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)

daily cost of having to substitute this unit with a conventional, less efficient fuel oil–fired thermal plant, such as Tula or Manzanillo, is US$1 million/day.

680 MW x 24h/d x 0.85 x (116.3 − 36.3*0.35/0.41) USD/MWh = 1,011,000 USD/d

3) The six subcritical units fueled with high-sulfur fuel oil emit 950 tons/day of SO 2 into the air. Given the area’s humidity, these emissions turn into more than 1,200 tons/day of sulfuric acid— approximately the production of a medium-sized sulfuric acid manufacturing plant. This sulfuric acid will eventually become acid rain, which is liable to damage crops, forests and buildings and has a deleterious impact on human health. 4) Mexican fuel oil also contains high concentrations of vanadium, which transforms into vanadium pentoxide in the boiler burners and condenses on the walls of the heat recovery systems. The deposited vanadium pentoxide acts as a catalyzer and converts a small percentage of SO 2 into SO 3 (sulfur trioxide), which in turn reacts with the humidity contained in the combustion gases. As a result, 10 to 20 tons per day of sulfuric acid are produced within the units, corroding the metal surfaces of the heat recovery systems. La Paz, Baja California Sur Case Study

The two largest power plants (out of the five that CFE operates in the state of Baja California Sur) are located in the city of La Paz. Up to 2019, they comprised five internal combustion units (210 MW) and three vapor units (112.5 MW) that operate with fuel oil, plus three diesel-fired gas turbines (69 MW). During 2020 and 2021, CFE added six more gas turbines (187 MW), fueled by diesel, due to the lack of natural gas supply. In addition to these plants, La Paz has two privately owned solar power plants, Aura Solar I and

Aura Solar II (55 MW). Two more privately owned plants are currently under construction: a gas turbine plant (145 MW), expected to come online in 2021, at the same time as natural gas supplies are set to arrive, and a wind farm (50 MW). Because of the elevated temperatures and high humidity during the summer months, peak power demand within the grid can be triple the off-peak demand. To meet the highly variable demand registered at different times of the day and through the year, several combinations of units from the different power plants need to be brought on line at different times. As a result, whereas the average local marginal price in the real-time market (LMP) during 2020 was MXN$2.23/kWh (US$112/MWh) 2 . For nearly half the year, prices oscillated between MXN$1.00 and MXN$2.00/kWh (US$50–US$100 /MWh) 3 , and more than 30% of the year prices were above MXN$3.00/kWh (US$150/MWh); LMPs even surpassed MXN$5.00/kWh (US$250/MWh) during certain periods. The highest LMPs were registered during the summer months, when the diesel-fired gas turbines

2 For comparison, in 2020, the real-time market LMP for the National Interconnected Grid (Sistema Interconectado Nacional; SIN) was MXN$567/MWh, and MXN$419/MWh for the Baja California grid. 3 This calculation assumes an exchange rate of MXN$20/US$1, which was the rate at the end of 2020.

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