The World Bank Report No: ISR12076 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: 16 Status: ARCHIVED Archive Date: 30-Oct-2013 1 = $25M; Phase 2 = $45M) (P077717) Country: Mexico Approval FY: 2006 Product Line: Global Environment Project Region: LATIN AMERICA AND CARIBBEAN Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 29-Jun-2006 Original Closing Date 30-Jun-2014 Planned Mid Term Review Date 14-Jun-2013 Last Archived ISR Date 20-Jan-2013 Effectiveness Date 18-Apr-2007 Revised Closing Date 30-Jun-2014 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 Unsatisfactory Moderately Unsatisfactory Overall Risk Rating Low Implementation Status Overview The La Venta III wind power plant has been operating since October 2012 and the Strategic Environmental and Social Assessment is expected to be launched by the end of October 2013. Page 1 of 9 The World Bank Report No: ISR12076 Locations Country First Administrative Division Location Planned Actual Mexico Not Entered Juchitan de Zaragoza Public Disclosure Copy Results Global Environmental Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Subsequent POISE include plans for additional Text Value None Achieved POISE includes > 1 wind IPP procurement at higher reference price Date 18-Apr-2007 10-Nov-2009 30-Jun-2014 and/or lower incentive support level (subject to Comments POISE (2011-2025) includes availability of subsidy funds - GEF or other). 7 wind plants: Sureste I, II, III, IV (1,216MW) and Rumorosa I, II, III, IV (300MW). Established CFE system short-run marginal Text Value None Achieved System established cost-based Reference Price combined with Date 18-Apr-2007 14-May-2010 30-Jun-2014 agreed maximum U.S. 1.1 cent GEF tariff Comments 2 bids received and one support sufficient to attract bids, investment, construction and operation contract for 100MW awarded Barrier Removal results described below under Text Value Baseline values described in Ongoing Barriers removed PDO. PAD Date 18-Apr-2007 09-Oct-2013 30-Jun-2014 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. Public Disclosure Copy Recognition of RE capacity in planning still needs to be applied, however. Emisions reduced (tons/year), over baseline Text Value 0 247,000 tons per year of (CO2, NOx, SOx, and particulates). operation Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments 124,616 tCo2 over the October 2012-August 2013 period, lower than target due Page 2 of 9 The World Bank Report No: ISR12076 to: - lower production (see explanation above) - emission factor of Mexican Public Disclosure Copy grid (2012:0.4929 tCO2/MWh) is lower than factor used during preparation (0.667 tCO2/MWh) Increase total installed renewable capacity, Text Value 2 wind farms Achieved - 101MW 101 MW (expected over baseline (MW). operations) Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Comments Increase electricity supply to national system Text Value 7.36 Ongoing 367.9 GWh annually (257.5 from renewable energy sources, over baseline. min) (GWh/yr) Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 Comments Between Oct 2012 and August 2013, production amounted to 253 GWh, corresponding to a capacity factor of 32% on average, which is what was expected when launching the bidding process and in line with minimum targets. The 367.6GWh target was based on an estimated 42% capacity factor, based on measurements taken during preparation (2006) over a shorter period of time. The capacity factor of 32% reflects the average over almost a year of operation, including Public Disclosure Copy high-wind and low-wind seasons. Intermediate Results Indicators Page 3 of 9 The World Bank Report No: ISR12076 Indicator Name Core Unit of Measure Baseline Current End Target Institutional capacity sufficient to issue and Text Value None Achieved Assessed as adequate manage tenders for additional wind farms/other Date 18-Apr-2007 19-Dec-2012 30-Jun-2014 Public Disclosure Copy RE resources. Comments Capacity exists. Development of wind farms has been very strong over the past few years (1200MW installed under IPP or self supply schemes). Strengthening of SENER IPU business Text Value None UPI's business development development services addressing marketing, services judged adequate permitting issues, financing, facilitation, and Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 business advisory services to sponsors of Comments Sener has made a proposal renewable energy projects for a single stop shop window for RE project, which it is now adjusting according to Bank's comments. 