/Long%20Term%20Perspectives%20for%20Electricity%20Supply

Comisión Nacional de Energía Eléctrica

President Carlos Eduardo Colom Bickford Director Enrique Moller Hernández Director César Augusto Fernández Fernández General Manager Sergio Oswaldo Velásquez Moreno

Developed by Strategic Projects Division Strategic Projects Division Chief José Rafael Argueta Monterroso Project Planning Department Chief Fernando Alfredo Moscoso Lira Work Team Edwin Roberto Castro Hurtarte Gustavo Adolfo Ruano Martínez Juan Carlos Morataya Ramos Alejandra Patricia Maldonado Castellanos Luis Fernando Rodríguez Santizo

TABLE OF CONTENTS Table of contents ...................................................................................................................3 Figure & table index...............................................................................................................5 Executive summary ................................................................................................................7 Introduction.............................................................................................................................9 Goals......................................................................................................................................10 Chapter 1 National electric subsector..............................................................................12 National electric market..................................................................................................12 Legal structure...............................................................................................................13 National electric market structure..............................................................................14 Steady demand & efficient steady supply...................................................................16 Current transmission system ............................................................................................18 Expansion plan of the transmission system 2008-2018 .............................................20 Indicators of national power grid...................................................................................24 Electricity distribution system...........................................................................................26 Energy & power ............................................................................................................28 Demand marginal cost to short-term (spot price).......................................................30 Gross domestic product (GDP) ......................................................................................31 Load curve ........................................................................................................................33 Chapter 2 Study premises ...................................................................................................35 Demand.............................................................................................................................35 Fuels ....................................................................................................................................36 New generating plants ....................................................................................................37 Simulated cases ............................................................................................................38 Hydrology ..........................................................................................................................39 Chapter 3 Study results........................................................................................................40 Case 1 ................................................................................................................................41 Case 2 ................................................................................................................................46 Case 3 ................................................................................................................................51 Case 4 ................................................................................................................................55 Case 5 ................................................................................................................................59 Nodal Losses......................................................................................................................63

Conclusions ...........................................................................................................................68 Bibliography ..........................................................................................................................70 Anex A ...................................................................................................................................71 Acronyms...........................................................................................................................71 Measuring units .................................................................................................................71 Multiples .............................................................................................................................72 Anex B References...............................................................................................................73

FIGURES & TABLES INDEX Figures Figure 1-1 Electric sub-sector structure........................................................................ 1 Figure 1-2 Steady demand .......................................................................................... 16 Figure 1-3 Efficient steady supply by fuel type.......................................................... 18 Figure 1-4 Ownership of the transmission lines of 230kv and 69kv........................... 19 Figure 1-5 Ownership of the transmission lines of 230kv, 2013................................ 21 Figure 1-6 Current transmission system, 2009............................................................. 22 Figure 1-7 Expansion plan of the transmission system, 2008-2018........................... 23 Figure 1-8 Renewable energy generation (gwh) years 2009, 2008 and 2007, respectively......................................................................................................................... 25 Figure 1-9 Non-renewable energy generation (gwh) years 2009, 2008 and 2007 .............................................................................................................................................. 25 Figure 1-10 Percentage of energy consumption by participant ............................. 28 Figure 1-11 Historic of energy consumed by distribution companies 1997-2009 ... 29 Figure 1-12 Historic of steady demand by distribution companies 2002-2010 ....... 30 Figure 1-13 SPOT behavior 1998-2009........................................................................... 31 Figure 1-14 Variation of energy demand vs. gdp 1997-2009.................................... 32 Figure 1-15 Variation of power demand vs. gdp 1997-2009 ..................................... 33 Figure 1-16 Hourly load curve, period 2006-2009........................................................ 34 Figure 1-17 Hourly load curve, period 1997-2006........................................................ 34 Figure 2-1 Energy and power demand scenarios .................................................... 36 Figure 2-2 Projection of fuels during the period 2009-2015 ..................................... 37 Figure 3-1 Energy matrix, 2010 and 2015, case 1...................................................... 42 Figure 3-2 Energy dispatch, case 1............................................................................. 43 Figure 3-3 Available power-demand, case 1 ........................................................... 44 Figure 3-4 Demand marginal cost, case 1 ................................................................ 45 Figure 3-5 Energy matrix, 2010 and 2015, case 2...................................................... 47 Figure 3-6 Energy dispatch, case 2............................................................................. 48 Figure 3-7 Available power-demand, case 2 ........................................................... 49 Figure 3-8 Demand marginal cost, case 2 ................................................................ 50 Figure 3-9 Energy matrix, 2010 and 2015, case 3...................................................... 51 Figure 3-10 Energy dispatch, case 3............................................................................. 52 Figure 3-11 Available power-demand, case 3 ........................................................... 53 Figure 3-12 Demand marginal cost, case 3 ................................................................ 54 Figure 3-13 Energy matrix, 2010 and 2015, case 4...................................................... 55 Figure 3-14 Energy dispatch, case 4............................................................................. 56 Figure 3-15 Available power-demand, case 4 ........................................................... 57 Figure 3-16 Demand marginal cost, case 4 ................................................................ 58 Figure 3-17 Energy matrix, 2010 and 2015, case 5...................................................... 59 Figure 3-18 Energy dispatch, case 5............................................................................. 60

