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)

Competitiveness of Thermal Power Plants The economic competitiveness of each thermal power plant in the economic dispatch is based on their variable cost per MWh generated and supplied to the grid. This factor can be obtained by adding the cost of fuel per MWh supplied to the grid and the variable operation and maintenance (O&M) costs. The cost of fuel per MWh supplied to the grid is in turn obtained by multiplying the net heat rate by the fuel cost per GJ. Table 3 presents the current fuel prices for the national electricity grid at the time of the analysis.

Table 3. Fuel Costs

Cost (USD/GJ)

Fuel

Natural Gas

3.74

Diesel

33.32 10.87

Fuel Oil

Coal (Domestic) Coal (Imported)

2.54 4.01

USD = U.S. dollars; MXP = Mexican pesos Sources: Prices of natural gas, diesel, and fuel oil: Secretaría de Energia (SENER), Prontuario Estadístico [Mexican Ministry of Energy. Statistical Compendium] June 2021. Price of domestic coal: Arturo Solís, “CFE gastará 2,000 millones de pesos en carbón para generar electricidad,” Forbes Mexico, July 14, 2020, https://www.forbes.com.mx/negocios-cfe-carbon- electricidad/. Price of imported coal: Diana Nava, “Glencore gana contrato por 520 mdd para venderle carbón a la CFE,” El Financiero, April 9, 2019, https://www.elfinanciero.com.mx/economia/glencore-gana-contrato-por-520- mdd-para-venderle-carbon-a-la-cfe/. Table 4 and Figure 1 show variable costs of CFE thermal power plants whose dispatch could be avoided through clean energy generation. Table 4. Variable Generation Cost Technology Fuel Fuel Cost (USD/MWh) O&M (USD/MWh) Variable Cost (USD/MWh)

(58%) (51%) (51%)

Natural Gas Natural Gas

26.49 30.13 259.20 43.90 123.45 29.12 46.03 108.02 46.56 400.59

3.40 3.40 3.40 3.50 3.50 3.60 3.60 8.30 4.80 4.80

29.89 33.53 262.60 47.40 126.95 32.72 49.63 116.32

Combined Cycle

Diesel

Natural Gas

Fuel Oil

Conventional Thermal (steam open cycle)

Coal (Domestic) Coal (Imported)

Internal Combustion

Fuel Oil

Natural Gas

51.36

Gas Turbine

Diesel 405.39 O&M variable cost: Centro Nacional de Control de Energía (CENACE), Informe de la Tecnología de Generación de Referencia [National Energy Control Center; Generation Technology Benchmark Report]; 2020, and Comisión Reguladora de Energía de Colombia, Costos de Tecnologías de Generación [Colombia Energy Regulatory Commission; Generation Technology Costs]; 2020.

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