CFE - Hydropower Rehabilitation Program

Project Description: 

This summary covers an application made by Comisión Federal de Electricidad (CFE) related to proposed non-shareholder loans to be provided by lender(s) yet-to-be identified. 

MIGA is considering issuing guarantees covering non-shareholder loans of up to US$350 million. MIGA’s guarantees would be for up to an estimated US$650 million for a period of up to 15 years and 6 months against the risk of Non-Honoring of Sovereign Financial Obligations by a State-Owned Enterprise (NHFO-SOE). 

MIGA’s NHFO-SOE instruments will be used to support the rehabilitation and modernization of seven existing hydropower plants owned and operated by CFE (the Project). The upgrades will include, depending on the site, replacement of turbines, generators, transformers and ancillary systems which are expected to increase the hydroelectric energy generation capacity of the plants by 113 MW in total, producing approximately 1,426 GWh of additional electricity per year, as well as extend the assets’ useful life by several decades, improve reliability and reduce maintenance costs, with the overall effect of lowering the levelized costs of energy produced by the plants. 

While solar PV and wind play an increasingly important role in Mexico’s energy matrix and Nationally Determined Contribution (NDC) commitments, hydropower remains Mexico’s largest source of renewable energy. The country’s 12.6 GW of installed hydropower capacity, which is primarily owned and operated by the CFE, generated approximately 10.5% of the country's electricity in 2022. The Government of Mexico (GoM) has pledged to increase investment in hydroelectricity generation as part of efforts to reduce Mexico's carbon footprint, reduce the amount of gas imports, and maintain and increase renewable energy production in the country’s energy matrix. 

Environmental Categorization:

The Project is a category B under MIGA’s Policy on Environmental and Social Sustainability. Click here for the project’s Environmental and Social Review Summary. 

Development Impact:

The Project entails capital investments to upgrade seven existing hydropower plants owned and operated by CFE. By virtue of these major works, the Project is expected to significantly extend the useful life of the plants, thereby ensuring the continued generation of clean electricity, and adopt the latest available technologies to achieve efficiency gains, which, at the margin, add to the plants’ generation capacity.   

Given Mexico’s heavy reliance on fossil fuels for generation, the Project plays a key role in the execution of the country’s sustainable agenda. 

The Project is aligned with the WBG Country Partnership Framework 2020-2025 for Mexico, as enabling sustainable infrastructure and supporting the GoM in reaching its climate change goals.  

The Project is aligned with MIGA’s FY21-23 Strategic Business Outlook under its strategic direction of demonstrating leadership on the global issue of climate change.