Figure 3-19 Figure 3-20 Figure 3-21 Figure 3-22 Figure 3-23 Figure 3-24 Figure 3-25 Figure 3-26

Available power-demand, case 5 ........................................................... 61 Demand marginal cost, case 5 ................................................................ 62 Nodal losses factor, load nodes 69kv....................................................... 64 Nodal losses factor, load nodes 69kv....................................................... 65 Nodal losses factor, new pet nodes 230kv.............................................. 65 Nodal losses factor, new pet nodes 230kv.............................................. 66 Nodal losses factor, existing nodes 230kv................................................ 66 Nodal losses factor, existing nodes 230kv................................................ 67

Tables Table 1-1 Table 1-2 Table 1-3 Table 1-4 Table 1-5 Table 1-6 Table 1-7 Table 1-8 Table 2-1 Table 2-2 Table 2-3 Table 2-4

Steady demand period 2010-2011 ............................................................... 16 Efficient steady supply period 2010-2011..................................................... 17 Length (km) of lines of sin by voltage level ................................................. 19 Length (km) of lines of sin by transmission company ................................. 19 Length (km) of transmission lines of pet by lot ............................................ 20 National power grid indicators during 2009 ................................................ 24 Distributing companies & region................................................................... 26 Energy consumption by participant............................................................. 27 GDP growth rates (%) according to scenario demand ............................ 35 Demand scenarios 2010-2015 ....................................................................... 36 Initial price of fuels........................................................................................... 37 New power plants........................................................................................... 38

EXECUTIVE SUMMARY This study’s goal is to layout the prospects for the electricity supply of the National Electric Power System and identify the likely scenarios of its behavior in the medium term (2010-2015).

For this study, we have established the following scenarios: demand (medium and high) and fuel price trend (high and reference). We simulated the start-up of the following hydroelectric power stations: Xacbal (07/2010), Santa Teresa (08/2010), El Manantial (06/2011), El Cóbano (12/2011), Palo Viejo (06/2012) and San Cristóbal (06/2013); thermal power generating centrals like Duke Phase 1 (06/2010), Duke Phase 2 (01/2011), Esi (11/2012) and Jaguar (05/2013); as well as GuatemalaMéxico 80 MW Interconnection (08/2013) (by increasing its capacity already in operation from 80 MW to 120 MW) The following table shows the scenarios combination, which were simulated with the model of economic dispatch in the period (2010-2015).

Case 1 2 3 4 5

Type of Demand Medium Medium High High Medium

Fuel Trend Reference High Reference High Reference

Generating Centrals Table 0-4 Table 0-4 Table 0-4 Table 0-4

The fifth case determinates the generation technology type that eliminates the volatility of demand marginal cost in the transition of dry to rain season and that demand marginal cost decreases after year 2015.

The following table shows a summary of the results, indicating the percentage of generation by fuel type for year 2010 and 2015, generation with bunker for year 2015, the average of demand marginal cost and the probable deficit in the study period. It is possible to note that the increase of the generation with base fuel due to the start-up of the Jaguar thermal power station, and the start-up of the hydropower generating centralsgenerating centrals Xacbal, San Cristóbal, Santa Teresa, El Manantial, El Cóbano and Palo Viejo, reduces significantly the generation percentage based on bunker fuel.

Results table, summary

Type of Demand

Fuel Trend

2015 (%)

1

Medium

Reference

16.3

40.8

14.8

0.6

41.4

43.8

56.70

93.11

0.00

2

Medium

High

16.2

41.0

14.8

0.6

41.4

43.8

57.26

114.47

0.00

3

High

Reference

15.9

41.0

17.0

1.3

40.2

41.1

141.40

109.47

0.00

4

High

High

15.9

40.8

17.0

1.2

40.1

41.7

125.91

131.55

0.00

5

Medium

Reference

16.3

35.1

14.7

0.2

41.5

47.5

24.64

83.23

0.00

2015 (%)

Case

2010 (%)

Generation Average Demand Probable whit Bunker Marginal Cost Deficit year 2015 2010-2015 2010-2015 (GWh) (US$/MWh) (MWh)

2010 (%)

Hydro

2015 (%)

Bunker

2010 (%)

Coal

INTRODUCTION The Strategic Projects Division, as part of the National Electric Energy Commission presents its “Medium-term prospects (2010-2015) for electricity supply of the National Electric Power System”, which considered the generating plants in commercial operation up to date, also including new generating projects that are close to start-up, as the interconnection with Mexico (which increases its existing capacity of 120MW to 200MW); hydropower generating centrals: Xacbal, San Cristóbal, Santa Teresa, El Manantial, El Cóbano and Palo Viejo; and geothermal power stations Jaguar, Esi and Duke.

