Indicative Expansion Plan of the Generation System

Transcription

1 Indicative Expansion Plan of the Generation System

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3 Indicative Expansion Plan of the Generation System

4 Ministry of Energy and Mines Minister Carlos Iván Meany Valerio Vice-Minister of the Energy Area Romeo Rodríguez Menéndez Vice-Minister of Sustainable Development Federico Franco Cordón Vice-Minister of Energy and Mines Alfredo Pokus Yaquián National Commission of Electric Power President Carlos Eduardo Colom Bickford Director Enrique Möller Hernández Director César Augusto Fernández Fernández General Manager Sergio Oswaldo Velásquez Moreno Strategic Projects Division Chief of the Strategic Projects Division (Coordinator) José Rafael Argueta Monterroso Chief of the Projects Planning Department Fernando Alfredo Moscoso Lira Work Team Edwin Roberto Castro Hurtarte Gustavo Adolfo Ruano Martínez Juan Arnoldo Arroyo Choc Juan Carlos Morataya Ramos Oscar Enrique Arriaga López Advisor Rodolfo Francisco Santizo Ruiz Indicative Expansion Plan of the Generation System

5 EXECUTIVE SUMMARY INTRODUCTION 1 GOALS 2 BASIC INFORMATION 3 Economic Status 4 National Electric Market 7 Current Plants 9 Current Transmission System 11 Developed Activities 13 Demand 14 Posed Generation Centrals 16 Fuels 19 Hydrology 19 Environmental Issues 19 Bi-national Projects 20 INDICATIVE EXPANSION PLANS OF THE GENERATION SYSTEM EXECUTED WITH SUPER-OLADE MODEL 21 Plants start-up schedule 22 Capacity to install 24 Matrix of installed capacity (MW) by demand s growth scenario 26 EXPANSION PLANS SIMULATION WITH SDDP SOFTWARE 30 Energy dispatch 30 Energy matrix from the Indicative Expansion Plan of Generation 33 Demand s marginal cost against possible deficit according to each scenario in indicative plan 36 CO2 Emissions 39 ACHIEVED RESULTS AND CONCLUSIONS 44 Demand 44 Plants start-up schedule 44 Cost comparisons 45 Capacity to install during the Generation Plan 45 Energy dispatch 45 CO2 Emissions 46 ANEXO A. References 47 ANEXO B. List of Acronyms, Measuring Units and Multiples 48 Indicative Expansion Plan of the Generation System

6 The Indicative Expansion Plan for the Generation System main goal is the fulfillment of outlines, actions, and strategies as stipulated in the Energy Policy approved by the Ministry of Energy and Mines. The priority of this plan is to guarantee electric power supply in Guatemala by the optimization of the use of renewable resources and considering the environment. The plan is developed as the starting point for the preparedness of the Expansion Plan of the Transmission System, which as stipulated by the law in force, must be prepared and executed by the National Commission of Electric Power. The system s optimum expansion is determined by the Indicative Expansion Plan of the Generation System considering restrictions or conditions such as investment costs, operation costs, fuels, and the minimum and maximum start-up of different power plants. SUPER- OLADE and SDDP computing tools were used for the elaboration of the Plan for its optimization and simulation of an interconnected behavior. Indicative Expansion Plan of the Generation System

7 The elaboration of the Plan used firsthand basic data such as projected electric power demand (four scenarios: vegetative, low, medium and high), different basins hydrology of current and future hydroelectric projects, fuel costs estimations and all data both technical and financial of feasible hydroelectric and thermal future projects. Guatemala-Mexico Interconnection and two hydroelectric bi-national projects, Usumacinta and Paz, are also taken into consideration. A relevant point of the analysis is the impact to the environment at the implementation of the Plan regarding production and emissions to the atmosphere, both from thermal and hydroelectric projects. At the implementation of the Indicative Plan for the Expansion, CO2 emissions would be reduced in a long term due to different hydroelectric projects start-up and electric power production through bunker plants displacement. The following table shows the average of the three demand scenarios (low, medium, and low), of the capacity to be installed during the period , and the average of investment costs in current values with reference to the year Indicative Expansion Plan of the Generation System

8 In 2022 the values per renewable resources in electric power generation will reach the average value of 63.95% of the three demand s scenarios total generation. The demand s average marginal cost of the three demand scenarios drifts to minimize and stabilize to long term; there is a variation in dry and rainy seasons only, as showed in the following table. With the implementation of the Indicative Expansion Plan for the Generation System, approximately 114 million of bunker barrels would not be imported, reducing significantly electric power production costs from petroleum international prices and its variations in international markets. The CO2 tons emitted in the year 2022 by electric power production, in relation to the number of inhabitants, would be approximately 0.25 tco2/ inhabitant; however, if the current matrix is not modified, these emissions would reach 0.32 tco2/ inhabitant. The results obtained from the Indicative Expansion Plan for the Generation System fulfill all the goals included therein, and would contribute to Guatemala s sustainable and responsible development. Indicative Expansion Plan of the Generation System

9 The Indicative Expansion Plan for the Generation System is presented by the Strategic Projects Division, a dependency of the National Commission of Electric Power, which evaluates the economic feasibility for the electric power demand through efficient generation technologies. The Plan was developed as the base of the Expansion Plan of the Transmission System elaboration, which must be prepared and executed by CNEE as stipulated in Article 26, Temporary Stipulations, contained in Title IX of the Electricity General Law Regulation: Expansion Plan of the Transmission System, (Temporary Reforms, Government Agreement No ). The Plan was developed to comply with the Energy Policy in force that includes the diversification of the energy matrix to long term, trying to encourage efficiency in power energy production from the start-up of generation plants and international interconnections, reducing and stabilizing energy production costs, and thus obtaining competitive electric power prices in Guatemala. Indicative Expansion Plan of the Generation System

10 The activities developed in the plan s preparation included the following activities: i. ii. iii. iv. v. Prepare the forecast of the electric power demand growth. Acquisition of the SUPER-OLADE model used for the achievement of the optimum plan. Prepare the list of generation plants and units to be considered in the Plan s optimization process. Determination of the optimum Generation Expansion Plan using the SUPER model. Simulation of the operation with Stochastic Dual Dynamic Programming (SDDP) of long term dispatch for generation units and plants resulting from the start-up chronogram, product of the optimization with the SUPER OLADE model. Additionally, a comparison of CO2 carbon dioxide emissions resulting from the present composition of generation with the current energy matrix was made, taking into account the expected demand growth, which gave as a result more CO2 emissions due to a bigger utilization of petroleum by-products, in comparison with the emissions resulting from the application of the Indicative Expansion Plan for the Generation System. 2 Indicative Expansion Plan of the Generation System

11 Fulfillment of outlines, actions and strategies as stipulated in the Energy Policy approved by the Ministry of Energy and Mines. Diversification of the energy matrix composition, giving priority to renewable energies projects by the optimization of the country s natural resources. Encouragement of investments in efficient electricity generation through the implementation of the Indicative Plan. Promotion of the start-up of efficient electric power generation plants to supply the demand. Decrease in electric power supply costs through the admission of more efficient generation plants. Minimization of environmental impacts from CO2 emissions by changing the energy matrix composition. Encouragement for the regional energy integration considering international interconnections generation in the economic assessment and in the optimization of the Plan. Provide with the necessary data for the elaboration of the Expansion Plan of the Transmission System, to allow the Commission to comply as stipulated in Article 26 of the Temporary Stipulations of the Electricity General Law Regulations. Attract investments to provide the necessary services for fuel supply constructions, implementation, operation, maintenance and logistic of different power plants. Indicative Expansion Plan of the Generation System

12 3.1. Economic Status. National economic activity measured by the Gross Domestic Product (GDP), is expected to grow in 5.3% for the year 2008, and 5.4% for the year The expected growth is based on macroeconomic stability, supported by the disciplined monetary and tax policies, favorable expectations of economic agents, and on public and private investment. The following table shows the estimated GDP s growth rates by activity. Table 1. Economic Activities contributing to Guatemala s GDP Source: Bank of Guatemala. The Retail Price Index (RPI) is one of the statistic tools used to measure the country s economy inflation, based on prices observed during the month of reference. 4 Indicative Expansion Plan of the Generation System

13 Figure 1. Retail Price Index variations period SOURCE: Guatemala s National Institute of Statistics. Since 2006 exchange rates in Guatemala have remained from 7.75 to 7.45 quetzals per one US$ dollar. Figure 2. Guatemala s Exchange Rate for the period Source: Bank of Guatemala. Indicative Expansion Plan of the Generation System

