The Cost of Power Generation: The current and future competitiveness of renewable and traditional technologies


May 1, 2010
147 Pages - SKU: RET2684042
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Table of Contents Search inside this report Related Reports Detailed Contents
The Cost of Power Generation
Executive summary
Introduction
Capital cost and levelized cost
Risk, volatility and liberalized electricity markets
Historical costs
Lifecycle analysis, CO2 emissions and the cost of carbon
Factors which distort the price of electricity
The cost of power


Chapter 1 Introduction


Chapter 2 Capital cost and levelized cost: the traditional approach to estimating the cost of power
Introduction
Capital costs
Regional capital cost fluctuations
Capacity factor
Financing capital cost
The levelized cost of electricity model
Interest, discount rate and present value
Levelized cost estimates


Chapter 3 Risk, volatility and liberalized electricity markets
Introduction
Fuel prices and fuel price volatility
Fuel price risk and risk modeling
Electricity price spikes
Risk hedging
Portfolio planning theory


Chapter 4 Historical costs of electricity,capital cost and the technology learning effect
Introduction
Historical costs of electricity
Retail cost and levelized cost
Technology costs, the learning effect and economies of scale


Chapter 5 The environment: lifecycle analysis, CO2 emissions and the cost of carbon
Introduction
Lifecycle energy analysis
Lifecycle CO2 emissions
Placing a price on carbon
Actual carbon costs: the European Trading Scheme


Chapter 6 Factors which distort the price of electricity
Introduction
Structural costs
Grid extension
Balancing costs
Capacity credit
Externalities
Subsidies
Fuel subsidies
Tariff subsidies
Other distorting mechanisms: quotas and taxes


Chapter 7 The cost of power
Introduction
The future of the liberalized electricity market
Market trends
Levelized cost trends
Index


List of Figures
Figure 2.1: EIA overnight capital cost of power generating technologies (2008$/kW), 2009
Figure 2.2: Lazard capital cost comparison for generating technologies ($/kW), 2009
Figure 2.3: Present value of one million dollars as a function of discount rate
Figure 2.4: Lazard levelized cost comparison for generating technologies ($/MWh), 2009
Figure 2.5: EIA levelized cost of electricity for new plants entering service in 2016 ($/MWh)
Figure 3.6: Annual average world oil prices ($/barrel), 2010
Figure 3.7: Annual coal prices ($/tonne), 2009
Figure 3.8: Steam coal for electricity generation ($/tonne), 2008
Figure 3.9: Annual gas prices ($/107kcalories), 2009
Figure 3.10: Natural gas prices for electricity generation ($/107kilocalories), 2008
Figure 3.11: US natural gas prices for electricity generation ($/thousand cubic meters), 2009
Figure 3.12: Spot prices for electricity in California ($/MWh), 2001
Figure 4.13: Domestic retail electricity prices ($/MWh), 2007
Figure 4.14: Industrial retail electricity prices ($/MWh), 2007
Figure 4.15: Predicted prices for gas and electricity in 2008 from earlier US Annual Energy Outlooks (%), 2009
Figure 4.16: Global solar photovoltaic module costs ($/W), 2008
Figure 4.17: Global solar cell production (MW), 2009
Figure 4.18: US wind turbine installation costs ($/kW), 2008
Figure 4.19: Annual wind turbine capacity additions (MW), 2009
Figure 5.20: Energy payback ratios based on lifecycle assessment
Figure 5.21: CO2 emissions from power generating technologies (t/GWh)
Figure 5.22: EU Emission Trading Scheme carbon prices (€/tonne CO2), 2010
Figure 6.23: Grid extension costs as a function of wind penetration
Figure 6.24: Balancing costs for 20% grid wind penetration with energy storage
Figure 6.25: Typical renewable capacity credits in California (%)
Figure 6.26: External costs of power generation (€/MWh)
Figure 6.27: Australian external cost estimates for power generation technologies (US$/kW), 2009
Figure 6.28: Economic value of fuel subsidies in non-OECD countries ($bn), 2006
Figure 6.29: US energy subsidies ($m), 2007
Figure 7.30: California Energy Commission levelized cost ($/MWh), 2009
Figure 7.31: UK levelized cost estimates (£/MWh), 2010
Figure 7.32: Levelized cost predictions for plants entering service in 2018 ($/MWh)


List of Tables
Table 2.1: EIA overnight capital cost of power generating technologies, 2009
Table 2.2: Lazard capital cost comparison for generating technologies ($/kW), 2009
Table 2.3: EIA overnight capital cost trends for power generating technologies ($/kW), 2010
Table 2.4: Lazard levelized cost comparison for generating technologies ($/MWh), 2009
Table 2.5: EIA levelized cost of electricity for new plants entering service in 2016 ($/MWh)
Table 2.6: Mean levelized costs from published global figures (£/MWh), 2007
Table 3.7: Annual average world oil prices ($/barrel), 2010
Table 3.8: Annual coal prices ($/tonne), 2009
Table 3.9: Steam coal for electricity generation ($/tonne), 2008
Table 3.10: Annual gas prices ($/107kcalories), 2009
Table 3.11: Natural gas prices for electricity generation ($/107kilocalories), 2008
Table 3.12: US natural gas prices for electricity generation ($/thousand cubic meters), 2009
Table 3.13: Spot prices for electricity in California ($/MWh), 2001
Table 4.14: Domestic retail electricity prices ($/MWh), 2007
Table 4.15: Industrial retail electricity prices ($/MWh), 2007
Table 4.16: Retail electricity prices in EU, first quarter 2009, excluding taxes (€/MWh)
Table 4.17: Predicted prices for gas and electricity in 2008 from earlier US Annual Energy Outlooks (%), 2009
Table 4.18: Global solar photovoltaic module costs ($/W), 2008
Table 4.19: Global solar cell production (MW), 2009
Table 4.20: US wind turbine installation costs ($/kW), 2008
Table 4.21: Annual wind turbine capacity additions (MW), 2009
Table 5.22: Energy payback ratios based on lifecycle assessment*
Table 5.23: Lifecycle emissions from power generating technologies
Table 5.24: EU Emission Trading Scheme carbon prices (€/tonne CO2), 2010
Table 6.25: Grid extension costs as a function of wind penetration
Table 6.26: Additional annual transmission and distribution costs in 2020 associated with increasing UK renewable contribution above 10 per cent after 2010
Table 6.27: Balancing costs for 20% grid wind penetration with energy storage
Table 6.28: Typical renewable capacity credits in California (%)
Table 6.29: External costs of power generation (€/MWh)
Table 6.30: Australian external cost estimates for power generation technologies, 2009
Table 6.31: Economic value of fuel subsidies in non-OECD countries ($bn), 2006
Table 6.32: US energy subsidies ($m), 2007
Table 7.33: California Energy Commission levelized cost ($/MWh)
Table 7.34: UK levelized cost estimates (£/MWh), 2010
Table 7.35: Levelized cost predictions for plants entering service in 2018 ($/MWh)
 
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