Renewable energy: Externality costs as market barriers

This paper addresses the impact of environmentally based market failure constraints on the adoption of renewable energy technologies through the quantification in financial terms of the externalities of electric power generation, for a range of alternative commercial and almost-commercial technologies. It is shown that estimates of damage costs resulting from combustion of fossil fuels, if internalised into the price of the resulting output of electricity, could lead to a number of renewable technologies being financially competitive with generation from coal plants. However, combined cycle natural gas technology would have a significant financial advantage over both coal and renewables under current technology options and market conditions. On the basis of cost projections made under the assumption of mature technologies and the existence of economies of scale, renewable technologies would possess a significant social cost advantage if the externalities of power production were to be “internalised”. Incorporating environmental externalities explicitly into the electricity tariff today would serve to hasten this transition process.     

Levelized cost of storage — Introducing novel metrics

The increasing share of variable renewable generation capacity leads to a growing interest in electricity storage technologies and a summarizing cost metric to analyze the economic viability of such electricity storage units. For conventional generation technologies, the levelized cost of electricity (LCOE) is a well-known metric. In the context of electricity storage however, such LCOE-like metrics are only limitedly applicable as the finite energy storage capacity can limit the charge and discharge scheduling decisions of the storage operator. In addition, the “fuel”, i.e., charged electricity, and “generated electricity”, i.e., discharged electricity, is one and the same commodity which provides the opportunity to use an adapted levelized cost metric. This work analyzes three different levelized cost metrics and their application to electricity storage units used for electric energy arbitrage. The strengths and shortcomings of these storage cost metrics are analyzed in order to determine how they can be applied correctly. This analysis results in the following recommendations. First, it is recommended to use a levelized cost metric in combination with an analysis of a representative price profile upon which the storage operator will act. This allows a more accurate estimation of the number of charging and discharging hours and the associated charging cost and discharging revenue, given the energy storage capacity constraints of the storage unit. Second, when a number of different representative price profiles, hence with different charging costs, is available, it is recommended to use a cost metric which is independent of the charging cost as this single metric can be compared to each price profile, thereby facilitating the interpretation of the results. The results and conclusions from this work provide a framework on how to use levelized cost metrics in the context of electricity storage. Such metrics may help policy makers and investors in prioritizing energy storage investment decisions.     

The economic competitiveness of promising nuclear energy system: A closer look at the input uncertainties in LCOE analysis

In this study, we aimed to provide important information about the potential economic benefits and risks of nuclear electricity generation associated with existing and prevailing nuclear technologies and to examine the economic effects of nuclear fuel cycle strategies in Korea. An economic analysis model that evaluates the overall life‐cycle costs of nuclear energy systems coupled with multiple fuel cycle options was specially developed by using the levelized cost of electricity (LCOE) as the fundamental methodology. This model is capable of identifying a range of techno‐economic uncertainties underlying each individual nuclear energy system taking into account the state of the art in fuel cycle technologies. It can also quantify and incorporate the resulting impacts into a system‐wide LCOE distribution for each fuel cycle option based on Monte Carlo probabilistic simulation. We analyzed and discussed examples of the economic performance of 13 promising candidates for nuclear energy systems integrated with extensive fuel cycle technologies (including one direct disposal and 12 specific reprocessing and recycling fuel cycle options). We also conducted a sensitivity analysis to investigate the major sensitivity factors of the system component cost in each fuel cycle option and their impacts on individual economic performances. Furthermore, a closer look at the techno‐economic uncertainties of advanced fuel cycle technologies in a break‐even analysis offers evidence of the potential economic feasibility and cost‐reduction opportunities in the reprocessing and recycling options relative to the direct disposal of spent nuclear fuel.     

Economic implications of thermal energy storage for concentrated solar thermal power

