The cost of electricity generated by different sources is a calculation of the cost
of generating electricity
at the point of connection to a load or electricity grid. It includes the
initial capital, discount rate, as well as the costs
of continuous operation, fuel, and maintenance. This type of
calculation assists policy makers, researchers and others to guide discussions
and decision making.
Cost factors
Projected cost of
solar PV generation per kWh in Europe.
While calculating costs, several internal cost factors have
to be considered. (Note the use of "costs," which is not the actual
selling price, since this can be affected by a variety of factors such as
subsidies and taxes):
- Capital costs (including waste disposal and decommissioning costs for nuclear energy) - tend to be low for fossil fuel power stations; high for wind turbines, solar PV; very high for waste to energy, wave and tidal, solar thermal, and nuclear.
- Fuel costs - high for fossil fuel and biomass sources, low for nuclear, and zero for many renewables.
- Factors such as the costs of waste (and associated issues) and different insurance costs are not included in the following: Works power, own use or parasitic load - that is, the portion of generated power actually used to run the stations pumps and fans has to be allowed for.
To evaluate the total cost of production of electricity, the
streams of costs are converted to a net
present value using the time value of money. These costs are all
brought together using discounted cash flow.
Calculations
Levelized Energy Cost (LEC, also known as Levelized Cost of
Energy, abbreviated as LCOE) is the price at which electricity must be
generated from a specific source to break even over the lifetime of the
project. It is an economic assessment of the cost of the energy-generating
system including all the costs over its lifetime: initial investment,
operations and maintenance, cost of fuel, cost
of capital, and is very useful in calculating the costs of generation from
different sources.
Typically LECs are calculated over 20 to 40 year lifetimes,
and are given in the units of currency per kilowatt-hour,
for example AUD/kWh or EUR/kWh or per megawatt-hour,
for example AUD/MWh (as tabulated below). However, care should be taken in
comparing different LCOE studies and the sources of the information as the LCOE
for a given energy source is highly dependent on the assumptions, financing
terms and technological deployment analyzed.In particular, assumption of capacity
factor has significant impact on the calculation of LCOE. For example,
Solar PV may have a capacity factor as low as 10% depending on location. Thus,
a key requirement for the analysis is a clear statement of the applicability of
the analysis based on justified assumptions.
System boundaries
When comparing LECs for alternative systems, it is very
important to define the boundaries of the 'system' and the costs that are
included in it. For example, should transmissions lines and distribution
systems be included in the cost? Typically only the costs of connecting the
generating source into the transmission system is included as a cost of the
generator. But in some cases wholesale upgrade of the Grid is needed. Careful
thought has to be given to whether or not these costs should be included in the
cost of power.
Should R&D, tax, and environmental impact studies be
included? Should the costs of impacts on public health and environmental damage
be included? Should the costs of government subsidies be included in the
calculated LEC?
Discount rate
Another key issue is the decision about the value of the
discount rate 
. The value
that is chosen for can often
'weigh' the decision towards one option or another, so the basis for choosing
the discount must clearly be carefully evaluated. See internal rate of return. A UK government
study in 2011 concluded that the appropriate discount rate to analyse UK
government programs was not the actual cost
of capital, but 3.5%.
. The value
that is chosen for can often
'weigh' the decision towards one option or another, so the basis for choosing
the discount must clearly be carefully evaluated. See internal rate of return. A UK government
study in 2011 concluded that the appropriate discount rate to analyse UK
government programs was not the actual cost
of capital, but 3.5%.
Marginal cost of electricity
A more telling economic assessment might be the marginal
cost of electricity. This value would serve the purpose of comparing the
added cost of increasing electricity generation by one unit from different
sources of electricity generation (see Merit Order).
Avoided cost
The US Energy Information Administration has cautioned that
levelized costs of non-dispatchable sources such as wind or solar
should be compared to the avoided energy cost rather than the levelized cost of
dispatchable sources such as fossil fuels or geothermal. This is because
introduction of fluctuating power sources may or may not avoid capital and
maintenance costs of backup dispatchable sources.
Estimates
US Department of Energy estimates
The tables below list the estimated cost of electricity by
source for plants entering service in 2018. The tables are from a January 2014
report of the Energy Information Administration
(EIA) of the U.S. Department of Energy (DOE) called
"Levelized Cost of New Generation Resources in the Annual Energy Outlook
2014".
