Evaluation of Technical Efficiency of Thermal Power Units in Mexico : Data Envelopment Analysis and Stochastic Frontiers

This chapter discusses two methodologies generally used for the estimation of technical efficiency in the generation of electric power in Mexico for a set of thermoelectric power plants. Data envelopment analysis and stochastic frontier model are developed to estimate the technical efficiency of a set of thermoelectric power plants, highlighting the differences in the results, as well as the pros and cons of each methodology. The estimation of technical efficiency measures within the framework of the liberalization of the Mexican electricity market is relevant because the public supplier must form a portfolio of the most efficient plants to be able to compete in the market. For this, it is necessary to develop efficiency studies that support decision-making; the study focuses on thermoelectric power plants because they represent the greatest participation in the national generation and the highest cost of production. ©2018, Springer International Publishing.