The World Bank Report No: ISR15201 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: 18 Status: ARCHIVED Archive Date: 19-Jul-2014 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): SENER 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 07-Dec-2013 Effectiveness Date 18-Apr-2007 Revised Closing Date 30-Apr-2016 Actual Mid Term Review Date 02-Jul-2013 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 Satisfactory Overall Risk Rating Low Low Implementation Status Overview The La Venta III wind power plant has been operating since October 2012 and technical assistance activities are being developed. Page 1 of 8 The World Bank Report No: ISR15201 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 Generation Capacity of Renewable Energy Megawatt Value 0.00 102.85 100.00 (other than hydropower) constructed Date 18-Apr-2007 21-Mar-2014 30-Jun-2014 Comments Generation Capacity of Renewable Energy Megawatt Value 0.00 102.85 100.00 constructed – Wind Sub Type Date 18-Apr-2007 21-Mar-2014 30-Jun-2014 Breakdown Comments Increase electricity supply to national system Text Value 7.36 255.294 GWh over April 270.3 GWh annually (257.5 from renewable energy sources, over baseline. 2013-March 2014. min) (GWh/yr) Date 18-Apr-2007 11-Mar-2014 30-Jun-2014 Comments This is slightly lower than expected, mainly because of a very low wind in September 2013. Increase total installed renewable capacity, Text Value 2 wind farms 101 MW (expected over baseline (MW). operations) Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments The plant came into operation in October 2012. Emisions reduced (tons/year), over baseline Text Value 0 157,516 tCo2 from April 2013- 166,769 tons per year of (CO2, NOx, SOx, and particulates). May 2013. operation Public Disclosure Copy Date 18-Apr-2007 16-Jun-2014 30-Jun-2014 Comments This is slightly lower than expected, mainly because of a very low wind in September 2013, which in turn affected production. Page 2 of 8 The World Bank Report No: ISR15201 Barrier Removal results described below under Text Value Baseline values described in Barriers removed PDO. PAD Date 18-Apr-2007 09-Oct-2013 30-Jun-2014 Public Disclosure Copy Comments Barriers have been greatly reduced, as shown by the strong development of wind energy in the recent years (1200MW installed under IPP or self supply schemes) and development of wind power projects is continuing. 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 Subsequent POISE include plans for additional Text Value None POISE includes > 1 wind IPP procurement at higher reference price Date 18-Apr-2007 11-Mar-2014 30-Jun-2014 and/or lower incentive support level (subject to Comments Achieved - POISE availability of subsidy funds - GEF or other). (2012-2026) includes 8 new wind plants which are expected to start operating between 2014-2019: Sureste III, IV and V (908 MW), Rumorosa I, II, III (300 MW) and Tamaulipas I-II-III (600 MW)- none of which benefiting from additional tariff support. Intermediate Results Indicators Public Disclosure Copy Indicator Name Core Unit of Measure Baseline Current End Target 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. Page 3 of 8 The World Bank Report No: ISR15201 Operational Manual for the auctioning Text Value None Operational manual adopted mechanism finalized with CFE sign-off, and Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 adopted by CFE. Comments N/A since the auctioning Public Disclosure Copy mechanism is in place 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 Comments An environmental assessment was prepared prior to the bidding but it did not include a regional review. The SESA, currently under implementation, will include a review of the cumulative environmental and social impacts of wind development in the Tehuantepec area. 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. 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 financial bid IPP solicitation for at least 70 MW of wind Text Value None IPP solicitation for at least 70 power. MW of wind power. Public Disclosure Copy Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments IPP wind contract for 100 MW awarded 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 Page 4 of 8 The World Bank Report No: ISR15201 Comments Environmental authorization obtained by CFE for the site. If a different site were chosen, bidder would have been Public Disclosure Copy responsible for obtaining the authorization. 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 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 Comments Mechanism for payments put into place and agreements signed. 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 11-Mar-2014 30-Jun-2014 Comments Funds for 2013 were fully Public Disclosure Copy paid. Significant avian/bat mortality is avoided. Text Value None Avian/bat mortality is within acceptable ranges. Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 Comments Plant has been operational since October 3, 2012. Avian mortality is within acceptable ranges. Page 5 of 8 The World Bank Report No: ISR15201 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 Public Disclosure Copy diversification value Date 18-Apr-2007 11-Oct-2013 30-Jun-2014 Comments There will be no phase II since no subsidies are required anymore for wind power development. 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 11-Oct-2013 30-Jun-2014 Comments There will be no phase II since no subsidies are required anymore for wind power development. 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. Planning and dispatch model installed and Text Value None Installed and used used in CFE to incorporate intermittent Date 18-Apr-2007 12-Mar-2014 30-Jun-2014 sources. Comments CFE implemented dispatch tools to incorporate Public Disclosure Copy renewables. In July 2013, a World Bank expert delivered a workshop on integrating renewables into the grid to top technical officials from CFE, SENER and CRE. Following up on this workshop, CFE is defining a program of activities, to be financed by the TA, to help the utility better address the issue. Page 6 of 8 The World Bank Report No: ISR15201 Financing for this activity was included in the restructuring. Strategic Environmental Assessment is Text Value None Strategic Environmental developed and accepted as basis permitting Assessment completed and Public Disclosure Copy scale-up of wind energy in Oaxaca region. disseminated Date 18-Apr-2007 16-Jun-2014 30-Jun-2014 Comments SEA is being implemented and should be completed in September 2014 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 26-Sep-2013 30-Jun-2014 Comments In July 2011, CRE released a resolution with a methodology to determine such capacity contribution. The technical work benefited from the support of GIZ. Strengthening of SENER IPU business Text Value None UPI's business development development services addressing marketing, services judged adequate permitting issues, financing, facilitation, and Date 18-Apr-2007 11-Mar-2014 30-Jun-2014 business advisory services to sponsors of Comments Bank gave NO to direct renewable energy projects contracting for the one stop shop. Now that the project's closing date was extended, SENER will process the contract. 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. Public Disclosure Copy Comments Capacity exists. Development of wind farms has been very strong over the past few years (1200MW installed under IPP or self supply schemes). Data on Financial Performance (as of 04-Jun-2014) Financial Agreement(s) Key Dates Page 7 of 8 The World Bank Report No: ISR15201 P077717 TF-56781 Effective 05-Oct-2006 05-Oct-2006 18-Apr-2007 30-Jun-2014 30-Apr-2016 Disbursements (in Millions) Public Disclosure Copy Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P077717 TF-56781 Effective USD 25.00 25.00 0.00 6.33 18.67 25.00 Disbursement Graph Key Decisions Regarding Implementation A restructuring of the project was processed in May 2014, which: i) extended the closing date of the Project from June 30, 2014 to April 30, 2016; (ii) reallocated funds between categories; and (iii) revised the Project’s indicators, in line with the plant's average capacity factor over the first 12 months of operation. Public Disclosure Copy Restructuring History Level two Approved on 18-Jun-2013, Level 2 CD Decision on 12-May-2014 Related Projects There are no related projects. Page 8 of 8