- Total System Levelized Cost (the rightmost column) gives the dollar cost per megawatt-hour that must be charged over time in order to pay for the total cost. These calculations reflect an adjustment to account for the high level of carbon dioxide produced by coal plants. From the EIA report:
"a 3-percentage point increase in the cost of capital
is added when evaluating investments in greenhouse gas (GHG) intensive
technologies like coal-fired power and coal-to-liquids (CTL) plants without carbon control and sequestration (CCS).
While the 3-percentage point adjustment is somewhat arbitrary, in levelized
cost terms its impact is similar to that of a $15 per metric ton of carbon
dioxide (CO2) emissions fee. ... As a result, the levelized capital costs of
coal-fired plants without CCS are higher than would otherwise be
expected."
No tax credits or incentives are incorporated in the tables.
From the EIA report (emphasis added):
"Levelized cost ... represents the per-kilowatthour
cost (in real dollars) of building and operating a generating plant over an
assumed financial life and duty cycle. Key inputs to calculating levelized
costs include overnight capital costs, fuel costs, fixed and variable
operations and maintenance (O&M) costs, financing costs, and an assumed
utilization rate for each plant type/. ... The availability of various
incentives, including state or federal tax credits, can also impact
the calculation of levelized cost. The values shown in the tables in this
discussion do not incorporate any such incentives.
All generating types are assumed to have the same 30-year
cost recovery period, regardless of the expected lifetime of the plant. From
the EIA report:
"The levelized cost shown for each utility-scale
generation technology in the tables in this discussion are calculated based on
a 30-year cost recovery period, using a real after tax weighted average cost of
capital (WACC) of 6.6 percent. I"
Incentives, tax credits, production mandates, etc. are
discussed in the overall comprehensive EIA report: "Annual Energy Outlook
2012".
Photovoltaics (solar PV) can be used both by
distributed residential or commercial users and utility scale power plants. The
costs shown are for utility scale photovoltaic power plants.
|
Estimated Levelized Cost of New Generation Resources,
2019
|
||||||
|
U.S. Average Levelized Cost for Plants Entering
Service in 2019
(2012 USD/MWh) |
||||||
|
Plant Type
|
Capacity
Factor (%) |
Levelized
Capital Cost |
Fixed
O&M |
Variable
O&M (including fuel) |
Transmission
Investment |
Total
System Levelized Cost |
|
Conventional Coal
|
85
|
60.0
|
4.2
|
30.3
|
1.2
|
95.6
|
|
Integrated Coal-Gassification Combined Cycle (IGCC
|
85
|
76.1
|
6.9
|
31.7
|
1.2
|
115.9
|
|
IGCC with CCS
|
85
|
97.8
|
9.8
|
38.6
|
1.2
|
147.4
|
|
Natural Gas Fired
|
||||||
|
NG: Conventional Combined Cycle
|
87
|
14.3
|
1.7
|
49.1
|
1.2
|
66.3
|
|
NG: Advanced Combined Cycle
|
87
|
15.7
|
2.0
|
45.5
|
1.2
|
64.4
|
|
NG: Advanced CC with CCS
|
87
|
30.3
|
4.2
|
55.6
|
1.2
|
91.3
|
|
NG: Conventional Combustion Turbine
|
30
|
40.2
|
2.8
|
82.0
|
3.4
|
128.4
|
|
NG: Advanced Combustion Turbine