Solar energy is an attractive renewable energy source because the sun's energy is plentiful and carbon-free. However, solar energy is intermittent and not suitable for base load electricity generation without an energy backup system. Concentrated solar power (CSP) is unique among other renewable energy options because it can approach base load generation with molten salt thermal energy storage (TES). This paper describes the development of an engineering economic model that directly compares the performance, cost, and profit of a 110-MW parabolic trough CSP plant operating with a TES system, natural gas-fired backup system, and no backup system. Model results are presented for 0–12 h backup capacities with and without current U.S. subsidies. TES increased the annual capacity factor from around 30% with no backup to up to 55% with 12 h of storage when the solar field area was selected to provide the lowest levelized cost of energy (LCOE). Using TES instead of a natural gas-fired heat transfer fluid heater (NG) increased total plant capital costs but decreased annual operation and maintenance costs. These three effects led to an increase in the LCOE for PT plants with TES and NG backup compared with no backup. LCOE increased with increasing backup capacity for plants with TES and NG backup. For small backup capacities (1–4 h), plants with TES had slightly lower LCOE values than plants with NG backup. For larger backup capacities (5–12 h), plants with TES had slightly higher LCOE values than plants with NG backup. At these costs, current U.S. federal tax incentives were not sufficient to make PT profitable in a market with variable electricity pricing. Current U.S. incentives combined with a fixed electricity price of $200/MWh made PT plants with larger backup capacities more profitable than PT plants with no backup or with smaller backup capacities. In the absence of incentives, a carbon price of $100–$160/tonne CO_2eq would be required for these PT plants to compete with new coal-fired power plants in the U.S. If the long-term goal is to increase renewable base load electricity generation, additional incentives are needed to encourage new CSP plants to use thermal energy storage in the U.S.     

A methodology for calculating the levelized cost of electricity in nuclear power systems with fuel recycling

In this paper we show how the traditional definition of the levelized cost of electricity (LCOE) can be extended to alternative nuclear fuel cycles in which elements of the fuel are recycled. In particular, we define the LCOE for a cycle with full actinide recycling in fast reactors in which elements of the fuel are reused an indefinite number of times. To our knowledge, ours is the first LCOE formula for this cycle. Others have approached the task of evaluating this cycle using an ‘equilibrium cost’ concept that is different from a levelized cost. We also show how the LCOE implies a unique price for the recycled elements. This price reflects the ultimate cost of waste disposal postponed through the recycling, as well as other costs in the cycle. We demonstrate the methodology by estimating the LCOE for three classic nuclear fuel cycles: (i) the traditional Once-Through Cycle, (ii) a Twice-Through Cycle, and (iii) a Fast Reactor Recycle. Given our chosen input parameters, we show that the ‘equilibrium cost’ is typically larger than the levelized cost, and we explain why.     

Is the concept of ‘grid parity’ defined appropriately to evaluate the cost-competitiveness of renewable energy technologies?

The concept of ‘grid parity’ has emerged as a key indicator of the competitiveness of renewable electricity generation technologies. In this study, we firstly summarize the definition of the current levelized cost of electricity (LCOE) based methodology for the concept and address its limitation in not taking into account the systematic changes in an electric power system. Secondly, we introduce a bottom-up energy system model based methodology to overcome the limitation. Lastly, we apply the methodology to a case study, the grid parity analysis of solar photovoltaic and onshore wind technologies in the Korean electric power system, to highlight the differences between the results obtained using both methodologies. The results of the study show three implications. First, even if the LCOE of onshore wind is already lower than that of natural gas technologies and the average price of grid electricity, the LCOE is required to be much lower to achieve cost-competitiveness in the electric power system. Second, different technologies might be required to have different LCOE levels to be cost-competitive in the same power system. Third, a policy or plan for the deployment of renewable energy technologies must be harmonized with other policies and plans within the same system.     

Levelized cost of electricity (LCOE) of renewable energies and required subsidies in China

The development and utilization of renewable energy (RE), a strategic choice for energy structural adjustment, is an important measure of carbon emissions reduction in China. High cost is a main restriction element for large-scale development of RE, and accurate cost estimation of renewable power generation is urgently necessary. This is the first systemic study on the levelized cost of electricity (LCOE) of RE in China. Results indicate that feed-in-tariff (FIT) of RE should be improved and dynamically adjusted based on the LCOE to provide a better support of the development of RE. The current FIT in China can only cover the LCOE of wind (onshore) and solar photovoltaic energy (PV) at a discount rate of 5%. Subsidies to renewables-based electricity generation, except biomass energy, still need to be increased at higher discount rates. Main conclusions are drawn as follows: (1) Government policy should focus on solving the financing problem of RE projects because fixed capital investment exerts considerable influence over the LCOE; and (2) the problem of high cost could be solved by providing subsidies in the short term and more importantly, by reforming electricity price in the mid-and long-term to make the RE competitive.     