In this technical study, energy dispatch is evaluated , as well as the available power of generating plants, the demand marginal cost and the energy matrix for a period of five years, taking into consideration the electricity demand, hydrology and trend of fuel costs. For this purpose two demand scenarios and two fuel trend scenarios were performed.

The activities developed in the study’s preparation included the following activities:

a) Prepare the demand growth projection for the period 2010 - 2015 in two representative scenarios.

b) Identification of two scenarios for fuel prices according to the projections made by the U.S. Energy Information Administration, EIA.

c) Prepare the list of generating projects under construction which have a certainty of the start-up date.

d) Determination of the simulation premises for different scenarios of fuel prices and demand growth.

e) Simulation of the energy dispatch of the generating plants considered in the study, starting operation in the specified time.

GOALS 1. Determine the prospects for electricity supply of the National Electric Power System, identifying the likely scenarios for its behavior in the medium term (2010-2015).

2. Estimate the demand marginal cost to short-term (Spot price) in the National Power Grid considering the start-up of new generating plants in addition to existing generation facilities.

3. Determine that the start-up of new generating plants to the National Power Grid will increase the reliability and will improve the quality of the electricity supply.

4. Set up generation technology that eliminates the volatility of demand marginal cost, in the period of transition from dry season to wet season, and reduce the demand marginal cost after 2015.

5.

Provide a technical-economic guide to the investor, national and foreign, to report about the growth prospects of the electric sub-sector to facilitate their decisions.

6. Estimate the factors of nodal losses in the National Power Grid, considering the building facilities in the Expansion Plan of the Transmission System 20082018.

CHAPTER 1, NATIONAL ELECTRIC SUBSECTOR NATIONAL ELECTRIC MARKET

The regulatory structure in which supports the Guatemalan electric sub-sector is based on a competitive market allowing the access to the National Power Grid to any individual or legal person who requires it, fulfilling the legal requirements established by the General Law of Electricity and its Regulations, thereby setting a balanced system of supply and demand prices, creating the conditions for competition. Prices are set by the regulator when there is existence of natural monopolies.

There are five participants in the Guatemalan electric sub-sector: Generation, Transmission and Distribution Companies; Power Marketers and Large power users; Article 6 of the General Law of Electricity provides definitions for each one of them being these: a) Generating Company: An individual or legal person who owns or is in possession of a power generation station and who sells commercially all or part of its output. b) Transmission Company: An individual or legal person owning a facility for electricity transmission and transformation. c) Distribution Company: An individual or legal person who owns or is in possession of facilities intended for the commercial distribution of electricity. d) Power Marketer: An individual or legal person whose activities are related to the purchase and sale of blocks of power, without itself being engaged in power generation, transmission, distribution, or consumption. e) Large power user: A customer whose power demand exceeds the ceiling specified for such purpose in regulations under this law (100kW maximum demand).

The generation activity takes place in a free and competitive context, composed of an opportunity market or short-term market that is based on energy dispatch at marginal cost and a term market or long-term market where conditions are freely agreed according to the period, the price and the amount of power and energy to hire.

The transmission and distribution activities are regulated by standards issued by the regulator system, in this case the National Electric Energy Commission.

The Wholesale Market Administrator is a private nonprofit entity that coordinates transactions among the participants of the Wholesale Market, to ensure a free market competition, with clear rules to encourage electric system investments, as well as to watch over to keep quality of the electricity supply service in Guatemala.

LEGAL STRUCTURE

The legal structure which governs the electric sub-sector is based on the following:

I.

General Law of Electricity, Decree No. 93-96

II. Regulation of the General Law of Electricity, Government Agreement No. 256-97 and its reforms III. Wholesale Market Administrator, Government Agreement No. 299-98 and its reforms IV. Technical Standards Commission

issued

by

the

National

Electric

Energy

V. Commercial and Operative Coordination Standards of the Wholesale Market Administrator The General Law of Electricity is the base for electricity issues and is supported on the following principles:

I.

The existence of an unrestricted market for electricity generation, with no requirement of prior Government authorization or condition other than the ones provided in the Constitution and laws of Guatemala. However, the use of the State’s property for these purposes will require proper authorization by the Ministry when the central’s power capacity exceeds 5MW.

II. The existence of an unrestricted market for the transmission of electricity, as long as there is no public property to be used for it, and a free market for private electricity distribution service.

III. Authorization is required for power transmission where public property is required to be used, and for distribution of power to the final customer.

IV. Electric service rates may be freely set, except for transmission and distribution service rates for which an authorization is required.

Wholesale power transfers between generating companies, power marketers, importers and exporters shall be regulated as provided in this law.

NATIONAL ELECTRIC MARKET STRUCTURE

The Guatemalan electric sub-sector is structured in the following way:

Ministry of Energy and Mines –MEM–: It is the body of the State responsible of the formulation and coordination of policies, State plans, indicative programs related to the electric sub-sector. In charge of reviewing that the authorization process of generating plants installation and that provision service of transportation and distribution is according to law. It is in charge of all juridical regime issues applicable to generation, transmission, distribution and commercialization of electricity, hydrocarbons and mining resources exploitation.