|
30
|
27.3
|
2.7
|
70.3
|
3.4
|
103.8
|
|
Advanced Nuclear
|
90
|
71.4
|
11.8
|
11.8
|
1.1
|
96.1
|
|
Geothermal
|
92
|
34.2
|
12.2
|
0.0
|
1.4
|
47.9
|
|
Biomass
|
83
|
47.4
|
14.5
|
39.5
|
1.2
|
102.6
|
|
Wind1
|
35
|
64.1
|
13.0
|
0.0
|
3.2
|
80.3
|
|
Wind - Offshore1
|
37
|
175.4
|
22.8
|
0.0
|
5.8
|
204.1
|
|
Solar PV1,2
|
25
|
114.5
|
11.4
|
0.0
|
4.1
|
130.0
|
|
Solar Thermal1
|
20
|
195.0
|
42.1
|
0.0
|
6.0
|
243.1
|
|
Hydro1
|
53
|
72.0
|
4.1
|
6.4
|
2.0
|
84.5
|
1Non-dispatchable (Hydro is dispatchable within
a season, but nondispatchable overall-limited by site and season)
2Costs are expressed in terms of net AC power
available to the grid for the installed capacity
|
Regional Variation in Levelized Costs of New Generation
Resources, 2019
|
||||
|
Plant Type
|
Range for Total System Levelized Costs
(2010 USD/MWh) |
|||
|
Minimum
|
Average
|
Maximum
|
||
|
Conventional Coal
|
87.0
|
95.6
|
114.4
|
|
|
IGCC
|
106.4
|
112.2
|
131.5
|
|
|
IGCC with CCS
|
137.3
|
147.4
|
163.3
|
|
|
Natural Gas Fired
|
||||
|
Conventional Combined Cycle
|
61.1
|
66.3
|
75.8
|
|
|
Advanced Combined Cycle
|
59.6
|
64.4
|
73.6
|
|
|
Advanced CC with CCS
|
85.5
|
91.3
|
105.0
|
|
|
Conventional Combustion Turbine
|
106.0
|
128.4
|
149.4
|
|
|
Advanced Combustion Turbine
|
96.9
|
103.8
|
119.8
|
|
|
Advanced Nuclear
|
92.6
|
96.1
|
102.0
|
|
|
Geothermal
|
46.2
|
47.9
|
50.3
|
|
|
Biomass
|
92.3
|
102.6
|
122.9
|
|
|
Wind
|
71.3
|
80.3
|
90.3
|
|
|
Wind-Offshore
|
168.7
|
204.1
|
271.0
|
|
|
Solar PV
|
101.4
|
130.0
|
200.9
|
|
|
Solar Thermal
|
176.8
|
243.1
|
388.0
|
|
|
Hydro
|
61.6
|
84.5
|
137.7
|
|
- O&M = operation and maintenance.
- CC = combined cycle.
- CCS = carbon capture and sequestration.
- PV = photovoltaics.
- GHG = greenhouse gas.
OpenEI Database
OpenEI,
sponsored jointly by the US DOE and the National Renewable Energy
Laboratory, has compiled a historical cost-of-generation database[19]
covering a wide variety of generation sources. Because the data is open source
it may be subject to frequent revision.
|
OpenEI Transparent Cost Database
|
|||||||||||||||
|
Plant Type
|
Levelized Cost of
Energy (USD/MWh) |
Overnight
Capital Cost (1000xUSD/kW) |
Fixed
Operating Cost (USD/kW) |
Variable
Operating Cost (USD/MWh) |
Capacity
Factor (%) |
||||||||||
|
Max
|
Median
|
Min
|
Max
|
Median
|
Min
|
Max
|
Median
|
Min
|
Max
|
Median
|
Min
|
Max
|
Median
|
Min
|
|
|
Wind, onshore
|
120
|
60
|
20
|
2.60
|
1.57
|
1.13
|
60.00
|
10.95
|
10.95
|
23
|
6.45
|
5.02
|
50.4
|
38
|
18.4
|
|
Wind, offshore
|
200
|
100
|
70
|
8.00
|
3.05
|
2.16
|
180
|
14.28
|
14.28
|
40
|
21.18
|
13
|
54
|
43
|
27
|
|
Solar PV
|
590
|
280
|
150
|
9.50
|
5.10
|
2.50
|
110
|
32.03
|
6.44
|
0
|
0
|
0
|
28
|
21
|
15.48
|
|
Solar CSP
|
300
|
200
|
60
|
8.09
|
5.74
|
3.20
|
142
|
55.72
|
7.80
|
25.50
|
.10
|
.10
|
65
|
31.16
|
21.84
|
|
Geothermal Hydrothermal
|
140
|
60
|
40
|
5.94
|
2.82
|
1.63
|
229
|
155.41
|
68.33
|
0
|
0
|
0
|
95
|
85
|
75
|
|
Blind Geothermal
|
100
|
6.85
|
222.98
|
0
|
0
|
0
|
95
|
||||||||
|
Enhanced Geothermal
|
130
|
130
|
60
|
7.25
|
7.00
|
1.78
|
199.69
|
199.69
|
134.05
|
40
|