14 Table 2. Principal products exported from Guatemala (metric tons) to March of each year. * In thousand barrels. Source: Bank of Guatemala. Table 3. Import CIF value to March each year in % Source: Declarations of merchandises and Central American unique custom forms. 6 Indicative Expansion Plan of the Generation System

15 3.2. National electric market The national electric sub-sector is structured as follows: 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, and the application of the Electricity General Law and its regulation for the fulfillment of its duties. Likewise, it is in charge of all juridical regime issues applicable to energy, hydrocarbons production, distribution and commercialization, and mining resources exploitation. National Commission of Electric Power CNEE (by its initials in Spanish): It is the technical body of the Ministry, in charge of the fulfillment and enforcement of the Electricity General Law. It is the regulating entity creating favorable and legal conditions for electric power generation, transmission, distribution and commercialization activities to become developed by any interested individual or juridical person, strengthening this process by issuing technical standards, fair prices, regulating measures and the whole action framework allowing entrepreneurs and users safety conditions and clear action rules to participate in a proper way in this new model, which is the grounding factor in the current modernization regarding the Electric Subsector, and consequently in the country s economic and social development. Wholesale Market Administrator WMA- (AMM by its initials in Spanish): The Wholesale Market Administrator of the Wholesale Market is a private, nonprofit entity, coordinating transactions among the Electricity Wholesale Market participants, guaranteeing competence in a free market, with clear rules and encouraging electric system investments, as well as watching over the quality of maintenance in Guatemala s electric power supply service. The Wholesale Market agents are: Generators, Carriers, Distributors, Traders, Large Users and additionally, a group of companies, which lacking of conditions as participants, they carry out economic transactions in the Wholesale Market. The regulating framework of the Guatemalan electric sector is based on a competitive market model to a generation and trading level that has been privileged with free access and a price system reflecting free offer and demand balances since these segments bring effective conditions for competence. In those segments in which the presence of scale economies bring space for natural monopolies existence, prices are fixed by the regulating entity based on efficient economic costs. Three segments are relevant in this sector s activities: Generation, Transmission and Distribution. Generation is developed in a free and competitive environment constituted by a market of opportunities based on marginal cost dispatch to short term, and on a market of contracts, in which Agents and Large Users agree in a free way their contract conditions regarding period, amount and price. Indicative Expansion Plan of the Generation System

16 Transmission and distribution are regulated activities. The legal structure ruling the electric subsector is based on the following: Political Constitution of the Republic. Electricity General Law, Decree No Regulation of the Electricity General Law, Government Agreement No and its reforms. Prices for the electricity service are free, except for transmission and distribution services, which are subject to authorization. Energy transfers among generators, traders, importers and exporters resulting from the Wholesale Market operation are subject to regulation pursuant to the law. Figure 3. Structure of the electric sub-sector Wholesale Market Administrator, Government Agreement No and its reforms. Coordination, Commercial and Operation Standards of the Wholesale Market Administrator. The Electricity General Law is the base for electricity issues and it is supported on the following principles: Electricity generation is free and no authorization or special condition is required by the State, but only those recognized by the Political Constitution of the Republic of Guatemala and the laws of the country. However, the use of the State s property for these purposes will require proper authorization by the Ministry when the central s power exceeds 5MW. Electricity transmission is free when for this purpose the use of public dominium properties is necessary. Electricity transmission implying the use of public dominium properties and final distribution service will be subject to authorization. 8 Indicative Expansion Plan of the Generation System

17 Table 4. INS s important indicators during the year Current Plants Source: WMA, Statistic Report The following table shows current plants according to the Firm Offer Report furnished by the WMA. Table 5. Current Plants, Non-Renewable Resources IC Motor = Internal combustion motor Indicative Expansion Plan of the Generation System

18 Table 6. Current Plants, Renewable Resources No. 10 Indicative Expansion Plan of the Generation System

19 Figure 4. Installed power during the year 2007 Figure kV and 69kV transmission lines owners. 9 % TRELEC ETCEE 91 % 22 % 3.4. Current transmission system Guatemalan transmission system has a trunk line infrastructure which allows the electric power flow from the main generating through a network of around 1.009km length in tensions of 138kv and 230kv, and capacity for transformation in 230 kv of 1445 MVA, and 319 MVA in 138 kv. For a 69kV voltage level there are about km of transmission lines allowing the supply to the Distribution and Large Users systems, the transformation capacity in 69kV is 760 MVA. There are four companies in Guatemala rendering electric power transmission service (STEE), and the companies with the largest number of kilometers are ETCEE and TRELEC. Nevertheless, the transmission system is also provided with transmission lines property of Wholesale Market Agents, connected to the Interconnected National System. The following figure shows the percentage of the property of ETCEE and TRELEC transmission systems for 230kV and 69kV tension levels; ETCEE owns 100% in the case of the 138kV lines. 78 % TRELEC ETCEE In accordance with Article 26, (Transitory reforms, Government Agreement No ) of the General Law of Electricity Regulations: Until the creation of the specialized Technical Body of the Ministry of Energy and Mines, the Expansion Plan of the Transmission System will be prepared and executed by the National Commission of Electric Power. The Expansion Plan of the Transmission System must be prepared every two (2) years and has to include ten (10) years of study. Also, it has to consider generation projects in construction and those that will come into operations within the scope of the stipulated study. The following figure shows National Transmission System present conditions, planned works, and location of main sub-stations. Indicative Expansion Plan of the Generation System

20 CNEE s Strategic Projects Division is currently preparing the Expansion Plan of the Transmission System, jointly with carrier companies and other interested agents participation. Among the main purposes of such plan is the expansion of transmission systems capacities to supply main electric power consumption centers demands from main generating. Figure 6. Current conditions of the Interconnected National System and main planned works Sistema de Transporte Actual Indicative Expansion Plan of the Generation System

21 3.5. Developed Activities The following activities were performed by the Strategic Projects Division of the National Commission of Electric Power in the elaboration of the Indicative Expansion Plan for the Generation System of the Interconnected National System for the period : Forecast of the demand s growth for the period of study based on econometric models considering factors such as gross domestic product (GDP), growth of the users and historical data of the demand, thus determining four representative growth scenarios. CNEE acquired the SUPER (Unified System of Regional Electric Planning) computing program version 5.1 from the Latin American Organization of Energy (OLADE, by its initials in Spanish). Such computing program allows the evaluation of different demand scenarios, the analysis of the benefits of energy preservation and load administration plans, the modeling of hydrothermal systems generation and interconnections expansion, the establishment of minimum risks strategies under undetermined conditions, and the definition of code plans through the optimization of algorithms of generation projects, among other performances. A consultant was hired for the development of a training course for the Commission s staff based on the SUPER model, with the participation of the staff of the Wholesale Market Administrator, staff of the Ministry of Energy and Mines, and the National Institute of Electrification staff. An inventory was carried out of the generation projects posed to be included within the chronogram optimization and determination procedure, from which data on projects historical volumes of rivers basins, capacity, programmed date for commercial operation, technical-economic characteristics, and geographic location was available. The SUPER computing model data base was defined and includes: Demand, technicaleconomic parameters, fuel price forecasts, hydrologic history, and design preliminary parameters for posed projects; and as well as standards for energy policies evaluation issued by the Ministry of Energy and Mines. Besides, conditions, risks and restrictions were defined to be considered in the elaboration of the Plan. Energy dispatch simulations from generation centrals considered by the optimization were performed with Stochastic Dual Dynamic Programming (SDDP) model version 9.0d, obtaining feasible deficit indicators, demand s marginal cost, and the effective power available resulting from different scenarios of the implementation Plan. CO2 emissions that would be produced at the implementation of the plan were calculated and compared with those that would result if the present energy matrix is not modified. Indicative Expansion Plan of the Generation System