Figure 0-1 Electric Sub-Sector Structure

National Electric Energy Commission –CNEE–: It is the regulator of the electric sub-sector responsible of reviewing the fulfillment of General Law of Electricity and its Regulations with planning functions;** bidding new generation and expanding the Transmission System to satisfy National Power Grid needs. It creates conditions according to the Law, so that any individual or legal entity could develop the activities of generation, transmission, distribution or commercialization; strengthening those activities with the emission of technical standards and disciplinary actions, as well as to define the rates and calculation methodology.

Generating Co.

Large Power Users

Distribution Co.

Transmission Co.

Power Marketers

Wholesale Market Administrator –AMM–: Private entity responsible of realize the dispatch or programming the operation and coordination of the National Power Grid, "SNI" (by its Spanish acronym), within the quality requirements of service and security, also the post-dispatch and the administration of commercial transactions of the Wholesale Market. Its aim is to guarantee the proper functioning of the SNI and the interconnections.

STEADY DEMAND & EFFICIENT STEADY SUPPLY

The Steady Demand1 for 2010-2011 is shown below: Table 0-1 Steady Demand period 2010-2011i Steady Demand 2010-2011 Participants Municipal Electricity Companies –EEM– (by its Spanish acronym) Large Power Users Distribution Companies Total

MW

%

103.90

6%

358.94 1125.93 1588.77

23% 71% 100%

Figure 0-2 Steady Demand

1 Steady Demand: This is the power demand calculated by the Wholesale Market Administrator (AMM), that has to be contracted by each Distributor or Major User.

Source: AMM, Steady Demand 2010-2011

The Efficient Steady Supply2 by fuel type for the period 2010-2011 is described below: Table 0-2 Efficient Steady Supply Period 2010-2011ii Efficient Steady Supply 2010-2011 Fuel type Geothermal Coal Sugar Mills (bunker) Diesel Biomass Hydro Bunker Total

MW 27.69 143.45 157.10 135.27 208.02 665.97 642.74 1980.24

% 1% 7% 8% 7% 11% 34% 32% 100%

2 Efficient Steady Supply: This is the maximum power amount that a power station can compromise in contracts to fulfill the Steady Demand calculated based on its maximum power, its availability and the efficiency of the power station.

Figure 0-3 Efficient Steady Supply by fuel type

Source: AMM, Efficient Steady Supply 2010-2011

CURRENT TRANSMISSION SYSTEM

The transmission system in Guatemala has an infrastructure that allows the electricity supply from the principal generating plants to the consumption centers, as shown in the table below through a network of 1063 Km approximately, in voltages of 138 kV and 230 kV, and a transformation capacity of 1445 MVA in 230 kV and 319 MVA in 138 kV.

For 69 kV of voltage are around of 2687 Km of transmission lines that allows to supply Distribution Systems and Large power users. The transformation capacity totals 760 MVA.

In Guatemala, there are four companies that provide electric power transportation service, being those with the highest number of km owned the “Empresa de Transporte y Control de Energía Eléctrica” of the “Instituto Nacional

de Electrificación” –ETCEE– (by its Spanish acronym) and “Transportista Eléctrica Centroamericana S.A.” –TRELEC– (by its Spanish acronym). However, the transmission system also includes transmission lines owned to Wholesale Market Agents, whose aim is the connection to the National Power Grid.

Table 0-3 Length (Km) of lines of SIN by voltage leveliii Voltage (kV) 230 138 69 Total

Length (Km) 766 297 2687 3750

Table 0-4 Length (Km) of lines of SIN by Transmission Companyiv Transmission Company Empresa de Transporte y Control de Energía Eléctrica Redes Eléctricas de Centroamérica, S.A. Duke Energy Intenational Transmission Guatemala, Ltda Transportista Eléctrica Centroamericana, S.A. Total

Length (Km) by voltage level 230 kV 138 kV 69 kV Total 669

297

1432

2398

-

-

696

696

33

-

-

33

64 766

297

559 2687

623

The figure below shows the ownership of the transmission lines for 230kV y 69kV in percentage; the 100% of the 138kV transmission lines are property of ETCEE.

Figure 0-4 Ownership of the transmission lines of 230kV and 69kV, respectively

EXPANSION PLAN OF THE TRANSMISSION SYSTEM 2008-2018

The Expansion plan of the Transmission System –PET– (by its Spanish acronym) was designed to satisfy the SNI needs regarding electricity transmission. We identified the critical points in the system and designed new projects of transmission lines, substations and their respective equipment.

PET is arranged in five loops: Metropacific, Hydraulic, Atlantic, Eastern and Western. These loops are divided in six lots as shown in the table below: Table 0-5 Length (Km) of transmission lines of PET by lotv Lot A B C D E F Total

Length (Km) 230kV 91 211 102 186 115 140 845

On January 20, 2010, the Ministry of Energy and Mines (MEM) issued a resolution which approves and awards the electricity service provision through the adjudication of the value of the annual canon to the EEG-EDM Guatemala Project Consortium.