30
|
5
|
95
|
84.6
|
80
|
|
Small Hydropower
|
140
|
4.50
|
130
|
0
|
0
|
0
|
50
|
||||||||
|
Hydropower
|
120
|
20
|
20
|
4.00
|
1.32
|
0.50
|
75
|
13.14
|
12.72
|
5.94
|
3.20
|
2.42
|
93.2
|
93.2
|
35
|
|
Ocean
|
230
|
220
|
210
|
11.34
|
6.00
|
4.50
|
100
|
0
|
0
|
0
|
25.5
|
||||
|
Biopower
|
170
|
70
|
10
|
7.66
|
2.62
|
0.36
|
369.28
|
66.63
|
12.00
|
29.12
|
4.61
|
.01
|
85
|
84.04
|
75
|
|
Distributed Generation
|
480
|
140
|
50
|
9.80
|
1.80
|
1.31
|
80
|
16.58
|
16.03
|
51
|
7.37
|
7.12
|
75
|
||
|
Fuel Cell
|
150
|
150
|
140
|
7.00
|
4.64
|
3.80
|
850
|
5.65
|
5.50
|
47.92
|
47.92
|
5.78
|
95
|
||
|
Natural Gas Combined Cycle
|
70
|
50
|
10
|
1.68
|
0.88
|
0.51
|
45.60
|
13.71
|
5.50
|
8.09
|
2.86
|
1.29
|
93
|
84.6
|
40
|
|
Natural Gas Combustion Turbine
|
110
|
70
|
60
|
8.09
|
5.74
|
3.20
|
14.52
|
10.53
|
5.26
|
29.90
|
3.57
|
2.67
|
92
|
80
|
10
|
|
Coal, pulverized, scrubbed
|
120
|
50
|
10
|
8.40
|
1.92
|
0.56
|
33.60
|
27.50
|
13.08
|
5.90
|
3.70
|
1.62
|
93
|
84.6
|
80
|
|
Coal, pulverized, unscrubbed
|
40
|
40
|
40
|
5.01
|
4.45
|
3.94
|
84.6
|
||||||||
|
Coal, integrated gasification
combined cycle |
180
|
80
|
60
|
11.00
|
3.17
|
2.22
|
130.03
|
38.67
|
25.00
|
11.12
|
7.25
|
1.15
|
80.96
|
80.96
|
75
|
|
Nuclear
|
120
|
60
|
40
|
8.20
|
3.10
|
2.28
|
127
|
85.66
|
12.80
|
6.00
|
.49
|
.42
|
90.24
|
90
|
85
|
Germany 2013 estimates
In November 2013, a new report on Germany levelised
generation costs was published by FRAUNHOFER. PV power plants reached LCOE
between 0.078 and 0.142 Euro/kWh in the third quarter of 2013, depending on the
type of power plant (ground-mounted utility-scale or small rooftop power plant)
and insolation (1000 to 1200 kWh/m²a GHI in Germany). New nuclear power is not
considered as an option anymore.
|
Germany energy costs for different generation
technologies in EUR
per megawatt hour (2013)
|
|
|
Technology
|
Cost range (EUR/MWh)
|
|
brown coal
|
38-53
|
|
hard coal
|
63–80
|
|
CCGT power plants
|
75-98
|
|
onshore wind
|
45-107
|
|
offshore wind
|
119–194
|
|
PV power plants
|
78-142
|
|
Biogas
|
135–250
|
UK 2010 estimates
In March 2010, a new report on UK levelised generation costs
was published by Parsons Brinckerhoff. It puts a range on each
cost due to various uncertainties. Combined cycle gas turbines without CO2
capture are not directly comparable to the other low carbon emission generation
technologies in the PB study. The assumptions used in this study are given in
the report.
|
UK energy costs for different generation technologies in pounds
per megawatt hour (2010)
|
|
|
Technology
|
Cost range (£/MWh)
|
|
New nuclear
|
80–105 (92.50 guaranteed
from 2023)
|
|
Onshore wind
|
80–110
|
|
Biomass
|
60–120
|
|
Natural gas turbines with CO2 capture
|
60–130
|
|
Coal with CO2 capture
|
100–155
|
|
Solar farms
|
125–180
|
|
Offshore wind
|
150–210
|
|
Natural gas turbine, no CO2 capture
|
55–110
|
|
Tidal power
|
155–390
|
Divide the above figures by 10 to obtain the price in pence
per kilowatt-hour.
More recent UK estimates are the Mott MacDonald study
released by DECC in June 2010 and the
Arup study for DECC published in 2011.
