions
• DC Tie service is an efficient, reliable and accepted
way to reduce peak hour energy costs in the
Northeast region (further wheeling analysis would
have to be used to show how much savings accrue
further south)
• Because it is the first time this type of facility is
available, there are tangible arbitrage opportunities
that will be available for first movers. Eventually, the
markets will become efficient
• Texas energy supply is deregulated and there are a
myriad of supply and structuring options that a
customer has to choose from
ASDFG
Contact Information:
Enrique J. Marroquin
Hunt Transmission Services, L.L.C.
1900 North Akard Street
Dallas, Texas 75201
214-978-8947
emarroquin@hunttransmission.com
www.hunttransmission.com
Annex:
Filing costs with CRE
•
a)
b)
c)
d)
•
(updated Feb. 08)
Analysis and filing costs with CRE for import permits are a function of the
load size:
MXN$
USD$ (approx)
Up to 10 MW
$69,620
$6,000
Between 10 and 50 MW
$90,853
$8,000
Between 50 and 200 MW
$134,343
$12,000
Over 200 MW
$568,229
$50,000
An annual fee of $7,337 ($US 650) will be assessed every year to each
permit holder as a means to cover CRE costs related to managing the
permits
DOE Export Permits
• The following entities are shown to have a current DOE permit to
export electricity to Mexico. Please refer to DOE website for
changes to the names listed herein.
°
°
°
°
°
°
°
AEP Energy Partners
CSW Power Marketing
Tex Mex Energy
Coral Power
Edison Mission Marketing & Trading, Inc (EMMT)
BP Energy Company
Duke Energy Trading and Marketing, LLC
Annex:
Screen shot of CRE wheeling cost simulator