Cost of electricity by source
[citation needed] A cost factor unique to storage are losses that occur due to inherent inefficiencies of storing electricity, as well as increased CO2 emissions if any component of the primary source is less than 100% carbon-free.
[11] In the U.S., a comprehensive 2015 study found that net system CO2 emissions resulting from storage operation are nontrivial when compared to the emissions from electricity generation [in real time to meet demand], ranging from 104 to 407 kg/MWh of delivered energy depending on location, storage operation mode, and assumptions regarding carbon intensity.
[11] The metric levelized avoided cost of energy (LACE) addresses some of the shortcomings of LCOE by considering the economic value that the source provides to the grid.
[16] There can be curtailment if grid connectivity is lacking across the pricing area – for example from wind power in Scotland to consumers in England – resulting in the capture rate not reflecting the true cost.
[28] Peaking power plants have particularly low capacity factors but make up for it by selling electricity at the highest possible price when supply does not meet demand otherwise.
Block 5 of Irsching Power Station in Southern Germany uses natural gas as fuel in a combined cycle converting 1750 megawatts of thermal energy to 847 net MW of usable electricity.
[36] The Lieberose Photovoltaic Park – one of the largest in Germany – had a nameplate capacity at opening of 52.79 megawatt and cost some €160 million to build[37][38] or €3031 per kW.
Fuel costs tend to be highest for oil fired generation, followed in order by coal, gas, biomass and uranium.
In the Global South, where interest rates tend to be higher, the shorter construction period of small scale projects (particularly wind and solar) partially compensates for their increased capital cost.
Coal-fired power plants are often supplied with locally or at least domestically available coal – this is especially true for lignite whose low grade and high moisture content make transporting it over long distances uneconomical – and are thus less subject to the influence of world markets.
[48] By contrast after being fully depreciated, Germany's (then remaining) nuclear power plants were described in media reports throughout the 2010s and into the early 2020s as highly profitable for their operators even without direct government subsidy.
Grids with very large amounts of intermittent power sources, such as wind and solar, may incur extra costs associated with needing to have storage or backup generation available.
[54] At the same time, intermittent sources can be even more competitive if they are available to produce when demand and prices are highest, such as solar during summertime mid-day peaks seen in hot countries where air conditioning is a major consumer.
If panels are replaced early this presents a significant policy challenge because if the recycling is made legal duty of the manufacturers (as it already is in the EU) it will dramatically reduce profit margins on this already competitive market.
A means to address a part of the external costs of fossil fuel generation is carbon pricing — the method most favored by economists for reducing global-warming emissions.
... On a cost basis, wind and solar is the best economic choice in markets where firm generation resources exist and demand is growing.
"[85]: 23 BNEF does not disclose the detailed methodology and LCOE calculation assumptions, however, apart from declaring it is "derived from selected public sources".
Costs of its combustion include emission of greenhouse gases carbon monoxide and dioxide, as well as nitrogen oxides (NOx), which damage the human respiratory system and contribute to acid rain.
[89] The report's main conclusions:[90] In October 2020, the financial firm Lazard compared renewable and conventional sources of energy, including comparison between existing and new generation (see table).
[91] In the 2023 study Lazard explained their LCOE estimates for nuclear power are "based on the then-estimated costs of the Vogtle Plant and US-focused".
[94] In the United Kingdom, a feed-in tariff of £92.50/MWh at 2012 prices (currently the equivalent of €131/MWh)[107] plus inflation compensation was set in 2013 for the new nuclear power plant to be built at Hinkley Point C, with a term of 35 years.
In one bid for offshore wind farms, at least one bidder dispensed entirely with public subsidies and was prepared to finance the project through the market alone.
[113] As of 2022[update], gas is the largest source of electricity at 40%:[114] its cost varies and being high carbon it causes climate change.
[115] So to reduce the share of gas the government annually auctions contracts for difference to build low-carbon generation capacity, mainly offshore wind.
[128] A 2010 study by the Japanese government (pre-Fukushima disaster), called the Energy White Paper,[129] 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.
As per the recent analysis of Solar Power Generation Costs in Japan 2021, module unit prices fell sharply.
[134] The LCOE below is calculated based on a 30-year recovery period using a real after tax weighted average cost of capital (WACC) of 6.1%.
For example, EIA expects the federal investment tax credit program to reduce the capacity weighted average LCOE of solar PV built in 2025 by an additional $2.41, to $30.39.
The electricity sources which had the most decrease in estimated costs over the period 2010 to 2019 were solar photovoltaic (down 88%), onshore wind (down 71%) and advanced natural gas combined cycle (down 49%).