French 2011 estimates
The International Agency for the Energy and EDF have estimated for 2011 the following
costs. For the nuclear power they include the costs due to new safety
investments to upgrade the French nuclear plant after the Fukushima Daiichi nuclear disaster;
the cost for those investments is estimated at 4 €/MWh. Concerning the solar
power the estimate at 293 €/MWh is for a large plant capable to produce in the
range of 50-100 GWh/year located in a favorable location (such as in Southern
Europe). For a small household plant capable to produce typically around 3
MWh/year the cost is according to the location between 400 and 700 €/MWh.
Currently solar power is by far the most expensive renewable source to produce
electricity, although increasing efficiency and longer lifespan of photovoltaic
panels together with reduced production costs could make this source of energy
more competitive.
|
French energy costs for different generation technologies
in Euros per megawatt
hour (2011)
|
|
|
Technology
|
Cost (€/MWh)
|
|
Hydro power
|
20
|
|
Nuclear (with State-covered insurance costs)
|
50
|
|
Natural gas turbines without CO2 capture
|
61
|
|
Onshore wind
|
69
|
|
Solar farms
|
293
|
Analysis from different sources
|
█
Conventional oil
|
█
Unconventional oil
|
█
Biofuels
|
█
Coal
|
█
Nuclear
|
█
Wind
|
|
Colored vertical lines indicate various historical oil prices.
From left to right:
|
|||||
|
— 1990s average
|
— January 2009
|
||||
Price of oil per barrel (bbl) at which energy sources are
competitive.
- Right end of bar is viability without subsidy.
- Left end of bar requires regulation or government subsidies.
- Wider bars indicate uncertainty.
Source: Financial
Times (edit)
A draft report of LECs used by the California Energy
Commission is available. From this report, the price per MWh for a municipal
energy source is shown here:
|
California levelized energy costs for different
generation technologies in US dollars per megawatt
hour (2007)
|
|
|
Technology
|
Cost (US$/MWh)
|
|
Advanced Nuclear
|
67
|
|
Coal
|
74–88
|
|
Gas
|
87–346
|
|
Geothermal
|
67
|
|
48–86
|
|
|
60
|
|
|
Solar
|
116–312
|
|
47–117
|
|
|
86–111
|
|
|
611
|
|
Note that the above figures incorporate tax breaks for the
various forms of power plants. Subsidies range from 0% (for Coal) to 14% (for
nuclear) to over 100% (for solar).
The following table gives a selection of LECs from two major
government reports from Australia.Note that these LECs do not include
any cost for the greenhouse gas emissions (such as under carbon tax
or emissions trading scenarios) associated with the
different technologies.
|
Levelised energy costs for different generation
technologies in Australian dollars per megawatt
hour (2006)
|
|
|
Technology
|
Cost (AUD/MWh)
|
|
40–70
|
|
|
Nuclear (to suit site;
typical)
|
75–105
|
|
28–38
|
|
|
53–98
|
|
|
Coal: supercritical pulverized + CCS
|
64–106
|
|
101
|
|
|
89
|
|
|
37–54
|
|
|
Gas: combined cycle + CCS
|
53–93
|
|
Small Hydro power
|
55
|
|
Wind power: high capacity
factor
|
63
|
|
85
|
|
|
88
|
|
|
120
|
|
In 1997 the Trade Association for Wind Turbines
(Wirtschaftsverband Windkraftwerke e.V. –WVW) ordered a study into the
costs of electricity production in newly constructed conventional power plants
from the Rheinisch-Westfälischen Institute for Economic Research –RWI). The RWI
predicted costs of electricity production per kWh for the basic load for the
year 2010 as follows:
|
Fuel
|
Cost per kilowatt
hour in euro
cents.
|
|
10.7 €ct – 12.4 €ct
|
|
|
8.8 €ct – 9.7 €ct
|
|
|
Black Coal (Bituminous)
|
10.4 €ct – 10.7 €ct
|
|
11.8 €ct – 10.6 €ct.
|
The part of a base load
represents approx. 64% of the electricity production in total. The costs of
electricity production for the mid-load and peak load
are considerably higher. There is a mean value for the costs of electricity
production for all kinds of conventional electricity production and load
profiles in 2010 which is 10.9 €ct to 11.4 €ct per kWh. The RWI calculated this
on the assumption that the costs of energy production would depend on the price
development of crude oil and that the price of crude oil would be approx. 23
US$ per barrel in 2010. In fact the crude oil price is about 80 US$ in the
beginning of 2010. This means that the effective costs of conventional
electricity production still need to be higher than estimated by the RWI in the
past.
