Galetovic A., Munoz C. (2013).

Wind, Coal and the Cost of Environmental Externalities. Energy Policy, Volume 62, pp. 1385-1391.




We compare the cost of generating electricity with coal and wind in Chile. On average, we estimate that the levelized cost of coal, including externalities, is $84/MWh. It is efficient to abate air pollutants (SOx, NOx and PM2.5) but not CO2. With abatement the cost wrought by environmental externalities equals $23/MWh or 27% of total cost. Depending on the price of coal, the levelized cost may vary between $72 and $99/MWh. The levelized cost of wind is $144/MWh with capacity factor of 24%. This cost includes backup capacity to maintain LOLP, which equals $13/MWh or 9% of total cost. The levelized cost of wind varies between $107/MWh with capacity factors of 35% to $217/MWh with capacity factors of 15%. Wind is competitive only with capacity factors around 35% and very high coal prices. Alternatively, a carbon price of $73/tCO2 ($268/tc) would make coal and wind equally costly. But this value implies a marginal damage at the 98th percentile of the distribution deduced from Tol’s (2011) estimates, rather far from the mean, $16/tCO2 ($59/tc)