22 3.6. Demand Multiple regression econometric models were used to obtain demand estimations. The selected econometric model for energy forecasts takes into account GDP and the number of electric power users as independent variables. Such model assumes a logistic relationship between gross generation and GDP, and a linear-exponential relationship between gross generation and the number of users. Table 7. GDP (%) Increase rates according to the demand scenario Due to changes that may take place in main activities influencing the country s economic activity, such as the economy behavior of Guatemala s main commercial partners, petroleum and petroleum by-products high international prices, and public and private investment; four energy demand scenarios were considered and prepared: vegetative, low, medium and high. The electric power consumption is highly tied to the country s economic development and in consequence the Gross Domestic Product (GDP) was considered for each previous scenario as the independent variable to forecast the electric power demand of the country. p=preliminary, e=estimated Additional and specific requirements of industrial projects demand were included among each scenario to be executed to short term at national level. The 50MW cement industry demand was considered for the year 2010, as well as the mining industry growing in phases from the year 2011 to its full capacity of 117MW in the year Also, the elaboration of one low demand scenario relevant, not including demand s additional requirements of the above mentioned industrial projects for the evaluation of a vegetative growth scenario. 14 Indicative Expansion Plan of the Generation System

23 Table 8. Demand scenarios Indicative Expansion Plan of the Generation System

24 Gráfica 7. Escenarios de demanda Proposed Power Generation Generation projects with sufficient technical and commercial data available to be modeled and included; were considered in the optimization process of this plan. This is not a limitation for the existence, or should be interpreted as the limitation for the construction of projects that might be available. Generic, hydraulic and thermal projects were modeled among the list of posed generation centrals in addition to those described in previous paragraphs in order to be in capacity of covering the four demand scenarios. Two groups of projects, fixed and generic plants, are classified in the assessment. Fixed plants are projects close to come into operations; therefore they are identified by their own names. Generic plants have longer periods to come into operations and they are not identified by their own names, but by their technology and possible location, and the purpose of the Super model is to determine the optimum date in which the plan must be available for generation. Plants investment costs are estimated to current values based on studies published by international entities for each technology. The information main source is the International Agency of Atomic Energy (IAAE). 16 Indicative Expansion Plan of the Generation System

25 The information for modeling hydraulic plants is available at CNEE and it is contained in the studies to access the transmission system furnished by the interested party during the development of the project, as well as the catalogue of the Master Plan of the National Institute of Electrification (INDE). For this type of technology, and taking into consideration the promotion of Distributed Renewable Energy projects, 4 blocks of 30MW each were considered in the startup scenario of this type of projects. Table 9. Proposed Thermal Plants, non-renewable resources Considering construction uncertain time and hydroelectric projects start-up due to social and environmental problems, a probability for delay in start-up operations was considered in the SUPER model. To fulfill with the energy policy in force, stipulating as priority the start-up of the Guatemala-Mexico Interconnection (400kV), it was taken into account within the SUPER model as an additional generator to the system, with 200MW capacity available for the year 2009, considering the variable cost for its dispatch which is lower than bunker internal combustion motors and higher than fuel generation plants. Base fuel = carbon, natural gas or petroleum coke. Indicative Expansion Plan of the Generation System

26 Table 10. Proposed Plants, renewable resources Tecnología TOTAL 18 Indicative Expansion Plan of the Generation System

27 3.8. Fuels Costs of fuels were based on current values and initial values according to table11. Cost s forecast was made from initial values, applying the tendency variation of the price of each fuel as estimated by the Energy Information Administration (EIA), according to AEO2008 Study, National Energy Modeling System for carbon, bunker, diesel and natural gas. Fuel base of thermal plants can be carbon, petroleum coke or natural gas. Table 11. Initial price of Fuels 3.9. Hydrology Information on volumes in current plants and proposed plants is part of the data base of the National Commission of Electric Power, used in planning and it was complemented with additional information furnished by the National Institute of Electrification, the Ministry of Energy and Mines, and the Wholesale Market Administrator. Hydroelectric posed plants modeled with annual regulating dam are: a) Hydro-AV I (181MW) b) Hydro-AV IV (340MW) c) Hydro-Quiché III (140MW) The remaining plants were modeled as passing centrals or as daily regulation Environmental Considerations Figure 8. % Variation of fuels during the period Generation projects have different type of environmental costs due to the used technology; usually their costs are not included because they are external factors. CO2 carbon dioxide emissions evaluation was carried out, but the existence of other emissions must be considered also, as CO2 sulfur dioxide, NOX nitrogen dioxides, organic compounds, and emissions of particles, that were not taken into account due the difficulty to value them and because there are different efficient mechanisms to mitigate such contaminants in almost 100%. However, posed technologies must comply with the legislation in force in relation to the environmental impact. Source: EIA, AEO2008, National Energy Modeling System. Indicative Expansion Plan of the Generation System

28 CO2 value of reference adopted for the evaluation is US$3.00/metric ton, which is a variable cost additional to the production value of each plant. CO2 factors used by technology are as follows: de producción de cada planta. A continuación se muestran los factores de CO2 utilizados por tecnología. The two previous projects are necessary according to the achieved results, particularly Usumacinta River central due to its great potential in producing electric power and for its geographic location. These two projects are considered as commercial operation start-ups, from the year Table 12. CO2 emissions factors Diesel Bunker Natural Gas Carbon Hydraulic Source: IPCC Directives (Inter-government Panel on Climate Change) Bi-National Projects Bi-National projects are one priority established within the energy policy approved by the Ministry of Energy and Mines, the projects in consideration are the following: Hydro Paz with 70MW jointly with El Salvador, from which 35MW correspond to Guatemala. Usumacinta River with 800MW jointly with México, from which 400MW would correspond to Guatemala. The Usumacinta River Project located in the Department of Petén, was divided in four phases 200MW each, as passing or water edge in cascade hydroelectric centrals. 20 Indicative Expansion Plan of the Generation System

29 The indicative plan seeks the determination of preferable ways or actions to face generation systems conditions. Each plan contributes with one indication about the desirable development under risks and restrictions conditions. Some of these conditions of risks and restrictions are: Minimum and maximum condition to start operations. Initial capital investment. Uncertain delays in plants constructions, particularly hydraulic plants. Time to recover the investment, larger in hydroelectric plants cases. Investment payment plan. Fuels prices variation. Discount rate. Losses in transmission and distribution. Four scenarios of demand were considered in the indicative plan: low, medium, high and vegetative growth. Additionally, and taking into consideration binational projects, an alternative Indicative Plan was performed. 200MW Comb. Base II central would not be included, at the occurrence of one vegetative growth demand and the chronogram behavior would respond to low scenario. The Indicative Plan total investment cost was calculated to the year 2008 of each demand scenario. The deficit in the cost has a very important influence in reserve margins, and also in plans total costs, using 1,354US$/MWh for the evaluation. The following chronograms show the years for the plants to start their commercial operations in accordance with the demand scenario. Indicative Expansion Plan of the Generation System

30 Plants Start-up Schedule Table 13. Plants Start-up schedule according to the demand scenario 22 Indicative Expansion Plan of the Generation System

31 Table 14. Plants Start-up schelude including bi-national projects, high demand scenario Comb. Base=Fuel Base = carbon, natural gas, petroleum coke Indicative Expansion Plan of the Generation System

32 4.2. Capacity to install The capacity by demand growth scenario to install doesn t vary drastically; differences can be appreciated in the delay of some projects start-up. In the following figures the accumulated capacity to install was calculated during the period of the study, and there are some years without plants installation. To the present (May 2,008), there is an effective and maximum capacity installed of 1,941 MW, which has a Solid Offer associated of 1,742 MW, from which 77 MW correspond to Fast Reserve, therefore the available solid offer is 1,665 MW. To guarantee the supply for the year 2,022, the installation of 2,705 MW is necessary under medium growth scenario; the solid offer associated to this capacity can be estimated in about 2,000MW, and in addition to the current offer would bring approximately 3,600MW in total to supply a demand higher than 3,100 MW. The average of additional capacity that has to be installed per year during the period from 2008 to 2022 of medium growth scenario is 190 MW approximately, making necessary to install 1,500MW during the first five years of the plan. Figure 9. Annual and accumulative capacity to be installed, low scenario 24 Indicative Expansion Plan of the Generation System

33 Figure 10. Annual and accumulative capacity to install, medium scenario Figure 11. Annual capacity to install and capacity accumulated, high scenario Indicative Expansion Plan of the Generation System

34 Plans total costs were calculated as current values to US$ dollars with reference to the year It is to be noted that values do not reflect relevant differences. Figure 12. Approximate cost of investments (in US$ million with reference to 2008) of low, medium and high indicative plans $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $ 3,221 $ 3,395 $ 3,479 $500 $0 Low Medium High 4.3. Composition of the matrix of the capacity installed (MW) by demand growth scenario Energy matrix composition of the capacity installed considers the current capacity installed and the one that would be obtained at the end of the period of the study of the Expansion Plan. Emphasis is made in the capacity with renewable resources, which exceeds 50% for the three scenarios. It is important to point out that in the three scenarios, the energy matrix guarantees energy supply even in those seasons in which droughts can occur in the country, based on sufficient capacity installed with other technologies. This is a relevant aspect to guarantee energy safety in Guatemala. 26 Indicative Expansion Plan of the Generation System

