The World Bank Report No: ISR9088 Implementation Status & Results Mexico Large-scale Renewable Energy Development Project (Phase 1 = $25M; Phase 2 = $45M) (P077717) Public Disclosure Copy Operation Name: Large-scale Renewable Energy Development Project (Phase Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 20-Jan-2013 1 = $25M; Phase 2 = $45M) (P077717) Country: Mexico Approval FY: 2006 Product Line: Global Environment Project Region: LATIN AMERICA AND CARIBBEAN Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 29-Jun-2006 Original Closing Date 30-Jun-2014 Planned Mid Term Review Date 14-Jun-2013 Last Archived ISR Date 19-Sep-2012 Effectiveness Date 18-Apr-2007 Revised Closing Date 30-Jun-2014 Actual Mid Term Review Date Global Environmental Objectives Global Environmental Objective (from Project Appraisal Document) The global objective of the project is to reduce greenhouse gas emissions (GHGs) and remove barriers to the development of renewable energy technologies and markets, per the Global Environment Facility Operation Progam 6. To assist Mexico in developing initial experience in commercially-based grid-connected renewable energy applications by supporting construction of an approximately 101 MW IPP wind fram, while building institutional capacity to value, acquire, and manage such resources on a replicable basis. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Financial Mechanism 20.40 Technical Assistance 3.90 Project Management 0.70 Public Disclosure Copy Overall Ratings Previous Rating Current Rating Progress towards achievement of GEO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Overall Risk Rating Implementation Status Overview The La Venta III wind power plant entered into commercial operation on October 3, 2012 and was inaugurated by President Calderon on October 30, 2012. Page 1 of 8 The World Bank Report No: ISR9088 Locations Country First Administrative Division Location Planned Actual Mexico Not Entered Juchitan de Zaragoza Public Disclosure Copy Results Global Environmental Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Subsequent POISE include plans for additional Text Value None POISE includes > 1 wind IPP procurement at higher reference price Date 18-Apr-2007 10-Nov-2009 30-Jun-2014 and/or lower incentive support level (subject to Comments POISE (2007-2016) includes availability of subsidy funds - GEF or other). 4 wind plants: Oaxaca I, II, III, IV Established CFE system short-run marginal Text Value None System established cost-based Reference Price combined with Date 18-Apr-2007 14-May-2010 30-Jun-2014 agreed maximum U.S. 1.1 cent GEF tariff Comments 2 bids received and one support sufficient to attract bids, investment, construction and operation contract for 100MW awarded Barrier Removal results described below under Text Value Baseline values described in Barriers removed PDO. PAD Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments TA activities to support SENER were delayed by difficulties in accessing the corresponding funds. Development of wind power has been extremely strong in the past few years, showing that most barriers are effectively removed. Public Disclosure Copy Emisions reduced (tons/year), over baseline Text Value 0 247,000 tons per year of (CO2, NOx, SOx, and particulates). operation Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments The plant entered into operation on Oct 3, 2012. Yearly figures are not yet available. Page 2 of 8 The World Bank Report No: ISR9088 Increase total installed renewable capacity, Text Value 2 wind farms 101MW 101 MW (expected over baseline (MW). operations) Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Public Disclosure Copy Comments Increase electricity supply to national system Text Value 7.36 367.9 GWh annually (257.5 from renewable energy sources, over baseline. min) (GWh/yr) Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments The plant entered into commercial operation on October 3, 2012. In October, the production was 25,551,807 KWh, with a plant factor of 33% (slightly above the average expected for the year). Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Institutional capacity sufficient to issue and Text Value None Assessed as adequate manage tenders for additional wind farms/other Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 RE resources. Comments Capacity exists. Development of wind farms has been very strong over the past few years (1200MW installed under IPP or self supply schemes). Strengthening of SENER IPU business Text Value None Delayed. UPI's business development development services addressing marketing, services judged adequate permitting issues, financing, facilitation, and Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 business advisory services to sponsors of Comments Sener has indicated that it renewable energy projects would propose an updated Public Disclosure Copy program of studies but has only provided a general framework. Publishing of new intermittent energy Text Value None New intermittent energy connection contract by CRE including RE connection contract including capacity recognition. RE capacity recognition is published by CRE. Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments The Bank team and SENER have not had the chance to Page 3 of 8 The World Bank Report No: ISR9088 discuss this. SENER should provide an updated list of relevant TA activities. Strategic Environmental Assessment is Text Value None Strategic Environmental Public Disclosure Copy developed and accepted as basis permitting Assessment completed and scale-up of wind energy in Oaxaca region. disseminated Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments The Request for EOI was published on November 15, 2012. SENER should send in January the short list and the draft request for proposal. Planning and dispatch model installed and Text Value None Installed and used used in CFE to incorporate intermittent Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 sources. Comments The Bank team should discuss this with CFE during its next mission. Least-cost methodology for calculation of Text Value None Least-cost methodology for renewable energy procurement reflecting calculation of renewable System Marginal Cost developed. energy procurement reflecting System Marginal Cost developed. Date 18-Apr-2007 26-May-2011 30-Jun-2014 Comments This activity was financed by an ESMAP study. CFE purchase price tariff proposed for Phase II Text Value None CFE purchase price tariff which requires reduced GEF subsidy from proposed for Phase II which Phase I. requires reduced GEF subsidy from Phase I. Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments Phase 1 still under Public Disclosure Copy implementation. Phase II purchase tariff could be proposed once corresponding TA activities are completed and if deemed relevant. CFE purchase tariff proposed for Phase II Text Value None CFE purchase tariff proposed which reflects SRMC plus RE capacity value for Phase II which reflects and energy portfolio diversification value. SRMC plus RE capacity value and energy portfolio diversification value Page 4 of 8 The World Bank Report No: ISR9088 Date 18-Apr-2007 22-Aug-2012 30-Jun-2014 Comments Phase 1 still under implementation. Phase II Public Disclosure Copy purchase tariff will be proposed once corresponding TA activities - which are delayed-are completed, and if deemed relevant. Significant avian/bat mortality is avoided. Text Value None Avian/bat mortality is within acceptable ranges. Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments Plant has been operational since October 3, 2012. Bird monitoring is a requirement in the environmental license. Iberdrola hired a company to monitor mortality during the migration season. Results should be known during the next supervision mission (probably in March 2013). Funds disbursed to ejidos, indigenous Text Value None Funds disbursed to communities, and small landowners. ejidatarios, indigenous communities, and small landowners as indicated in agreements. Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments As of October 2012, 75% of funds were paid for 2012, with the remaining 25% to be paid in December 2012. The team will follow up with CFE. Public Disclosure Copy Mechanism for payments to ejidos, indigenous Text Value None Mechanism for payments to communities, and small landowners, with ejidatarios, indigenous established process through which landowners communities, and small or ejidos can verify revenue and requisite landowners, with an payments. established process through which landowners or ejidatarios can verify revenue and requisite payments. Date 18-Apr-2007 08-Nov-2010 30-Jun-2014 Page 5 of 8 The World Bank Report No: ISR9088 Comments Mechanism for payments put into place and agreements signed. Public Disclosure Copy Co-financing provided by private entities and Text Value None Co-financing provided by export credit agencies by way of capital private entities and export investments. credit agencies by way of capital investments. Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments Iberdrola a private firm was awarded the contract Only those bids proposing development in sites Text Value None Only those bids proposing identified as environmentally suitable for development in sites identified development are accepted as eligible. as environmentally suitable for development are accepted as eligible Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments Environmental authorization obtained by CFE for the site. If a different site were chosen, bidder would have been responsible for obtaining the authorization. IPP solicitation for at least 70 MW of wind Text Value None IPP solicitation for at least 70 power. MW of wind power. Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments IPP wind contract for 100 MW awarded Number of qualified bids received from tender. Text Value None At least three qualified bids received Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments 2 technical bids and 1 Public Disclosure Copy financial bid CFE base solicitation allowing for locations Text Value None Authorization to change other than the currently identified for La Venta location included in the III, including those that would require a change bidding documents. in transmission lines. Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments Such flexibility was included in the bidding documents. Page 6 of 8 The World Bank Report No: ISR9088 Regional Environmental Assessment is Text Value None Regional Environmental completed and made available for the La Venta Assessment completed III bidding package. Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Public Disclosure Copy Comments The Manifestacion de Impacto Ambiental, which includes an environmental analysis of the area, was included in the bidding documents. The regional assessment will be part of the SEA. Operational Manual for the auctioning Text Value None Operational manual adopted mechanism finalized with CFE sign-off, and Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 adopted by CFE. Comments The Bank team will discuss the relevance of such a manual, as a new renewable energy law was implemented. Functioning mechanism for the auctioning of Text Value None Mechanism is in place and tariff subsidy support through competitive functioning bidding established, with incremental Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 tariffsupport provided by GEF. Comments 1 contract awarded for 100 MW through competitive bidding. Tariff support to be provided once wind farm starts functioning. Data on Financial Performance (as of 18-Sep-2012) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P077717 TF-56781 Effective 05-Oct-2006 05-Oct-2006 18-Apr-2007 30-Jun-2014 30-Jun-2014 Public Disclosure Copy Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P077717 TF-56781 Effective USD 25.00 25.00 0.00 0.36 24.64 1.00 Disbursement Graph Page 7 of 8 The World Bank Report No: ISR9088 Public Disclosure Copy Key Decisions Regarding Implementation This ISR follows a series of meetings held with SENER (Secretaría de Energía / Ministry of Energy), CFE (Comisión Federal de Electricidad / Federal Electricity Commission) and NAFIN (Nacional Financiera, the Financial Intermediary) during a recent mission to Mexico City (October 28-31, 2012). An important milestone has been reached, as the La Venta III Project was commissioned. The wind plant is generating electricity and supplying it to the national grid. It is expected that the next supervision mission will be held in March 2013, when the Bank team will travel to Juchitán, Oaxaca to visit the wind project. Restructuring History There has been no restructuring to date. Related Projects There are no related projects. Public Disclosure Copy Page 8 of 8