Spanish power utility Iberdrola has secured a contract from the Government of Mexico to develop the 850MW Noreste combined-cycle power plant.
Planned to be built in the municipality of Escobedo in Nuevo León state, the project is likely to require a $400m investment.
Following construction, Iberdrola will also own the facility and be responsible for its operation and maintenance.
Once commissioned, the combined-cycle power plant will have the capacity to meet energy demands of two million Mexican consumers.
Power output from the project will be sold to the Mexican Federal Electricity Commission (CFE) at fixed capacity charges under 25-year power purchase agreement.
Iberdrola is expected to start construction work for the project early next year and finish by July 2018.
The firm is also responsible for supplying plant infrastructure such as the power lines and transformer substation.
Noreste power plant will be equipped with gas turbines and a steam turbine manufactured by Japan-based Mitsubishi Hitachi Power Systems (MHPS), and Foster Wheeler-built boilers.
The Spanish firm has signed deal to set-up energy projects in Mexico in June this year, as a part of the framework of cooperation agreement signed in May 2014. The power projects will be developed in co-ordination with state-owned Federal Electricity Commission (CFE).
To date, Iberdrola has spent more than $1bn on power generation projects in Mexico and intends to spend a further $5bn over the next five years.
Image: A combined-cycle power plant located at La Laguna in Mexico. Photo: courtesy of Iberdrola, SA.