Techno-economics of novel refueling stations based on ammonia-to-hydrogen route and SOFC technology

This paper presents the economic assessment of novel refueling stations, in which through advanced and high efficiency technologies, the polygeneration of more energy services like hydrogen, electricity and heat is carried out on-site.The architecture of these polygeneration plants is realized with a modular structure, organized in more sections.The primary energy source is ammonia that represents an interesting fuel for producing more energy streams. The ammonia feeds directly the SOFC that is able to co-generate simultaneously electricity and hydrogen by coupling a high efficiency energy system with hydrogen chemical storage.Two system configurations have been proposed considering different design concepts: in the first case (Concept_1) the plant is sized for producing 100 kg/day of hydrogen and the power section is sized also for self-sustaining the plant electric power consumption, while in the second one (Concept_2) the plant is sized for producing 100 kg/day of hydrogen and the power section is sized for self-sustaining the plant electric power consumption and for generating 50 kW for the DC fast charging.The economic analysis has been carried out in the current and target scenarios, by evaluating, the levelized cost of hydrogen (LCOH), the levelized cost of electricity (LCOE), the Profitability Index (PI), Internal rate of Return (IRR) and the Discounted Payback Period (DPP).Results have highlighted that the values of the LCOH, for the proposed configurations and economic scenarios, are in the range 6–10 €/kg and the values of the LCOE range from 0.447 €/kWh to 0.242 €/kWh.In terms of PI and IRR, the best performance is achieved in the Concept_1 for the current scenario (1.89 and 8.0%, respectively). On the contrary, in the target scenario, thanks to a drastic costs reduction the co-production of hydrogen and electricity as useful outputs, becomes the best choice from all economic indexes and parameters considered.     

Levelized and environmental costs of power-to-gas generation in Germany

The transformation to a greener energy system leads to new challenges, as wind and solar power are not always available. A solution for this challenge is the generation of synthetic natural gas (SNG) and hydrogen from (surplus) wind and solar power, so that the green gases can be stored in the natural gas grid long-term and be used for electricity generation when wind and solar power are not accessible. This solution is especially of interest if the storage infrastructure is already in place, as in Germany, since investment costs can be avoided. Because of that, the study investigates the levelized cost of SNG and hydrogen generation in Germany applying the cost estimation method by Rubin et al. For the investigation, different water electrolysis technologies (alkaline electrolysis, polymer exchange membrane, and solid oxide electrolyzer cell with a size of 1 and 100 MW) and energy scenarios (8,000 h grid, 2,000 h grid, wind, and solar) are contemplated. Besides that, the environmental costs of SNG and hydrogen generation in Germany are investigated due to the increasing importance of these costs for society and companies. The author concludes that the levelized costs of SNG and hydrogen are far too high compared to peer studies, as more cost factors have been considered after applying the method by Rubin et al. In terms of the environmental costs, the use of Germany's grid electricity is not recommended for SNG and hydrogen generation since the generation from wind and solar power is more environmentally friendly, whereby wind power is preferable over solar power.     

Techno – Economic assessment of flexible decarbonized hydrogen and power co-production based on natural gas dry reforming

The need for flexible power plants could increase in the future as variable renewable energy (VRE) share will increase in the power grid. These power plants could balance the increasing strain on electricity grids by renewables. The proposed plant in this paper can adapt to these ramps in electricity demand of the power grid by maintaining a constant feed and producing also high purity hydrogen. Dry methane reforming (DMR) is incorporated into a flexible power plant model and the key performance indicators are calculated from a techno-economic perspective. The net output of the plant is 450 MW with the possibility to lower power production and produce hydrogen, maintaining a high CO₂ capture rate (72%). Two cases are compared to the base case to quantify: (i) energy and cost penalties for CO₂ capture and (ii) advantages of flexible power plant operation. The levelized cost of electricity (LCOE) for the base case is 67 Euro/MWh, the addition of a carbon capture unit increases it to 82 Euro/MWh. In the case of flexible operation, both the LCOE and levelized cost of hydrogen (LCOH) are calculated and the two depend on the cost allocation factor. The LCOE ranges from 65 to 85 Euro/MWh while the LCOH from 0.15 to 0.073 Euro/Nm³. The DMR power plant presented in Cases 1 and 2 present little advantages in today's market conditions however, the flexible plant (Case 3) can be viable option in balancing VRE.     

