A review of the IEA/NEA Projected Costs of Electricity – 2015 edition |
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| Affiliation: | 1. Energy Demand Management Research Division, Climate Change Policy Research Group, Korea Energy Economics Institute, 405-11 Jongga-ro, Jung-gu, Ulsan 681-300, South Korea;2. Department of Natural Resources and Environmental Engineering Hanyang, University, 222 Wangsimni-ro, Seongdong-gu, Seoul 133-791, South Korea;3. Department of Economics, Ewha Womans University, 52 Ewhayeodae-gil, Seodaemun-gu, Seoul 120-750, South Korea;1. State Key Laboratory of Urban Water Resource and Environment, Harbin Institute of Technology, Harbin 150090, China;2. Department of Food and Environment Engineering, East University of Heilongjiang, Harbin 150086, China;3. Key Laboratory of Beijing for Water Quality Science and Water Environment Recovery Engineering, Engineering Research Center of Beijing, Beijing University of Technology, Beijing 100124, China;4. Department of Civil and Environmental Engineering, University of Connecticut, Storrs, CT 06269, USA |
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| Abstract: | The IEA/NEA recently issued their eighth edition of the Study on the “Projected Costs of Generating Electricity” – 2015 edition. The Study is mainly concerned with calculating the levelised cost of electricity (LCOE). The LCOE calculations are based on a levelised average life time cost approach using the discounted cash flow (DCF) method. The analysis was this year, and for the first time, performed using three discount rates (3%, 7%, and 10%). The LCOE can serve as a tool for calculating the cost of different generation technologies. However the Study's usefulness is affected by its narrow base of a limited set of countries that are not necessarily representative. It ignored the negative role of subsidies and did not provide a methodology for selective application of the discount rates and costing of carbon. The global power generation scene is changing. Generation growth in OECD countries has become very limited; simultaneously there is rapid growth of varying renewables (VRE) generation which needs special criteria for assessing its system cost. All this demands a rethinking of the application and usefulness of the LCOE in future generation planning. |
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| Keywords: | Generation System costing Discount rates Carbon Subsidies |
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