Electricity generation portfolios in Mexico: Environmental, economic, and policy implications

The aim of this paper is to evaluate the environmental and economic impact of the Electricity Generation Portfolios (EGPs) projected by Mexico's Secretariat of Energy (SENER 2018) for the years 2023 to 2032. We use real data to calibrate the mean and standard deviation of the unit costs of energy generation and portfolio theory to obtain the efficient EGPs. We develop a methodology for the parametric construction of the efficient frontier of EGPs comprised of eight technologies. In the efficient portfolios, we find the dominant technology in electricity generation to be solar photovoltaics (SP), the share of which in the total ranges from 26.8% to 100%. The efficient EGPs might emit less than half as much CO2 2 as the projected EGPs. Their electricity generation cost is between 95.4% and 97.4% of that of the projected EGPs. Therefore, the projected EGPs for the years 2023-2032 are not efficient. This analysis supports the case for increasing the proportion of SP in Mexico's generation portfolio.