35 Figure 13. Low scenario, capacity installed to the end of the year 2022 Indicative Expansion Plan of the Generation System

36 Figure 14. Medium scenario, capacity installed to the end of the year Indicative Expansion Plan of the Generation System

37 Figure 15. High scenario, capacity installed to the end of the year 2022 Indicative Expansion Plan of the Generation System

38 5.1. Energy dispatch The SDDP model determines the optimum dispatch of the generation systems minimizing the operation cost (combustibles, fuels, O&M variable costs). The dispatch of monthly energy was performed during the period of the study with SDDP program in order to extend and confirm SUPER-OLADE results and those of the Indicative Expansion Plan of the Generation System, for the determination of the supply guarantee that would result with the implementation of the plan and demand marginal cost, through an economic dispatch. Energy dispatch starts from current situation, taking into account each of the following scenarios: low, medium and high. 30 Indicative Expansion Plan of the Generation System

39 Figure 16. Energy dispatch, low scenario Figure 17. Energy dispatch, medium scenario Indicative Expansion Plan of the Generation System

40 Figure 18. Energy dispatch, high scenario 32 Indicative Expansion Plan of the Generation System

41 5.2. Energy matrix resulting from the Generation Expansion Plan Energy dispatches calculated with the SDDP, form the energy matrix at the end of the period of the Expansion Plan. In the three scenarios, energy dispatches are achieved higher than 58% as minimum, with renewable resources. The use of Guatemala-Mexico 400kV interconnection for the year 2022 is achieved only for demand adjustments, thus guaranteeing the Independence regarding electric power supply in the Republic of Guatemala. Besides, the use of petroleum by-products as energy generation fuel was considerably reduced in the three cases, making electric power supply cost independent, in a good measure, from petroleum price variations in international markets. Figure 19. Energy Matrix, energy in the year 2022, low demand scenario Geothermal Indicative Expansion Plan of the Generation System

42 Figure 20. Energy matrix, energy year 2022, medium demand scenario 34 Indicative Expansion Plan of the Generation System

43 Figure 21. Energy matrix, energy year 2022, high demand scenario Indicative Expansion Plan of the Generation System

44 5.3. Demand marginal cost versus the indicative plan probable deficit according to each scenario As an additional analysis, results of demand marginal costs were obtained in US$/MWh, according to the demand scenario versus the feasible deficit. Except some seasons of the year during the period of the study, in which deficit exists and can be covered by the system s reserve, the possibility of deficit is reduced to zero by the implementation of the plan in most cases. The demand marginal cost doesn t have variations to short term, however, a clear tendency to reduce and stabilize to medium and long term is observed in the price. Likewise, difference in the price can be observed between dry and rainy seasons. In the three scenarios, the tendency of the demand marginal cost is to reduce due to a bigger probability of hydraulic energy plants and fuel base plants availability. Figure 22. Demand marginal cost versus probable deficit, low scenario Indicative Expansion Plan of the Generation System

45 Figure 23. Demand marginal cost versus probable deficit medium scenario Indicative Expansion Plan of the Generation System

46 Figure 24. Demand marginal cost versus probable deficit, high scenario. 38 Indicative Expansion Plan of the Generation System

47 Table 15. CO2 emissions for each demand scenario 5.4. CO2 emissions In accordance with the electric power generated at each demand scenario and by each plant, the CO2 emitted was calculated in tons taking into account emission factors in Table 9. According to the USA Energy Information Administration in its International Energy Annual 2005 report published for Guatemala, the emission of CO2 in tons per capita by the utilization of fossil fuels in general (transport, agriculture, industrial, residential sector, electric power, etc) was In the following table CO2 tons emission per capita was estimated for each demand scenario by electric power generation only, and by the utilization of fossil fuels in thermal plants. Besides, CO2 emitted by hydraulic plants, which is a minimum amount, was taken into account also. Values in the tables don t vary considerably, in spite of the installation of fuel base plants; and the reason for this small variation is because the fuel base replaces or displaces petroleum by-products due to the fuel cost. The above table clearly shows that the implementation of the posed Indicative Expansion Plan for the Generation System, would contribute significantly to Guatemala s development with no impact to the environment. For the emissions impact assessment of different technologies variable cost, the portion of the emission was calculated taking into account the value of 3.00 US$/tCO2 emitted and the cost of fuel. As a result, carbon technology is the cheapest within thermal technologies. The following figure shows hydroelectric plants as the cheapest option. Indicative Expansion Plan of the Generation System

48 Figure 25. Approximate additional cost to variable cost by the CO2 emission Estimation was carried out of bunker barrels that would not be imported as the result of the implementation of the Expansion Plan; there are two important reasons for the reduction of bunker consumption: The first reason is the construction of hydroelectric projects, and the second is the introduction of fuel base plants replacing bunker plants. CO2 /tons avoided by bunker replacement give as result CO2 emissions stabilization as showed in table 15. Finally, CO2 tons emitted by fuel base plants were evaluated versus CO2 tons avoided by hydroelectric plants. The avoided tons by hydroelectric plants counteract completely those emitted by fuel base plants. 40 Indicative Expansion Plan of the Generation System

49 Figure 26. Approximate number of bunker barrels that wouldn t be imported due to hydroelectric and fuel base plants constructions during the Generation Plan Figure 27. CO2 tons avoided due to bunker plants displacement for fuel base plants and the introduction of new hydroelectric plants during the Generation Plan. Indicative Expansion Plan of the Generation System

50 Figure 28. CO2 tons emitted by fuel base plants versus CO2 tons avoided by new hydroelectric plants installation during the Generation Plan. Figure 29. Decrease generation by bunker fuels during the Generation Expansion Plan 42 Indicative Expansion Plan of the Generation System

51 Based on the current energy matrix and considering the expected demand growth, there would be more CO2 emissions due to more utilization of petroleum by-products. The following figure shows two cases: To continue or to change the current energy matrix according to the Generation Indicative Plan. Figure 30. CO2 emissions per capita with the current energy matrix versus CO2 emissions per capita according to the Generation Expansion Plan tco2/per/cápita Current Matrix Matrix of the Generation Plan The above figure clearly shows the benefit to the environment that would be achieved through the implementation of the posed Generation Expansion Plan. Indicative Expansion Plan of the Generation System

52 6.1. Demand It is important to observe the great similarity between low scenario and vegetative growth scenario, and its impact in the start-up chronogram of the plants; the sole change is the non-inclusion of a 200MW fuel base plant. The three demand scenarios behave the same way up to the year 2013, which brings the importance of urgent measures for the following 4-5 years Costs comparison The following table shows the total amounts of the investments produced by the Expansion plan for each scenario. Table 16. Investment costs, low, medium and high scenarios 6.2. Plants start-up schelude The results of the Generation Expansion Plan show that the start-up of large capacity plants, in respect to the size of the Guatemalan system, is the optimum way to supply the demand of the Interconnected National System. The plants start-up chronogram including bi-national projects shows the relevance of feasible economic projects in order to supply the system s demand with emphasis in Usumacinta River Project, which becomes strategic for the country s development and the regional integration. US$ 3,221 US$ 3,395 US$ 3, Capacity to be installed during the Generation Plan From the 31 posed centrals based on renewable resources, 18 plants will be included in the Expansion Plan; and from the 18 posed centrals based on nonrenewable resources, 10 will be included in the Plan, pointing out the following: 44 Indicative Expansion Plan of the Generation System

53 i. Guatemalan hydric potential must be exploited as the cheapest option of medium and long term supply, guaranteeing electric power competitive prices. ii. Demand on petroleum by-products for electric power generation must be reduced. The following table specifies the power to be installed for each type of technology, as it is observed, the installation of renewable resources is predominant for all scenarios. Table 17. Capacity to be installed, MW 6.5. Power Dispatch Electric power production through internal combustion motors will be replaced in the long term by the addition of fuel base thermal plants due to their high variable cost and their dependency on petroleum by-products price. Guatemala México 400Kv interconnection is an important resource contributing to avoid the probable deficit to short term, since there is a small amount of plants that are guaranteed to come into commercial operations in the next 4 years, and to long term as an additional measure to supply the demand to competitive prices. The deficit showed in the figures is considered insignificant since it can be easily covered with the system s reserve. This deficit is the result of the accumulation of failures maintenance of the plants. The marginal cost at the start-up of the different hydroelectric projects, tends to reduce and to less variation during the year. Table 18 shows the average marginal costs by dry and rainy seasons for each scenario. Indicative Expansion Plan of the Generation System