Economic analysis of solar energy development in North Africa

The economic analysis of solar energy development is the basis of promoting the solar energy planning in north Africa and realizing the clean energy power transmission among continents. In this paper, the cost development trend of photovoltaic(PV) power and concentrating solar power(CSP) generation is analyzed, and the levelized cost of energy (LCOE) of solar power generation is forecasted. Then, taking the development of Tunisian solar energy as an example in the context of transcontinental transmission, PV power with energy storage and PV-CSP power generation are given as two kinds of development plan respectively. The installed capacity configurations of the two schemes are given with production simulation method, and comprehensive LCOE are calculated. The studies show that based on the LCOE forecast value, the LCOE of PV-CSP combined power generation will decrease when the annual utilization hours of transmission channel is increased. It can be chosen as one of important mode of the North Africa solar energy development.     

Solar thermal power generation in India—a techno–economic analysis

Limited fossil resources and environmental problems require new sustainable energy supply options, that use renewable energies and are economic at the same time. Solar Thermal Electricity (STE) generating systems are proven renewable energy technologies and often a very cost effective way to produce electricity from solar radiation.In India, the electricity demand is drastically increasing. At the same time, solar resources and large wasteland areas are widely available. These factors together make India an ideal country for the implementation of STE-technologies.In this paper, we analyze the potential and the cost-effectiveness of centralized and decentralized STE-generation in India. Comparing the levelized electricity costs (LEC) for STE with the corresponding LEC for the electricity generating options used at present, we find that STE is an economically viable technology under favorable conditions, i.e. in areas with high insolation levels and provided that capital is available at low interest rates.     

直接空冷型槽式太阳能发热电系统技术经济分析

以50 MW槽式太阳能直接空冷发电系统为研究对象,基于光电效率、发电量、度电成本评价指标,对空冷光热机组和水冷机组的年热力性能与经济性进行比较分析研究。结果表明:在储热时长9 h下,当以年光电效率最高为优化目标时,空冷机组和水冷机组聚光器采光面积分别为425100 m²(集热场回路数130)和398940 m²(集热场回路数122),对应的年光电效率分别为13.19%和13.84%;当以发电成本最低为目标时空冷机组和水冷机组聚光器采光面积分别为647460 m²(集热场回路数198)和623100 m²(集热场回路数190),对应的发电成本分别为1.118元/kWh和1.069元/kWh。     

De-risking investment into concentrated solar power in North Africa: Impacts on the costs of electricity generation

A low-carbon energy transition on the basis of renewable energy sources (RES) is of crucial importance to solve the interlinked global challenges of climate change and energy security. However, large-scale deployment of RES requires substantial investments, including the participation of private capital. Scientific evidence shows that the economic feasibility of a RES project hinges on the availability of affordable project financing, which itself depends on risk perceptions by private investors. Since financing costs tend to be particularly high for capital-intensive RES projects and in developing countries, we investigate the impacts of addressing these perceived risks on electricity prices from semi-dispatchable concentrated solar power (CSP) in four North African countries. By employing a levelized cost of electricity (LCOE) model we find that comprehensively de-risking CSP investments leads to a 39% reduction in the mean LCOE from CSP. However, this reduction is still not sufficient to achieve economic competitiveness of CSP with highly subsidized conventional electricity from fossil fuels in North Africa. Hence, our results suggest that de-risking reflects an important strategy to foster the deployment of CSP in North Africa but additional measures to support RES, such as reconsidering fossil fuel subsidies, will be needed.     

Assessment of sustainability indicators for renewable energy technologies

The non-combustion based renewable electricity generation technologies were assessed against a range of sustainability indicators and using data obtained from the literature. The indicators used to assess each technology were price of generated electricity, greenhouse gas emissions during full life cycle of the technology, availability of renewable sources, efficiency of energy conversion, land requirements, water consumption and social impacts. The cost of electricity, greenhouse gas emissions and the efficiency of electricity generation were found to have a very wide range for each technology, mainly due to variations in technological options as well as geographical dependence of each renewable energy source. The social impacts were assessed qualitatively based on the major individual impacts discussed in literature. Renewable energy technologies were then ranked against each indicator assuming that indicators have equal importance for sustainable development. It was found that wind power is the most sustainable, followed by hydropower, photovoltaic and then geothermal. Wind power was identified with the lowest relative greenhouse gas emissions, the least water consumption demands and with the most favourable social impacts comparing to other technologies, but requires larger land and has high relative capital costs.     