The WVW takes the legislative feed-in-tariff as basis for
the costs of electricity production out of renewable energies because renewable
power plants are economically feasible under the German law (German Renewable
Energy Sources Act-EEG).
The following figures arise for the costs of electricity
production in newly constructed power plants in 2010:
|
Energy source
|
Costs of electricity production in euros per megawatt
hour
|
|
Nuclear Energy
|
107.0 – 124.0
|
|
Brown Coal
|
88.0 – 97.0
|
|
Black Coal
|
104.0 – 107.0
|
|
Domestic Gas
|
106.0 – 118.0
|
|
Wind Energy Onshore
|
49.7 – 96.1
|
|
Wind Energy Offshore
|
35.0 – 150.0
|
|
Hydropower
|
34.7 – 126.7
|
|
Biomass
|
77.1 – 115.5
|
|
Solar Electricity
|
284.3 – 391.4
|
Other estimates
A 2010 study by the Japanese government (pre-Fukushima
disaster), called the Energy White Paper, concluded the cost for kilowatt hour
was ¥49 for solar, ¥10 to ¥14 for wind, and ¥5 or ¥6 for nuclear power. Masayoshi
Son, an advocate for renewable energy, however, has pointed out that the
government estimates for nuclear power did not include the costs for
reprocessing the fuel or disaster insurance liability. Son estimated that if
these costs were included, the cost of nuclear power was about the same as wind
power.
Beyond the power station terminals, or system costs
The raw costs developed from the above analysis are only
part of the picture in planning and costing a large modern power grid. Other
considerations are the temporal load
profile, i.e. how load varies second to second, minute to minute, hour to
hour, month to month. To meet the varying load, generally a mix of plant
options is needed, and the overall cost of providing this load is then
important. Wind power has poor capacity contribution, so during windless
periods, some form of back up must be provided. All other forms of power
generation also require back up, though to a lesser extent. To meet peak demand
on a system, which only persist for a few hours per year, it is often worth
using very cheap to build, but very expensive to operate plant - for example
some large grids also use load shedding coupled with diesel
generators at peak or extreme
conditions - the very high kWh production cost being justified by not having to
build other more expensive capacity and a reduction in the otherwise continuous
and inefficient use of spinning reserve (see Operating
reserve).
In the case of wind energy, the additional costs in terms of
increased back up and grid interconnection to allow for diversity of weather
and load may be substantial. This is because wind stops blowing frequently even
in large areas at once and for prolonged periods of time. Some wind advocates
have argued that in the pan-European case back up costs are quite low, resulting
in overall wind energy costs about the same as present day power.However, such
claims are generally considered too optimistic, except possibly for some
marginal increases that, in particular circumstances, may take advantage of the
existing infrastructure.
The cost in the UK of connecting new offshore wind in
transmission terms, has been consistently put by Grid/DECC/Ofgem at £15billion
by 2020. This £15b cost does not include the cost of any new connections to
Europe - interconnectors, or a supergrid, as advocated by some. The £15b cost
is the cost of connecting offshore wind farms by cables typically less than
12 km in length, to the UK's nearest suitable onshore connection point.
There are total forecast onshore transmission costs of connecting various new
UK generators by 2020, as incurred from 2010, of £4.7 billion, by comparison.
When a new plant is being added to a power system or grid,
the effects are quite complex - for example, when wind energy is added to a
grid, it has a marginal cost associated with production of about £20/MWh (most
incurred as lumpy but running-related maintenance - gearbox and bearing
failures, for instance, and the cost of associated downtime), and therefore
will always offer cheaper power than fossil plant - this will tend to force the
marginally most expensive plant off the system. A mid range fossil plant, if
added, will only force off those plants that are marginally more expensive.
Hence very complex modelling of whose systems is required to determine the
likely costs in practice of a range of power generating plant options, or the
effect of adding a given plant.