Finally, on February 22, 2010, the authorization contract for the execution of the transmission works for lots A, B, C, D, E and F is signed, with approximately 845 Km of transmission lines, awarded as a result of the International Open Tender process for the provision of electricity transmission service through the adjudication of the value of the annual canon to “Transportadora de Energía de Centroamérica, Sociedad Anónima” –TRECSA– (by its Spanish acronym) constituted in Guatemala by the EEG-EDM Guatemala Project Consortium.

With the PET culmination in 2013, the SNI will have an approximate of 1611 Km of 230kV transmission lines, out of which 52.45% will belong to TRECSA.

The following figure shows the ownership of the 230kV transmission lines once the PET project is concluded.

Figure 0-5 Ownership of the 230kV transmission lines , 2013

Figure 0-6 Current Transmission System, 2009

Figure 0-7 Expansion Plan of the Transmission System, 2008-2018

INDICATORS OF NATIONAL POWER GRID For the period of January 1 to December 31, 2009, the total of energy generation was 8,014.67 GWh, out of which 99.5% were generated locally, and 0.5% were imported from the Regional Electricity Market –MER– (by its Spanish acronym). The energy exported to MER was 94.10 GWh, being this the 1.17% of the total generation of the country, reaching a 22% of participation on the energy injections into MER. The internal consumption of energy reached 7,597.86 GWh including: own consumption of units, of generating plants and equipment of electricity transmission.

The average of the opportunity price was 103.24 US$/MWh, showing a decrease of 16.69% over the previous year. The maximum power demand occurred on December 15, 2009 reaching 1,472.47 MW. The load factor calculated for the system was 61.41%.

Table 0-6 National Power Grid indicators during 2009vi National Power Grid indicators, 2009 Local Generation 7977.47 GWh Internal Consumption 7597.86 GWh Exports 94.10 GWh Imports 37.21 GWh SPOT Price (Average) 103.24 US$/MWh Maximum Demand 1472.47 MW Load Factor 61.41 % Source: AMM, 2009 Statistical Report

Figure 0-8 Renewable Energy Generation (GWh) years 2009, 2008 and 2007, vii respectively

Figure 0-9 Non-Renewable Energy Generation (GWh) years 2009, 2008 and 2007, respectively

ELECTRICITY DISTRIBUTION SYSTEM

The distribution system of Guatemala has lines, substations and distribution networks operating at medium voltage. There are three main companies in Guatemala that offer the service of electricity distribution, as well as municipal companies. These companies are listed in the following tablewith the region they cover.

Table 0-7 Distributing Companies & Region Distributing Company Empresa ElĂŠctrica de Guatemala, S.A. (EEGSA) Distribuidora de Electricidad de Occidente, S.A. (DEOCSA) Distribuidora de Electricidad de Oriente, S.A. (DEORSA) Municipal Electricity Companies

Region Central area (Guatemala, Escuintla, SacatepĂŠquez) North-South-West area North-South-East area

From 8,014.67 GWh that were obtained of the total generation 2009, 67.7% was consumed by distribution companies, being 35.7% consumed by EEGSA, 10.9% by DEORSA, 14.9% by DEOCSA and 6.2% by Municipal Electricity Companies. The country' s energy consumption is presented in the table below:

Table 0-8 Energy Consumption by Participant Participants Power Marketers EEGSA DEORSA DEOCSA Municipal Electricity Companies Own Consumption Large Power Users Losses Exports Total Source: AMM, 2009 Statistical Report

GWh 1999.30 2863.66 873.83 1195.29 496.48 30.23 139.07 322.71 94.10 8014.67

Figure 0-10 Percentage of Energy consumption by Participant

ENERGY & POWER

Energy consumed by distribution companies has changed since the establishment of the wholesale market, from 471.1 to 1195.3 GWh for DEOCSA, from 341.2 to 873.8 GWh for DEORSA and from 2918.2 to 2863.7 GWh for EEGSA. In total, the energy consumed by distribution companies changed from 3760.5 to 4932.78 GWh in the period 1997-2009, increasing 24.37%.

In general, the energy consumption by distribution companies ranged from 3,760.5 to 4,932.78 GWh from 1997 to 2009, increasing in 24.37%.

The steady demand of distribution companies has changed since 2002 to 2010, from 217 to 316 MW for DEOCSA, from 148 to 216 MW for DEORSA and from 551to

594 MW for EEGSA, representing a growth of 31.33%, 31.48% and 7.24% for DEOCSA, DEORSA and EEGSA respectively, taking 2009 as base year.

