Measuring the Incremental Costs of Global Environment Protection: The Case of Grid-Connected Wind Turbines in Morocco

An application is presented of the methodology used bythe Global Environment Facility (GEF) to measureincremental costs. Incremental cost estimates are usedby the GEF to determine its financial contribution toprojects that protect the global environment, such asinvestments in renewable energy. The importance ofadopting a system-wide view in certain types ofprojects (such as investments in grid-connected power)is illustrated using the case of wind power inMorocco. A narrow plant-by-plant comparison wouldneglect the adjustments in the system expansion planthat may be warranted when one type of plant (e.g., acoal fired thermal plant) is replaced by another (e.g.,a wind farm).