The Institution of Engineers and Shipbuilders in Scotland
commissioned a former Director of Operations of the British National Grid,
Colin Gibson, to produce a report on generation levelised costs that for the
first time would include some of the transmission costs as well as the
generation costs. This was published in December 2011 and is available on the
internet :. The institution seeks to encourage debate of the issue, and
has taken the unusual step among compilers of such studies of publishing a
spreadsheet showing its data available on the internet :
OECD/NEA Estimates for the United States
|
Estimated Grid-Level Systems Cost, 2013 (USD/MWh)
|
||||||||||||
|
Technology
|
Nuclear
|
Coal
|
Gas
|
Onshore Wind
|
Offshore Wind
|
Solar
|
||||||
|
Penetration Level
|
10%
|
30%
|
10%
|
30%
|
10%
|
30%
|
10%
|
30%
|
10%
|
30%
|
10%
|
30%
|
|
Backup costs (adequacy)
|
0.00
|
0.00
|
0.04
|
0.04
|
0.00
|
0.00
|
5.61
|
6.14
|
2.10
|
6.85
|
0.00
|
10.45
|
|
Balancing costs
|
0.16
|
0.10
|
0.00
|
0.00
|
0.00
|
0.00
|
2.00
|
5.00
|
2.00
|
5.00
|
2.00
|
5.00
|
|
Grid connection
|
1.56
|
1.56
|
1.03
|
1.03
|
0.51
|
0.51
|
6.50
|
6.50
|
15.24
|
15.24
|
10.05
|
10.05
|
|
Grid reinforcement & extension
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
2.20
|
2.20
|
1.18
|
1.18
|
2.77
|
2.77
|
|
Total Grid-level System Costs
|
1.72
|
1.67
|
1.07
|
1.07
|
0.51
|
0.51
|
16.30
|
19.84
|
20.51
|
28.26
|
14.82
|
28.27
|
The estimated figures on grid-level systems costs published
by the OECD Nuclear Energy Agency in 2012, have been
criticized for its adequacy and used methodology. Swedish KTH in Stockholm
published a report in response, finding "several question marks concerning
the calculation methods". . While the grid-level systems costs in the 2012
OECD-NEA report is calculated to be $17.70 per MWh for 10% onshore wind in Finland,
the Swedish Royal Institute of Technology concludes in their analysis, that
these costs are rather $0 to $3.70 per MWh, as they are either comparatively
small or already included in the market.
External costs of energy sources
Typically pricing of electricity from various energy sources
may not include all external costs - that is, the costs indirectly borne by
society as a whole as a consequence of using that energy source. These may
include enabling costs, environmental impacts, usage lifespans, energy storage,
recycling costs, or beyond-insurance accident effects.
The US Energy Information Administration predicts that coal and gas are set to be continually
used to deliver the majority of the world's electricity, this is expected to
result in the evacuation of millions of homes in low lying areas, and an annual
cost of hundreds of billions of dollars' worth of property damage.
Furthermore, with a number island nations becoming slowly
submerged underwater due to rising sea levels, massive international climate
litigation lawsuits against fossil fuel users are currently beginning in the International Court of Justice.
An EU funded research study known as ExternE, or Externalities
of Energy, undertaken over the period of 1995 to 2005 found that the cost of
producing electricity from coal or oil would double over its present value, and
the cost of electricity production from gas would increase by 30% if external
costs such as damage to the environment and to human health, from the particulate matter, nitrogen
oxides, chromium VI, river water alkalinity,
mercury poisoning and arsenic emissions
produced by these sources, were taken into account. It was estimated in the
study that these external, downstream, fossil fuel costs amount up to 1%-2% of
the EU’s entire Gross Domestic Product (GDP),
and this was before the external cost of global warming from these sources was
even included.
Nuclear power has largely worked under an insurance
framework that limits or structures accident liabilities in accordance with the
Paris
convention on nuclear third-party liability, the Brussels supplementary
convention, and the Vienna
convention on civil liability for nuclear damage and in the U.S. the Price-Anderson Act.
It is often argued that this potential shortfall in liability represents an
external cost not included in the cost of nuclear electricity.
However these beyond-insurance costs for worst-case
scenarios are not unusual to nuclear power, as hydroelectric power plants are similarly not
fully insured against a catastrophic event such as the Banqiao Dam
disaster, where 11 million people lost their homes and from 30,000 to 200,000
people died, or large dam failures in general. As private insurers base dam
insurance premiums on limited scenarios, major disaster insurance in this
sector is likewise provided by the state. Also of note is that more modern
reactors than those of the Fukushima Daiichi Nuclear Power
Plant vintage, such as the proven Onagawa nuclear plant design,
demonstrated that it can survive 13 meter high tsunamis and safely shut down
without incident, despite being the closest nuclear plant to the epicenter of
the 2011 earthquake and tsunami.
