Changes in the Generation Dispatch Criterion in Mexico

CHANGES IN THE GENERATION DISPATCH CRITERION IN MEXICO: A SUMMARY OF DIRECT IMPACTS

By comparing the simulation of the two scenarios with the no-reform scenario, the analysis produced the following specific results 1 : 1. A loss in the efficiency of the thermal fleet used to supply the basic service demand in a range between approximately 9 and 14% (see charts 1 & 2). This is the result of substituting efficient NGCC plants from IPPs with old conventional thermal plants using fuel oil to satisfy the basic service demand. 2. A significant cost overrun in energy sold to CFE Basic Supply, ranging from US$2,000/year to US$3,000/year; these substantial cost overruns are shown in the blue bars in charts 3 & 4 below for both the “high” and “low” scenarios. 3. An increase in energy costs per MWh for basic supply in an average range of 10.8 - 16.4% compared to the values registered in 2020; these increased energy costs are reflected by the orange lines in charts 1 & 2 for both the “high” and “low” scenarios. 4. An increase in CO 2 emissions that goes from 5.15% to 13.34% between 2022 and 2026 (in addition to a higher relative increase in other emissions like SO 2 , NO x and particles due to the increase in consumption of fuel oil). This is the result of both using a less efficient thermal plants fleet and fuel oil instead of natural gas.

1 Simulations were run by GME ( Mercados Energéticos ) using a SDDP tool.

INSTITUE OF THE AMERICAS | POLICY BRIEFING

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