碳价格对低碳基荷发电技术相对竞争力的影响评估

根据国际能源机构（IEA）的评估标准选出合适的低碳基荷发电技术,分析了引入碳价格后发电成本和温室气体排放强度的变动情况,并研究碳定价机制对各发电技术相对竞争力的影响。结果表明,核电成本的排放量最低,竞争优势最大;太阳能热利用成本的排放量最高,相对竞争力最小。目前依靠碳捕捉与封存技术（CCS）的传统煤粉蒸汽锅炉发电（PFcoal/ CCS）、联合循环发电系统（IGCC/ CCS）、联合循环燃气涡轮（CCGT/ CCS）技术是有风险的策略。     

Renewable decentralized in developing countries: Appraisal from microgrids project in Senegal

Sahelian developing countries depend heavily on oil-import for the supply of their increasing energy demand. This setup leads to an imbalance in the balance of payment, an increase of debt and budget asphyxia, whereas renewable resources are widely and abundantly available. The objective of this paper is to carry out a feasibility analysis of off-grid stand-alone renewable technology generation system for some remote rural areas in one Sahelian country. A survey conducted in 2006, within the framework of microgrids project, in rural areas located in three different regions in Senegal (Thies, Kaolack and Fatick) permits determination of demand estimations. Two reference technologies are chosen, namely a solar photovoltaic (PV) system of 130 Wc for solar endowment and a wind turbine of 150 W for wind speed. Taking into account the life-cycle-cost and the environmental externalities costs, our results show that the levelized electricity costs of PV technology are lower than the cost of energy from the grid extension for all these three regions. Thus, decentralized PV technologies are cost-competitive in comparison to a grid extension for these remote rural areas. For wind technology viabilities results are attained with a requirement demand lower than 7. 47 KWh/year for Thies and 7.884 KWh/year for the two remaining areas, namely Kaolack and Fatick. The additional advantage of the proposed methodology is that it allows the environmental valuation of energy generated from non-renewable resource.     

How carbon pricing changes the relative competitiveness of low-carbon baseload generating technologies

There is wide public debate about which electricity generating technologies will best be suited to reduce greenhouse gas emissions (GHG). Sometimes this debate ignores real-world practicalities and leads to over-optimistic conclusions. Here we define and apply a set of fit-for-service criteria to identify technologies capable of supplying baseload electricity and reducing GHGs by amounts and within the timescale set by the Intergovernmental Panel on Climate Change (IPCC). Only five current technologies meet these criteria: coal (both pulverised fuel and integrated gasification combined cycle) with carbon capture and storage (CCS); combined cycle gas turbine with CCS; Generation III nuclear fission; and solar thermal backed by heat storage and gas turbines. To compare costs and performance, we undertook a meta-review of authoritative peer-reviewed studies of levelised cost of electricity (LCOE) and life-cycle GHG emissions for these technologies. Future baseload electricity technology selection will be influenced by the total cost of technology substitution, including carbon pricing, which is synergistically related to both LCOE and emissions. Nuclear energy is the cheapest option and best able to meet the IPCC timetable for GHG abatement. Solar thermal is the most expensive, while CCS will require rapid major advances in technology to meet that timetable.     

External costs of electricity generation options in Lithuania

This article deals with external cost of electricity generation in Lithuania. The external costs of electricity generation are the most important environmental criteria shaping decisions within the electricity system. External costs of electricity generation were calculated based on ExternE methodology for Lithuania during EU (European Union) Framework 6 project Cost Assessment for Sustainable Energy Systems (CASES). The article presents the methodology and results of external costs of electricity generation in Lithuania. The assessment of external costs provided that future energy policy should be oriented towards the renewable energy generation technologies having the lowest external costs. External costs for electricity generation technologies were analysed in terms of external costs categories, electricity generation technologies life cycle stages and time frame 2010–2030.     

Policies to improve biomass-electricity generation in Brazil

Electricity consumption in Brazil has grown twice from 1979 to 1994 and, for the future, official forecasts estimate high risks of deficit. Brazilian generation system presents highly seasonal characteristics due to its hydroelectric origin and sugar cane origin electricity could be used as complementation for the dry period, instead of conventional thermoelectric power plants, with the corresponding environmental advantages. Nowadays, most sugar/alcohol industries in the state of São Paulo are energy self-sufficient and some of them already “export” a small electricity surplus to the grid. The potential for such surplus is significant, moreover with the introduction of more efficient technologies, but prices are not yet attractive when compared to conventional market prices, besides the existing barriers related to the current legislation. On the other hand, existing studies show that more efficient technologies become competitive when externalities are included. This paper analyzes worthing methodologies, externalities-based decisions and policy mechanisms to guide governments, planners, decision-makers and managers in the correct evaluation of bioenergy use and production faced to other alternatives.