54 Table 18. Average demand marginal cost during the period CO2 emissions Among the three fuels producing CO2, emissions, the cheapest is fuel base, then bunker and diesel; the last two are very dependable on petroleum international prices; and their cost have been duplicated during the last years. Fuel base has increased its cost in the last years also, but unaffected by petroleum prices variations because there isn t a direct correlation between fuel base and petroleum; besides, its historical behavior has become more stable. Additionally, the continent s biggest fuel base reserves are located in countries as the United States, Canada, Mexico and Colombia, and their logistic for imports is much more flexible than bunker s. With the introduction of fuel base plants in the Generation Plan, 7.5 million of bunker barrels per year would not be imported, which represents annual savings of approximately 650 US$ million to the country, reflecting in its petroleum invoice. To follow the same energetic matrix, for which bunker fuel is predominant, more CO2 tons would be emitted, than following with the Indicative Plan of the Generation System. 46 Indicative Expansion Plan of the Generation System

55 Wholesale Market Administrator, Statistical Report 2007, Bank of Guatemala, Economic Statistics, gob.gt Energy Information Administration (EIA), AEO2008 National Energy Modeling System, Guatemala s National Institute of Statistics. Statistics, International Atomic Energy Agency, Expansion Planning for Electrical Generation Systems, International Atomic Energy Agency, Nuclear Power and Sustainable Development, April International Atomic Energy Agency, Projected Costs of Generation Electricity, International Energy Agency, Statistics, International Energy Agency, World Energy Outlook Royal Academy of Engineering, Cost of Generation Electricity, March Indicative Expansion Plan of the Generation System

56 ACRONYMS WMA AMM* CNEE* EIA ETCEE* IAEA INDE* RPI MEM* OLADE* GDP SDDP TRELEC* Wholesale Market Administrator Administrador del Mercado Mayorista Comisión Nacional de Energía Eléctrica (National Commission of Electric Power) Energy Information Administration Empresa de Transporte y Control de Energía Eléctrica International Atomic Energy Agency Instituto Nacional de Energía Eléctrica National Institute of Electric Power Retail price index Ministerio de Energía y Minas Ministry of Energy and Mines Organización Latinoamericana de Energía Latin American Organization of Power Gross Domestic Product Stochastic Dual Dynamic Programming Transportista Eléctrica Centroamericana *By its initials in Spanish MEASURE UNITS BTU British Thermal Unit. CO2 Carbon Dioxide. GWh Giga watt/ hour Kg Kilogram. kv Kilo volt Cubic meter. MBTU Millón de BTU million. MVA Mega volt-amp. MW Mega watt. MWh Mega watt/ hour. tco2 CO2 metric ton. TJ Tera joule. US$ USA dollar. 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, Indicative Expansion Plan of the Generation System

57

58 Expansion Plan of the Transmission System

59

60 Ministry of Energy and Mines Minister Carlos Iván Meany Valerio Vice-Minister of the Energy Area Romeo Rodríguez Menéndez Vice-Minister of Sustainable Development Federico Franco Cordón Vice-Minister of Energy and Mines Alfredo Pokus Yaquián National Commission of Electric Power President Carlos Eduardo Colom Bickford Director Enrique Möller Hernández Director César Augusto Fernández Fernández General Manager Sergio Oswaldo Velásquez Moreno Strategic Projects Division Chief of the Strategic Projects Division (Coordinator) José Rafael Argueta Monterroso Chief of the Projects Planning Deparment Fernando Alfredo Moscoso Lira Work Team Edwin Roberto Castro Hurtarte Gustavo Adolfo Ruano Martínez Juan Arnoldo Arroyo Choc Juan Carlos Morataya Ramos Oscar Enrique Arriaga López Advisor Rodolfo Francisco Santizo Ruiz Expansion Plan of the Transmission System

61 EXECUTIVE SUMMARY 1 INTRODUCTION 3 GOALS 4 BASIC INFORMATION 5 Legal Basis 5 Status of the National Electric Market 5 Generating Expansion Projects International Interconnections 10 Current interconnections 10 Interconnection with Mexico 10 SIEPAC Project 10 EXPANSION PLAN OF THE TRANSMISSION SYSTEM Analysis of the Results 11 Base case 13 Current status of the Transmission network & works in construction 14 Metropacific Collector Loop 17 Works comprising the Metropacific Collector Loop 17 Transformers Replacement 19 Metropacific Collector Loop Geographic Map 20 Transmission losses decrease 21 Power Transmission Maximum Capacity of the Pacific zone, the Metropolitan zone 21 Thermal generation decrease based on petroleoum by-products 21 Hydraulic Collector Loop 23 Works comprising the Hydraulic Collector loop 23 Geographic map of the Hydraulic Collector Loop 24 Transmission losses decrease 25 Power maximum transference 25 Atlantic Collector Loop 26 Works comprising the Atlantic Collector Loop 26 Geographic map of the Atlantic Collector Loop 27 Eastern Collector Loop 28 Works comprising the Eastern Collector Loop 28 Geographic map of the Eastern Collector Loop 29 Western Collector Loop 30 Works comprising the Western Collector Loop 30 Transmission losses decrease 31 Geographic map of the Western Collector Loop 32 Relevant works as development policy 33 Expansion Plan of the Transmission System

62 Chixoy II Line El Rancho 230kV 33 Complete analysis of the Expansion Plan of the Transmission System Costs savings in thermal operations 36 Losses savings in energy transmission 36 Marginal cost of the INS s demand 37 Nodal losses factors 38 Probable deficit, Base Case against Expansion Plan of the whole Transmission System 38 Total Cost of the Expansion Plan of the Transmission System Reactive power compensation 39 Reinforcements to the 69kV network 39 CONCLUSIONS 42 ANNEX A. REFERENCES 44 ANEXO B. 45 ACRONYMS 45 MEASURING UNITS 46 MULTIPLES 46 Expansion Plan of the Transmission System

63 Problems in the Transmission network of the Expansion Plan of the Transmission System, due to the increased demand and lack of investment during previous years, have been identified. Recent changes in law regulations have allowed the National Commission of Electric Power to execute the Expansion Plan of the Transmission System The execution of the Expansion Plan of the Transmission System, required the following tasks: Revision of the data base used in electric planning, studies on demand allowing short, medium and long term projections; the expansion of the Indicative Plan of the Generating System, and the preparedness of the transmission basic scheme, which was created based on the identification of electricity network current problems and immediate future expectations. In addition, electricity studies were performed allowing the identification of critical points in Guatemala s transmission system in the years 2008, 2012 and 2015, and the recommended reinforcements to transmission lines and equipment in substations, necessary to fulfill quality, safety and performance criteria of RMER (by its initials in Spanish) and those proposed by CNEE; Technical Access and Use Standards of transmission Capacity (NTAUCT, by its initials in Spanish), and the Study Standards to Access the Transmission System (NEAST, by its initials in Spanish). because it needs to build new lines and substations. To attenuate severe failures effects, low investment reinforcements are proposed to come promptly into practice to short term execution. A double bar scheme provided with linking circuit switch among bars, and a failure breaker protection is suggested as a reinforcement at Escuintla 2, Escuintla 1, GuateSur and GuateNorte substations currently operating under a simple bar scheme. The posed improvements intend to reduce the possibility of bars going out, which would represent a risk for collapse of the Interconnected National System (INS). These improvements do not require to replace or to add high tension equipment, but only to add protections and modifications to control systems. In general, at 230kV substations the operation philosophy of double bar scheme needs more analysis and information about protections and equipment current status. The Expansion Plan of the Transmission System is focused in the formation of collector loops and netting networks to meet the operation safety standard (N-1), which means that at the moment of losing a network element, this will be in capacity of continuing its normal performance. Currently, the INS is formed by radial networks, which makes it very vulnerable facing the loss of one of its elements as it was observed. Currently Guatemala s transmission system does not comply with safety, quality and operation criteria, Expansion Plan of the Transmission System