Photovoltaics
Photovoltaic prices have fallen from $76.67 per watt in 1977
to an estimated $0.36 per watt in 2014, for crystalline silicon solar cells.
This is seen as evidence supporting Swanson's
law, an observation similar to the famous Moore's
Law that states that solar cell prices fall 20% for every doubling of
industry capacity.
However, cost per watt is a poor way to compare actual
life-cycle costs of energy sources, as explained above.
By 2011, the price of PV modules per MW had fallen by 60%
since 2008, according to Bloomberg New Energy Finance estimates, putting solar
power for the first time on a competitive footing with the retail price of
electricity in some sunny countries; an alternative and consistent price
decline figure of 75% from 2007 to 2012 has also been published, though it is
unclear whether these figures are specific to the United States or generally
global. The levelised cost of electricity (LCOE) from PV is competitive with
conventional electricity sources in an expanding list of geographic regions,particularly
when the time of generation is included, as electricity is worth more during
the day than at night.There has been fierce competition in the supply chain,
and further improvements in the levelised cost of energy for solar lie ahead,
posing a growing threat to the dominance of fossil fuel generation sources in
the next few years. As time progresses, renewable energy technologies generally
get cheaper, while fossil fuels generally get more expensive:
The less solar power costs, the more favorably it compares
to conventional power, and the more attractive it becomes to utilities and
energy users around the globe. Utility-scale solar power can now be delivered
in California at prices well below $100/MWh ($0.10/kWh) less than most other
peak generators, even those running on low-cost natural gas. Lower solar module
costs also stimulate demand from consumer markets where the cost of solar
compares very favorably to retail electric rates.
It is now evident that, given a carbon price of $50/ton,
which would raise the price of coal-fired power by 5c/kWh, solar PV, Wind, and
Nuclear will be cost-competitive in most locations. The declining price of PV
has been reflected in rapidly growing installations, totaling about 23 GW in
2011. Although some consolidation is likely in 2012, due to support cuts in the
large markets of Germany and Italy, strong growth seems likely to continue for
the rest of the decade. Already, by one estimate, total investment in
renewables for 2011 exceeded investment in carbon-based electricity generation.
In the case of self consumption, payback time is calculated
based on how much electricity is not brought from the grid. Additionally, using
PV solar power to charge DC batteries, as used in Plug-in Hybrid Electric
Vehicles and Electric Vehicles, leads to greater efficiencies, but higher
costs. Traditionally, DC generated electricity from solar PV must be converted
to AC for buildings, at an average 10% loss during the conversion. An
additional efficiency loss occurs in the transition back to DC for battery
driven devices and vehicles, and using various interest rates and energy price
changes were calculated to find present values that range from $2,057.13 to
$8,213.64 (analysis from 2009).
Additional cost factors
Calculations often do not include wider system costs
associated with each type of plant, such as long distance transmission
connections to grids, or balancing and reserve costs. Calculations do not
include externalities such as health damage by coal plants, nor the effect of
CO2 emissions on the climate change, ocean acidification and eutrophication,
ocean
current shifts. Decommissioning costs of nuclear plants are usually not
included (The USA is an exception, because the cost of decommissioning is
included in the price of electricity, per the Nuclear Waste Policy Act), is therefore not
full cost accounting. These types of items can
be explicitly added as necessary depending on the purpose of the calculation.
It has little relation to actual price of power, but assists policy makers and
others to guide discussions and decision making.
These are not minor factors but very significantly affect
all responsible power decisions:
- Comparisons of life-cycle greenhouse gas emissions show coal, for instance, to be radically higher in terms of GHGs than any alternative. Accordingly, in the analysis below, carbon captured coal is generally treated as a separate source rather than being averaged in with other coal.
- Other environmental concerns with electricity generation include acid rain, ocean acidification and effect of coal extraction on watersheds.
- Various human health concerns with electricity generation, including asthma and smog, now dominate decisions in developed nations that incur health care costs publicly. A Harvard University Medical School study estimates the US health costs of coal alone at between 300 and 500 billion US dollars annually.
- While cost per kWh of transmission varies drastically with distance, the long complex projects required to clear or even upgrade transmission routes make even attractive new supplies often uncompetitive with conservation measures (see below), because the timing of payoff must take the transmission upgrade into account.
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