In general, the power consumption by them ranged from 916 to 1,126 MW in the period 2002-2010, increasing in 18.65% Figure 0-11 History of energy consumed by distribution companies 1997-2009

Figure 0-12 History of steady demand by distribution companies 2002-2010

DEMAND MARGINAL COST TO SHORT-TERM (SPOT PRICE)

The behavior of marginal cost for the demand to short-term in the last twelve years is shown in the figure below:

Figure 0-13 SPOT behavior 1998-2009

GROSS DOMESTIC PRODUCT (GDP)

Figures 1-13 and 1-14 show the relationship between energy demand variation and power demand variation (over the previous year) against GDP growth, both for the period 1997-2009

Figure 0-14 Variation of energy demand vs. GDP 1997-2009viii

Figure 0-15 Variation of power demand vs. GDP 1997-2009

LOAD CURVE

In the following figures the variation of the hourly load curve for the period 19972009 can be seen.

Figure 0-16 Hourly load curve, period 2006-2009

Figure 0-17 Hourly load curve, period 1997-2006

CHAPTER 2: STUDY PREMISES To prepare this study, the National Commission of Electric Power took into consideration the following conditions:

DEMAND

The development of two scenarios for electricity demand growth is modeling by an econometric model which takes into account GDP and the number of electric power users as independent variables. Such model assumes a logistic relationship between energy demand and GDP, and a linear-exponential relationship between energy demand and the number of users. The following table shows the GDP data used to determinate de growth demand scenarios:

Tabla 0-1 GDP growth rates (%) according to scenario demand Year

Medium

High

2010 2011 2012 2013 2014 2015

1.2 2.5 3.2 4.1 4.1 4.3

2.6 3.1 4.0 4.9 5.0 4.8

Source: CNEE, based in national and international publications of financial entities.

The projections of energy and power demand growth for the study period are shown in the table below. Two scenarios were set for each of them.

Table 0-2 Demand scenarios 2010-2015 Year

2010 2011 2012 2013 2014 2015

Energy demand (GWh)

Power Demand (MW)

Scenario 1 (Medium)

Scenario 2 (High)

Scenario 1(Medium)

Scenario 2 (High)

8,148.30 8,448.58 8,811.22 9,253.04 9,707.02 10,188.81

8,368.82 8,742.76 9,197.57 9,735.52 10,298.57 10,864.72

1,488.27 1,538.20 1,599.12 1,673.98 1,753.33 1,837.45

1,528.55 1,591.76 1,669.24 1,761.27 1,860.18 1,959.35

Figure 0-1 Energy and power demand scenarios

FUELS

The initial values for fuel prices are shown in table 2-3. The cost forecast was made from initial values, applying the tendency variation of the price of each fuel estimated by the Energy Information Administration (EIA) for carbon, bunker and diesel.

Table 0-3 Initial price of fuels Fuel type Coal Bunker Diesel Bagasse Geothermal

Price (US$ per MWh) 50.00 115.00 240.00 26.00 1.00

Figure 0-2 Projection of fuels during the period 2009-2015ix

Source: EIA (Coal, Report # :DOE/EIA-0383(2010); Liquid fuels, Report # :DOE/EIA-0484(2009))

NEW GENERATING PLANTS

The Guatemala-Mexico Interconnection (400kV) was considered with an initial capacity of 120MW and at the end of the construction of PET works of 200MW, and was estimated that its variable cost is less than cost of internal combustion engines based on bunker, but higher than the cost of base fuel plants (coal).

The parameters used to model the hydropower generating centrals Xacbal, San Cristóbal, Santa Teresa, El Manantial, El Cóbano and Palo Viejo, and the geothermal power stations Duke, Esi and Jaguar were obtained from access studies to transmission system, information submitted by developers projects and the respective resolutions of approval.

Table 0-4 New power plants Start-up

Project

Power (MW)

Jun-10

Duke phase 1

40

Jul-10

Hydroelectric Xacbal

94

Aug-10 Jan-11 Jun-11 Dec-11 Jun-12 Nov-12 May-13 Jun-13 Aug-13

Hydroelectric Santa Teresa Duke phase 2 Hydroelectric El Manantial Hydroelectric El Cóbano Hydroelectric Palo Viejo Esi Jaguar Hydroelectric San Cristóbal Mexico Interconnection

19.6 40 35 7 80 80 275 10 803

Total

769.6

SIMULATED CASES

To simulate the cases, different scenarios of demand were taken into account, hydrology and fuels prices trendsand the start-up operation of the new projects.

i.

For cases 1 and 2, medium demand and a combination of fuel price scenarios (reference and high) are considered, taking the 2003 as hydrology base year, as well as the start-up of the plants listed in the above table.

The Guatemala – Mexico interconnection capacity represents an increase from 120 MW available to 200 MW.

3

ii.

For cases 3 and 4, high demand and a combination of fuel price scenarios (reference and high) are considered, taking the 2003 as hydrology base year, as well the start-up of the plants listed in the above table.

HYDROLOGY

The information of flows for the development of the study were obtained from the data base that National Electric Power Commission used to carry out the Indicative Expansion Plan of the Generation System 2008-2018, and it was complemented with additional information provided by the National Institute of Electrification and the Wholesale Market Administrator.

The hydropower generating centrals Xacbal and Palo Viejo were modeled as daily regulation centrals because they had technical data to model it this way and hydropower generating centrals San Crist贸bal, Santa Teresa, El Manantial and El C贸bano were modeled as pass centrals.