64 To assess the cost-benefit of the implementation of a netting system, the methodology consisted in determining the advantages of the integration of the transmission system in collector loops in comparison with a reference case, which considers the system s growth in a radial form named Base Case to connect new generating projects only, and to establish the following parameters: petroleum by-products. Power transmission maximum capacities from each netting or collector loop section to the remaining INS. The following table enumerates in short, the Works of the Expansion Plan of the Transmission System and in the collector loops division. System operations cost decrease, which takes into account the composition of the generation for each case. Losses decrease in transmission. Thermal operation cost decrease with 1 Approximate in US$ million 2 Estimated distances In addition to the posed works in each collector loop, necessary reinforcements in the 69kV networks were evident. Coordination with transmission companies is suggested to specify in detail the expansions of 69kV networks in order to analyze the topology and physical conditions for the optimization of expansion investments due to load supply. standardization of transformation groups capacity at medium term is necessary to reach scale economies in equipment purchases, as well as to bring modulation to substations allowing transformers in stock to attend contingencies or emergencies in a faster way. Transformation park operating conditions to high tension level were also analyzed taking into account the growth of the demand and the works included in this Plan. As a result of the stable condition study, the 2 Expansion Plan of the Transmission System

65 The Expansion Plan of the Transmission System was executed by the National Commission of Electric Power to satisfy the Interconnected National System s urgent needs in relation to electric power transmission, as stipulated in articles 26 and 29 of Government Agreement number dated the twenty-first of March of two thousand and seven, which reforms the Regulation of the Electricity General Law. The Indicative Expansion Plan of the Generating System prepared by the Commission is the base for the Expansion Plan of the Transmission System development, because it takes into account the location of possible power plants electric centrals in such way for the Transmission system to be in capacity to evacuate such generation, and thus to bring electric power service to load centers at the established quality and safety standards. Acquisition of specialized computing models by CNEE to analyze power electric systems. These tools allowed the stable condition analysis determining power maximum transfers among the INS s netting sections to load centers. SDDP software was used to evaluate the operations costs decrease, transmission losses decrease, thermal operation decrease with petroleum by-products, and nodal losses factors. ArcGIS software was used to represent projects graphically considering their location in UTM (Universal Transverse Mercator) Coordinates. Preparation of the final report including the achieved results. The Commission developed several activities to prepare the Expansion Plan of the Transmission System, as follows: Hiring of consultant experts on electric studies to carry out an assessment of the INS s safety operations. As a result of this study, reinforcements to short, medium, and long term in transmission system were suggested. Expansion Plan of the Transmission System

66 Fulfillment of outlines, actions and strategies established in the Electric Policy approved by the Ministry of Energy and Mines. Definition of the expansions to the Interconnected National System, to be in capacity to evacuate the planned generation from production centers to load centers, necessary to cover the increasing demand of Guatemala s electric power by the optimization of the necessary cost of investment. Determination of the expansions to the Interconnected National System to increase confidence and to improve quality of supply, minimizing the frequency and duration of failures, and adapting the current radial topology network into a netting topology. Promotion of investments for new generation power plants based on renewable resources located far away from the biggest loading centers by providing them with energy transmission means through the works proposed in the Expansion Plan of the Transmission System. Encouragement for a change in the energy matrix as determined in the Expansion Plan of Generation, extending the Interconnected National System in accordance with the Expansion Plan of the Transmission System, thus to promote the installation of renewable resources projects to minimize the impact to the environment. 4 Expansion Plan of the Transmission System

67 4.1. Legal Basis Government Agreement number dated the twenty-first of March of two thousand and seven, reforming the Regulation of the General Law of Electricity regarding the Expansion Plan of the Transmission System stipulating as follows: TEMPORARY STIPULATIONS Article 26 Expansion Plan of the Transmission System. Until the creation of a specialized Technical Body by the Ministry of Energy and Mines, the Expansion Plan of the Transmission System will be prepared and executed by the National Commission of Electric Power Status of the national electric market At the end of the 80 s and early in the 90 s, the electric Sub-sector conditions, in a sustained growth of the demand, but a standstill in the offer, with lack of financing resources for the necessary investments, and so with the sector s institutions severe damaged in their administrative structure, came to the conclusion to admit that the model of the state s exclusive negotiator was exhausted. In a crisis context, provoked by electric supply rationings, the first contracts for purchases of power from private companies became real, and therefore their generating installations would be constructed during the following years. Without modifications to the sub-sector s legal structure, those facts pointed out the beginning of private participation in investments. The development policy of the Government of the Republic guided the electric sector toward a mixed system with the private sector participation, which stipulates that the Government would not undertake new generation investments, and from that moment the energy offer would grow through private sector investments. Nevertheless, the State through the National Institute of Electrification (INDE, by its initials in Spanish) kept the property and the administration of the main hydroelectric centrals (Chixoy, Aguacapa, Jurún Marinalá, Esclavos and others) and the High Voltage Transmission networks (230 KV, 138 KV and 69 KV). With the participation of the different private and government sectors, a new regulating framework of the sub-sector was approved as follows: In 1994, INDE s new Law oriented to limit monopolist decisions of the State and to make easy private participation in electric sub-sector businesses. In November 1996, the Electricity General Law, by creating the following sector s entities: CNEE and the WMA (Wholesale Market Administrator). CNEE is in charge of regulatory duties and the WMA (Wholesale Market Administrator) is in charge of operation duties, both technical and commercial. Expansion Plan of the Transmission System

68 The government allots national budget funds previously destined to the electric sub-sector, to basic infrastructure constructions (roads, health, and education) and reinforcements to rural electrification programs, All these measures created a reliable atmosphere increasing private participation in a growth mixed model, thus consolidating the opening of all subsector s activities. The market has started to show economic efficiency results. The institutionalization is becoming consolidated, and the legislation is in application; the public sector plays a subsidiary role, and investments have been important, particularly in electricity generation and distribution. Investors have allowed variables to grow, which means that from one electric system in crisis, one electric system in open development has been achieved. As the new juridical framework application has been strengthened, private participation has increased in generation and commercialization also, with higher levels of competence in the market. Investors are inclined to take more risks progressively producing electricity for the market, although it is important to mention that advances in electric power transmission and transformation investments are very low. Table 1. Comparative Information of the growth of the Electric Sub-sector Sources: Statistical Report of the Ministry of Energy and Mines, CNEE and WMA (AMM by its initials in Spanish). 6 Expansion Plan of the Transmission System

69 However, from the year 2003, investments in generation have not been sufficient to guarantee the coverage of the demand to long term or to change a high prices structure derived from the high dependency from petroleum by-products. In electric power transmission the situation is more dramatic, only PER (by its initials in Spanish) of INDE and international connections have made important investments in the transmission system. The number of necessary and non-financed projects is large and the electric system began to show weak signals requiring urgent measures to allow the construction of a new transmission infrastructure. This is the reason for the modification of law regulations to be oriented to the execution of a-many years planning process, and to institutional decisions to solve the problem of lack of investments in transmission and transformation. The National electric sub-sector is structured as follows: MINISTRY OF ENERGY AND MINES MEM : It is the body of the State, in charge of the formulation and coordination of policies, State plans, electric subsector related code programs, and the application and fulfillment of the Electricity General Law and its regulation. Likewise, it is responsible of all juridical regime issues applicable to energy and hydrocarbons production, distribution and commercialization, and to mining resources exploitation as well. NATIONAL COMMISSION OF ELECTRIC POWER CNEE (its initials in Spanish): It is the Technical Body of the Ministry, in charge of the fulfillment of the General Law of Electricity, as the regulating entity creating favorable conditions pursuant to the law, for electric power generation, transmission, distribution and commercialization activities developed by any individual or juridical person, strengthening these activities and issuing technical standards, fair prices, disciplinary measures and the whole action framework allowing entrepreneurs and users, safety conditions and clear action regulations in the Electric Sub-sector. WHOLESALE MARKET ADMINISTRATOR WMA (AMM BY ITS INITIALS IN SPANISH): It is the private, nonprofit entity, coordinating transactions among the Electricity Wholesale Market participants guaranteeing the competence in a free market with clear rules, encouraging investments in the electric system, and watching over quality in maintenance of Guatemala s electric power service supply. WHOLESALE MARKET PARTICIPANTS: They are a group of agents of the Wholesale Market (Generators, Carriers, Distributors and Traders), in addition to the group of companies, which are not in conditions to become participants, but carry out economic transactions in the wholesale market, with exception of the users of the final distribution service who are subject to prices regulation. Guatemalan electric sector regulating framework is based on a competitive market model to a generation and commercialization level, in which free access and the existing price system, reflecting offer and demand free balances were privileged, because these segments allow effective conditions for competence. In those segments in which the presence of scale economies allow the existence of natural monopolies, prices are fixed by the regulating entity on efficient economic costs basis. Expansion Plan of the Transmission System