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. However, RE capacity is not yet recognized in effect in planning studies (POISE 2011-2025). Public Disclosure Copy Strategic Environmental Assessment is Text Value None Strategic Environmental developed and accepted as basis permitting Assessment completed and scale-up of wind energy in Oaxaca region. disseminated Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 Comments 5 offers were received and NAFIN is expected to send by the end of October 2013 the request for NO to open the financial offers. Page 4 of 9 The World Bank Report No: ISR12076 Planning and dispatch model installed and Text Value None ongoing Installed and used used in CFE to incorporate intermittent Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 sources. Comments CFE implemented dispatch Public Disclosure Copy tools to incorporate 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. CFE will send their proposal to SENER by mid October. 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 but it is not being used. 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 Public Disclosure Copy since no subsidies are required anymore for wind power development. CFE purchase tariff proposed for Phase II Text Value None CFE purchase tariff proposed which reflects SRMC plus RE capacity value for Phase II which reflects and energy portfolio diversification value. SRMC plus RE capacity value and energy portfolio diversification value Date 18-Apr-2007 11-Oct-2013 30-Jun-2014 Page 5 of 9 The World Bank Report No: ISR12076 Comments There will be no phase II since no subsidies are required anymore for wind power development. Public Disclosure Copy Significant avian/bat mortality is avoided. Text Value None Ongoing. 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 (8 collisions took place in the fall2012- Spring monitoring report still pending) but bat monitoring has not been carried out yet, although it is a legal requirement. Funds disbursed to ejidos, indigenous Text Value None Achieved (need ongoing Funds disbursed to communities, and small landowners. monitoring) ejidatarios, indigenous communities, and small landowners as indicated in agreements. Date 18-Apr-2007 26-Sep-2013 30-Jun-2014 Comments Funds for 2012 were fully paid. Mechanism for payments to ejidos, indigenous Text Value None Achieved. 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 Public Disclosure Copy and requisite payments. Date 18-Apr-2007 08-Nov-2010 30-Jun-2014 Comments Mechanism for payments put into place and agreements signed. Co-financing provided by private entities and Text Value None Achieved. 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 Page 6 of 9 The World Bank Report No: ISR12076 Comments Iberdrola a private firm was awarded the contract Only those bids proposing development in sites Text Value None Achieved. Only those bids proposing Public Disclosure Copy identified as environmentally suitable for development in sites identified development are accepted as eligible. as environmentally suitable for development are accepted as eligible Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments Environmental authorization obtained by CFE for the site. If a different site were chosen, bidder would have been responsible for obtaining the authorization. IPP solicitation for at least 70 MW of wind Text Value None Achieved. IPP solicitation for at least 70 power. MW of wind power. Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments IPP wind contract for 100 MW awarded Number of qualified bids received from tender. Text Value None Partially achieved. At least three qualified bids received Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 Comments 2 technical bids and 1 financial bid CFE base solicitation allowing for locations Text Value None Achieved. 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. Public Disclosure Copy 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 The Manifestacion de Impacto Ambiental, which includes an environmental analysis of the area, was included in the bidding documents. The regional assessment will be part of the SEA. Page 7 of 9 The World Bank Report No: ISR12076 Operational Manual for the auctioning Text Value None N/A 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 Functioning mechanism for the auctioning of Text Value None Mechanism is in place and tariff subsidy support through competitive functioning bidding established, with incremental Date 18-Apr-2007 22-Jun-2009 30-Jun-2014 tariffsupport provided by GEF. Comments 1 contract awarded for 100 MW through competitive bidding. Tariff support to be provided once wind farm starts functioning. Data on Financial Performance (as of 08-May-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P077717 TF-56781 Effective 05-Oct-2006 05-Oct-2006 18-Apr-2007 30-Jun-2014 30-Jun-2014 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P077717 TF-56781 Effective USD 25.00 25.00 0.00 0.41 24.59 2.00 Disbursement Graph Public Disclosure Copy Page 8 of 9 The World Bank Report No: ISR12076 Public Disclosure Copy Key Decisions Regarding Implementation Disbursement mechanism for the tariff support should be operational by the end of October 2013, allowing disbursements to start under the project's main component. Restructuring History Level two Approved on 18-Jun-2013 Related Projects There are no related projects. Public Disclosure Copy Page 9 of 9