For the development of the different scenarios, the year 2003 was considered as a basis for hydrological simulation.

CHAPTER 3, STUDY RESULTS

CASE 1 DEMAND TYPE Medium

FUEL TREND Reference

By May 2013, when Jaguar coal plant is expected to start-up, it is estimated that coal generation will increase from 16.3% in 2010 to 40.8% in 2015. Thus, generation with bunker is reduced from 14.8% to 0.6%. It is estimated that energy dispatch with bunker will be approximately 56.70 GWh in 2015. The average of demand marginal cost in these conditions will be approximately $ 93.11 per MWh. In these circumstances the probable energy deficit is zero.

Figure 0-1 Energy matrix, 2010 and 2015, case 1

Figure 0-2 Energy dispatch, case 1

Figure 0-3 Available power-demand, case 1

Figure 0-4 Demand marginal cost, case 1

CASE 2 DEMAND TYPE Medium

FUEL TREND High

By May 2013, when Jaguar coal plant is expected to start-up, it is estimated that coal generation will increase from 16.2% in 2010 to 41.0% in 2015. Thus, generation with bunker will decrease from 14.8% to 0.6%. It is estimated that energy dispatch with bunker will be approximately 57.26 GWh in 2015. The average of demand marginal cost in these conditions will be approximately $ 114.47 per MWh. In these circumstances the probable energy deficit is zero.

Figure 0-5 Energy Matrix, 2010 and 2015, case 2

Figure 0-6 Energy dispatch, case 2

Figure 0-7 Available power-demand, case 2

Figure 0-8 Demand marginal cost, case 2

CASE 3 DEMAND TYPE High

FUEL TREND Reference

By May 2013, when Jaguar coal plant is expected to start-up, it is estimated that coal generation will increase from 15.9% in 2010 to 41.0% in 2015. Thus, generation with bunker is reduced from 17.0% to 1.3%. It is estimated that energy dispatch with bunker will be approximately 141.40 GWh in 2015. The average of demand marginal cost in these conditions will be approximately $ 109.47 per MWh. In these circumstances the probable energy deficit is zero.

Figure 0-9 Energy Matrix, 2010 and 2015, case 3

Figure 0-10

Energy dispatch, case 3

Figure 0-11 Available power-demand, case 3

Figure 0-12 Demand marginal cost, case 3

CASE 4 DEMAND TYPE High

FUEL TREND High

By May 2013, when Jaguar coal plant is expected to start-up, it is estimated that coal generation will increase from 15.9% in 2010 to 40.8% in 2015. Thus, generation with bunker is reduced from 17.0% to 1.2%. It is estimated that energy dispatch with bunker will be approximately 125.91 GWh in 2015. The average of demand marginal cost in these conditions will be approximately $ 131.55 per MWh. In these circumstances the probable energy deficit is zero.

Figure 0-13 Energy Matrix, 2010 and 2015, case 4

Figure 0-14 Energy dispatch, case 4

Figure 0-15 Available power-demand, case 4

Figure 0-16 Demand marginal cost, case 4

CASE 5 DEMAND TYPE Medium

FUEL TREND Reference

This case considers the start-up of a 50MW geothermal power station in April 2014. It also considers the start-up of a block of 50 MW of renewable distributed generation in blocks of 20MW by April 2013, 20MW by April 2014 and 10MW by April 2015. These power generation plants, based on renewable resources, eliminate the price volatility in the transition (May and June) of dry season to rain season.

Figure 0-17

Energy Matrix, 2010 and 2015, case 5

Figure 0-18

Energy dispatch, case 5

Figure 0-19

Available power-demand, case 5

Figure 0-20

Demand marginal cost, case 5

NODAL LOSSES In the Guatemalan electricity market, the procedure to model and determine the economic value of losses in the transmission system is through the establishment of a losses factor in every single node of the National Interconnected System, whereby the electric power is valued in each network connection respect to a reference node. The value of the energy transferred to one node will be the energy price in the market affected by the nodal losses factor.

The nodal losses factor of energy according to Commercial Coordination Standard # 7, is set with a reference node (Guatemala-Sur-230kV) as the relationship between marginal cost of both nodes, when in that node the marginal cost incorporates transmissions marginal losses to the reference node.

In this study we determined the approximate nodal losses factors for case 1, in which new generation plants are expected to be installed in the future or in the nodes that represent a very important role in the National Interconnected System.

The calculation in this analysis considers the works of the Expansion Plan of the Transmission System 2008-2018 in commercial operation, so these factors can’t be considered definitive because the values in addition to the topology of the network depend on the seasonality, daily economic dispatch of load and demand in the SNI.

The nodal losses factors of the existing 69kV load bars tend to get better. This means a drastic reduction of network losses, resulting in a benefit for users of electrical service.

The nodal losses factors of the nodes considered in of the Expansion Plan of the Transmission System 2008-2018 tend to vary in values close to one, due to the seasonality between rain and dry seasons, which could result in a benefit for the centrals that will be connected in the future.

