Clean Energy Cost-Savings: A Study of Mexico’s Federal Electricity Commission (CFE)

Clean Energy Cost-Savings: A Study of Mexico’s Federal Electricity Commission (CFE)

Figure 14. Estimated Value of Avoided SO2 Emissions

Equivalent Generation Costs To plan and define public policies, and to perform a cost-benefit analysis of potential measures to reduce harmful emissions, equivalent generation costs need to be calculated. This paper looks specifically at the variable equivalent generation costs, defined here as the variable generation cost for fossil-fuel power plants plus the cost of purchasing emissions allowances in an efficient market in order to offset the generated emissions. Based on the above definition, Figure 15 presents the equivalent variable generation costs for the types of fossil fuel-fired power plants presented in the previous sections, along with a comparison to the prices paid by CFE for the clean energy contracted through long-term auctions.

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