70 Graphic 1. Electric Sub-sector structure Table 2. INS important indicators during the year 2007 SOURCE: WMA, Statistical Report Expansion Plan of the Transmission System

71 Graphic 2. Solid Offer year % 37 % 6.71 % 6.51 % 5.94 % % % Sugar Mills (Bunker) Gas Turbine (Diesel) Motors (Bunker) Geothermic Hydro Sugar Mills (Biomass) Steam (Carbón) SOURCE: Indicative Expansion Plan of the Generating System , CNEE Generating Expansion Projects In accordance with the Indicative Expansion Plan of the Generating System prepared by the National Commission of Electric Power and following the start-up schedule of different electric centrals, the year 2022 anticipates the start up of approximately 2700MW of new generation under medium growth demand simulation. The following table shows the amount of each type of electric centrals exceeding the hydraulic centrals installed capacity. Thermal plants will be installed in the Pacific and Atlantic regions mainly, while hydraulic plants will be installed north side the country, particularly in the Departments of Huehuetenango, Quiché, Alta Verapaz and Baja Verapaz. Table 3. Planned Electric Centrals SOURCE: Indicative Expansion Plan of the Generating System , CNEE. Expansion Plan of the Transmission System

72 4.4. International Interconnections Current Interconnections Table 4. Longitudes of line sections corresponding to each country In 1983 the interconnection line between Guatemala and El Salvador came into operations establishing a commercial relationship with this country up to the present. At this moment international interconnections are becoming more relevant in the national electric sector field. There are two important projects; one is SIEPAC, which anticipates electric interconnection with countries of the Isthmus and the interconnection with Mexico Interconnection with Mexico This project includes the construction of one double circuit transmission line, two drivers per phase caliber 1113 MCM ACSR in 400Kv, laying on latticework towers between the substation Tapachula Potencia and Los Brillantes in Retalhuleu. The interconnection line is 103km length approximately, from which 71km are located within the territory of the Republic of Guatemala. Transformation capacity at Los Brillantes is 225MVA; the planned and initial transference capacity between Mexico and Guatemala is 120MW that could reach 200MW in a short term. This interconnection is programmed to come into operations the first quarter of SOURCE: EPR Website: SIEPAC Project has two main purposes: The support of MER s (by its initials in Spanish) progressive formation and consolidation through the creation and establishment of the appropriate legal, institutional and technical mechanisms in order to allow private sector participation in the development of electric generation expansions. The establishment of the electric interconnection infrastructure (transmission Lines, compensation equipment and substations) allowing electric power exchanges among MER s participants SIEPAC Project SIEPAC infrastructure consists in the execution of the First System of Regional Electric Transmission, which will reinforce transmission capacity among Central American countries. The project includes the construction of one electric transmission line that will operate in one 230kV circuit, although the design considers the possibility of a second circuit interconnecting the electric systems of the five countries of the Isthmus. 10 Expansion Plan of the Transmission System

73 5.1. Analysis of Results As stipulated in the Indicative Expansion Plan of the Generating System, different new projects are programmed to come into operations in order to supply the increasing demand. This requires the construction of economic reinforcements in electric transmission for the fulfillment of the goals established in this plan. The Strategic Division of the National Commission of Electric Power identified critical points in the INS for the years of the study, setting up expansion and development reinforcements of transmission lines new projects, substations and equipment necessary to fulfill RMER, NTAUCT and NEAST s quality, safety and operation criteria prepared by CNEE, as stipulated in the national and regional standards. Electric studies in the INS were performed for dry and wet seasons during the period of the study at maximum, medium and minimum demand. The analyses performed are as follows: Expansion Plan of the Transmission System

74 Load flow study in normal operation conditions. Load flow study in simple contingence conditions (lost of one element from the Transmission system only) Load flow in multiple contingence conditions (lost of bars in substations, the lost of double circuit lines) Voltage stability study Temporary stability study Short circuit study for a maximum demand simulation Decrease of thermal operation costs with petroleum by-products. Power Transmission Maximum Capacity from each Collector Loop to the remaining INS. The Expansion Plan of the Transmission System develops the transmission network with a collector loop or netting topology in order to fulfill the operation safety standard N 1, which means that it will be able to continue operating in normal conditions in case of losing one network element. At the present, the INS presents a radial topology, which makes it vulnerable to face the loss of one of its elements. The methodology for the cost-benefit assessment of the implementation of a netting system, consisted in the determination of the advantages of the integration of a transmission system with netting topology against the case of reference called Base Case, which considers the growth of the system in a radial form only to connect new generation projects, and after this the parameters were compared between both cases as follows: Decrease of the system s operation cost considering each case generation composition (Collector Loop network against Base Case). Decrease of losses in transmission 12 Expansion Plan of the Transmission System

75 Base Case This simulation considers INS s growth in a radial form and its use to connect new generation and demand projects only. The Base Case s oneline diagram is as follows: Graphic 3. Base Case Oneline Diagram Transformer Current Line Current Generation Foreseen Line One Circuit San Juan Ixcoy Uspantán Chixoy Programmed Generation Foreseen Line Double Circuit Load Covadonga Santa Eulalia Chixoy 2 Tac Tic El Estor Panaluya Río Lindo Honduras Huehue Guate Norte Guate Este La Vega Moyuta Zacapa Ahuachapán El Salvador Pologua Guate Sur Chiquimulilla Chiquimula La Esperanza Sololá Las Cruces Jalpatagua Aguacapa El Progreso Ipala Río Grande México Escuintla Escuintla 1 San Joaquín Legend Los Brillantes Siquinalá Escuintla kv kv kv kv Expansion Plan of the Transmission System

76 5.2 Current status of the Transmission Network and Works in Construction Guatemala 230kV and 138kV Transmission System Expansion Plan of the Transmission System

77 In 2008, Guatemala s transmission system does not comply with safety, quality and performance standards by the absence of new lines and substations that have not been constructed. To reduce severe failure effects, low investment reinforcements are proposed capable to become immediately into practice to short term execution. Currently, there are projects in construction that will reinforce the transmission system to short term. (1) Approximate Cost in US$ million The following works are currently in construction or covered with the necessary funds to the end of their construction. Some of the most important works are SIEPAC Project, 230kV Line Aguacapa-La Vega; some reconversions from 69 kv to 138kV, and the 400kV Guatemala-Mexico Interconnection. status. This reinforcement was identified as a priority, both for safety operations and the possibility of increasing generation. In 230kV substations, the implementation of the philosophy of double bar operation scheme with linking switch, bar differential protection, and breaker failure protection, need more analysis and information about schemes protection and equipment current Expansion Plan of the Transmission System

78 Table 6. Transmission Network Projects in construction (1) Approximate in US$ million 16 Expansion Plan of the Transmission System

79 5.3. Metropacific Collector Loop The Pacific and central region includes expansion works due to the installation of thermal generation mainly, and to the increased demand also. Quetzal Port is located within this region as one strategic point for fuel supply; hence the construction of reinforcements in carriers and substations is very important for the evacuation of new generation. Metropacific Collector Loop s main purpose is to supply the largest loading center of the country located in the Department of Guatemala guaranteeing electric power supply Works comprising the Metropacific Collector Loop Table 7. Metropacific Works Expansion Plan of the Transmission System

80 18 Expansion Plan of the Transmission System

81 Replacement of Transformers The analyses performed included the evaluation of the load s percentage of the INS s most important transformers, taking as firsthand data a high demand simulation both for dry and wet seasons for the year The following table shows transformers loads for dry and wet seasons of the year 2015, if no expansions are made in transmission capacity. Therefore, these expansions must be executed immediately for them to become the appropriate capacity for that year. There is a high probability that those transformers in substations Guate-Norte, Guate-Este, Guate-Sur and La Esperanza, may suffer overloads in the near future, which would impact the energy supply. Table 8. Urgent INS s Transformation Expansion Expansion Plan of the Transmission System

82 Geographic map of the Metropacific Collector Loop Guatemala Expansion Plan of the Transmission System Metropacific Collector Loop Expansion Plan of the Transmission System