The nodal losses factors of the existing load bars 230kV tend to get better. This means a drastic reduction of network losses, resulting also in a benefit for users of electricity service.

Figure 0-21

Nodal losses factor, load nodes 69kV

Figure 0-22

Nodal losses factor, load nodes 69kV

Figure 0-23

Nodal losses factor, new PET nodes 230kV

Figure 0-24

Nodal losses factor, new PET nodes 230kV

Figure 0-25

Nodal losses factor, existing nodes 230kV

Figure 0-26 Nodal losses factor, existing nodes 230kV

CONCLUSIONS I.

The growth rate of energy and power demand shows a direct relationship to the national Gross Domestic Product. A recovery can be noted from 2009, however, natural phenomena may affect such recovery.

II.

On average, there is an increase from 16% to 41%, from 2010 to 2015 in generation with base fuel. The start-up of Jaguar in May 2013 will significantly reduce the generation with bunker. This decrease will depend on demand conditions, hydrology and fuel costs.

III.

To ensure safety and reliability of electricity supply, it is necessary that new generation plants, considered in this study, provide the energy needed to satisfy demand at minimum cost.

IV.

The demand marginal cost (SPOT price) tends to decrease from the start-up of hydropower generating centrals and base fuel plants. New generation planst are necessary from 2015 to stabilize the trend of marginal cost in the long-term. Due to this reduction in SPOT price, it is necessary that generation plants have contracts that guarantee their return on investment.

V.

In order to eliminate volatility of SPOT price in the transition from dry to rain season and to assure greater stability of that price after 2015, it is convenient to encourage the start-up of distributed renewable generation and a geothermal plant.

VI.

In all cases we notice that renewable energy generation is over 50%.

VII.

Year

Case 1

Case 2

Case 3

Case 4

2010 (%) 2015 (%)

57.6 56.2

57.6 56.1

55.9 53.0

55.9 53.6

Most of the nodal losses factors on the existing nodes of 69kV and 230kV tend to get better, resulting into a benefit for users of electrical service because a drastic reduction of network losses. The nodal losses factors of the nodes in the Expansion Plan of the Transmission System 2008-2018 tend to values close to 1, this will benefit the plants that will be connected to these nodes in the future.

BIBLIOGRAPHY 1. Wholesale Market Administrator, 2009 Statistical Report, Coordination Standards https://www.amm.org.gt

2. National Commission of Electric Power, Indicative Expansion Plan of the Generation System 2008-2018 Expansion Plan of the Transmission System 2008-2018 http://www.cnee.gob.gt

ANEX A

ACRONYMS

AMM

Administrador del Mercado Mayorista (Wholesale Market Administrator).

CNEE

Comisión Nacional de Energía Eléctrica (National Commission of Electric Power).

EIA

Energy Information Administration.

ETCEE

Empresa de Transporte y Control de Energía Eléctrica.

INDE

Instituto Nacional de Electrificación.

MEM

Ministerio de Energía y Minas (Ministry of Energy and Mines).

TRELEC

Transportista Eléctrica Centroamericana.

TRECSA

Transportadora de Energía de Centroamérica, S.A.

EEGSA

Empresa Eléctrica de Guatemala, S.A.

DEORSA

Distribuidora de Electricidad de Oriente, S.A.

DEOCSA

Distribuidora de Electricidad de Occidente, S.A.

MEASURING UNITS

GWh

Giga watts hour

kV

Kilovolt

MVA

Mega volt-ampere

MW

Mega watt

MWh

Mega watt hour

US$

USA Dollars

MULTIPLES

Prefix

Symbol

Factor

Kilo

k

1,000

Mega

M

1,000,000

Giga

G

1,000,000,000

Tera

T

1,000,000,000,000

ANEX B REFERENCES

i

Wholesale Market Administrator, Solid demand, http://www.amm.org.gt

ii

Wholesale Market Administrator, Solid Offer and Efficient Solid Offer, http://www.amm.org.gt

iii

Ministry of Energy and Mines, Electricity Subsector, Energy Statistics Report 20012008, http://www.mem.gob.gt

iv

TRELEC, Corporate Information, http://www.eegsa.com/informacion4.php Uni贸n Fenosa, the company, high voltage lines, http://www.unionfenosa.com.gt/

v

National Commission of Electric Power, Expansion Plan of the Transmission System 2008-2018 http://www.cnee.gob.gt

vi

Wholesale Market Administrator, 2009 Statistical Report, http://www.amm.org.gt

vii

Wholesale Market Administrator, 2007-2009 Statistical Reports http://www.amm.org.gt

viii

Banco de Guatemala, Gross Domestic Product -GDP-, 2001 Base and 1958 Base, Years: 1990 - 2007 (Variation Rate), http://www.banguat.gob.gt/inc/ver.asp?id=/mapa/default.htm

ix

Energy Information Administration (EIA), AEO2009 National Energy Modeling System, 2009, http://www.eia.doe.gov