83 Decrease of transmission losses The decrease of transmission losses by the implementation of works comprising the Metropacific Collector Loop during the period is 586.6GWh. This decrease contributes with savings from electric power generation from those losses also. Graphic 5. Decrease of transmission losses, base case against the Metropacific Collector Loop operation safety standard not any transmission line shall exceed 80% of its thermal capacity. Power transference maximum capacity between the pacific zone and the metropolitan zone, as a result of the study about the implementation of the Metropacific Collector Loop works, is 1500MW. This capacity includes current installed capacity and in addition the installation capacity of Pacific zone s new projects Decrease of thermal generation based on petroleum by-products When the Metropacific Collector Loop increases the transference capacity between the pacific and the metropolitan zones, it allows the increase of the thermal generation capacity of base fuel in accordance with the Indicative Expansion Plan of the Generating System , and therefore, the possibility to replace petroleum by-products generation, resulting from the decrease of the INS s energy production operating costs. The following graphic shows the decrease of electric power production based on petroleum by-products in 2,543.7 GWh Maximum capacity of power transmission of the Pacific Zone, the Metropolitan Zone. The maximum transference of power from the pacific zone was calculated for the maximum demand simulation during dry season, taking into consideration in the study all works of the Expansion Plan of the Transmission System. The substations comprising the Pacific zone are: Escuintla I, Escuintla 2, Palín, Pacífico, Aguacapa and San Joaquín, and the transmission lines connecting the remaining system: Palím - Las Cruces 230kV, Aguacapa La Vega 2 230kV, Escuintla GuateSur 230kV, Escuintla Palín 138kV and Escuintla Jurún Marinalá 138kV. As an Expansion Plan of the Transmission System

84 Graphic 6. Decrease of electric power production based on petroleum by-products during the period The following graphic shows the increase in generation per base fuel in 1,337 GWh for the period Graphic 7. Increase of the electric power generation through base fuel Expansion Plan of the Transmission System

85 5.4. Hydraulic Collector Loop The Hydraulic Collector Loop is located in the Departments of Huehuetenango, Alta Verapaz, Baja Verapaz and Quiché mainly, and its purpose is to bring near hydraulic potential of electric power generation located in that region of the country, to consumption centers. encourage investments in the area, guaranteeing competence and prices stabilization of electric power production by the use of Guatemala s renewable resources replacing the use of fossil fuels imported to the country. Currently, there are different hydroelectric projects with large potential to be executed to medium term at the implementation of the Hydraulic Collector Loop works. The Hydraulic Collector Loop s works will Works comprising the Hydraulic Collector Loop Table 9. Works of the Hydraulic Collector Loop Expansion Plan of the Transmission System

86 Mapa geográfico del anillo Hidráulico. Guatemala Expansion Plan of the Transmission System Hydraulic Collector Loop Expansion Plan of the Transmission System

87 Decrease in transmission losses Decrease in transmission losses is 352 GWh by the implementation of works comprising the Hydraulic Collector Loop during the period This decrease contributes with savings also, due to the decrease in power electric generation based on petroleum by-products. Graphic 8. Decrease in transmission losses, base case against Hydraulic Collector Loop Power Maximum Transference Power maximum transference to the remaining INS as a result of the implementation of the Hydraulic Collector Loop works is 1,572 MW at the end of their construction, which encourages and guarantees transmission capacity for new hydroelectric centrals installation and electric power prices stabilization by the use of the own resource. Graphic 9. Power maximum transference of the Hydraulic Collector Loop to the remaining INS Expansion Plan of the Transmission System

88 5.5. Atlantic Collector Loop The Atlantic Collector Loop takes into consideration those projects in construction, particularly SIEPAC Project. Due to the development plans of industrial, hydroelectric projects, and those projects proper of the ports in the Atlantic, it is important to be in capacity to supply such demand as to evacuate the generation, both thermal and hydraulic that might come into operations in the future. Currently, the Atlantic coast transmission capacity is restricted because it is executed with one 69kV radial line covering a very large distance; in consequence and in order to guarantee quality and supply of energy in the area, it is necessary to convene local forced generation based on petroleum by-products. With the construction of the Atlantic Collector Loop works, these restrictions will disappear by the increased transmission capacity, and hence will bring savings in the system s operation cost. Another important consequence from the lack of transmission capacity is the misuse of the locations of Atlantic coast ports, because fuel maritime transport to these ports may result cheaper than to Pacific ports, particularly because the transit through Panama Canal won t be necessary, and distances will be shorter from supplying points. Having fuel supply to lower prices and increased electric transmission capacity, bring the possibility of more efficient generation installation, and the opportunity for this area to become the development point for thermal generation. The increase of the Atlantic coast s transmission capacity brings the possibility to these ports to become industrialized and commercially developed by the availability of electric generation Works comprising the Atlantic Collector Loop Table 10. Atlantic Collector Loop Works, approximate cost in US$ million 26 Expansion Plan of the Transmission System

89 Geographic map of the Atlantic Collector Loop Guatemala Expansion Plan of the Transmission System Atlantic Collector Loop 2018 Expansion Plan of the Transmission System

90 5.6. Eastern Collector Loop The Eastern Collector Loop is formed by the reconversion section from Río Grande to Panaluya from 69kV to 138kV, and by the expansions in transformation in substations Panaluya (two transformers 138/69kV and 230/69kV respectively), and Jalpatagua (one transformer 230/138kV). Savings in losses would be GWh approximately, at the end of such installations. Graphic 10. Decrease in transmission losses, base case against Eastern Collector Loop Works comprising the Eastern Collector Loop Table 11. Works of the Eastern Collector Loop (1) Approximate in millions of US$ 28 Expansion Plan of the Transmission System

91 Geographic map of the Eastern Collector Loop Guatemala Expansion Plan of the Transmission System Eastern Collector Loop 2018 Expansion Plan of the Transmission System

92 5.7. Western Collector Loop The Western Collector Loop is comprised by the transmission line project and the associated substations, Esperanza Sololá Las Cruces GuateSur 230kV; and by the expansion in transformation in the substation Cocales (one transformer 230/69kV), Magdalena (one transformer 230/69kV). The most important line of this Collector Loop is the 230kV Esperanza Sololá Las Cruces GuateSur, because it increases the transmission capacity from the western area, implying the availability of a larger capacity of energy imported from the Guatemala México interconnection, it also contributes to the evacuation of energy coming from the Hydraulic Collector Loop. Therefore, this line represents a larger availability of energy guaranteeing the supply in the central area as the one with the biggest load. The purpose of this analysis is the comparison of the INS s operation with such transmission line Works comprising the Western Collector Loop Table 12. Works of the Western Collector Loop (1) Approximate in US$ million 30 Expansion Plan of the Transmission System

93 Decrease in transmission losses Medium losses savings by the implementation of the Western Collector Loop is GWh during the period Graphic 11. Decrease of transmission losses, base case against the Western Collector Loop Savings of the System s thermal operation are also significant in the amount of US$34.4 million with the construction of La Esperanza Sololá Las Cruces GuateSur Line. Graphic 12. Savings in thermal operation cost Expansion Plan of the Transmission System

94 Geographic map of the Western Collector Loop Guatemala Expansion Plan of the Transmission System Western Collector Loop Expansion Plan of the Transmission System

95 5.8. Relevant works as development policy Graphic 14. Savings in thermal operation cost Chixoy II El Rancho 230kV Line Chixoy II El Rancho line is part both of the Hydraulic Collector Loop and the Atlantic Collector Loop. The most important effect from the construction of such work is its contribution with additional capacity to evaluate the generation coming from the Hydraulic Collector Loop, increasing the capacity to evacuate the energy from the Atlantic Collector Loop as well. This allows the advantage of the hydric potential of the country s north zone, with the effective decrease in the System s operation cost. The decrease in energy losses coming from the start-up operations of this transmission line is GWh. Graphic 13. Decrease in energy transmission losses Complete analysis of the Expansion Plan of the Transmission System This section offers a complete analysis of the Expansion Plan of the Transmission System in order to show medium and long term benefits, the results achieved in connection with the system s operation cost savings, the decrease in transmission losses, and the decrease in the demand s marginal cost. It also shows the effect of the implementation of the plan on nodal losses factors of some important nodes, in order to inform potential investors about the benefits that may be obtained from their connections to the INS. It s evident that the start-up of the transmission line Chixoy II El Rancho, reduces the System s thermal operation in million dollars as it is showed in the following graphic. Expansion Plan of the Transmission System

96 Graphic 15. Expansion Plan of the Transmission System Guatemala Expansion Plan of the Transmission System Expansion Plan of the Transmission System