Comparative electrical generation costs

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This article is part of the Coal Issues portal on SourceWatch, a project of CoalSwarm and the Center for Media and Democracy.

1 Comparative costs data: California regulatory agencies (May 2008)
2 Comparative costs data: Lazard analysis (June 2008)
3 Capacity costs
4 Resources

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Comparative costs data: California regulatory agencies (May 2008)

On May 13, 2008, the California Energy Commission and the California Public Utilities Commission released a comparison of the costs of of new generating capacity from various sources. The analysis for the comparison was prepared by Energy and Environmental Economics, Inc., a consulting firm that prepares studies for utilities, governmental regulators, law firms, and non-profit agencies.^[1] These estimates include firming resource costs.

Busbar cost in cents per kilowatt-hour in 2008 dollars:

Coal:

Coal Supercritical: 10.554
Coal Integrated Gasification Combined Cycle (IGCC): 11.481
Coal IGCC with Carbon Capture & Storage (IGCC with CCS): 17.317

Alternatives:

Biogas: 8.552
Wind: 8.910
Gas Combined Cycle: 9.382
Geothermal: 10.182
Hydroelectric: 10.527
Concentrating solar thermal (CSP): 12.653
Nuclear: 15.316
Biomass: 16.485

Busbar means the price of the power leaving the plant. All capital, fuel, and operating costs are taken into account in busbar costs.

The spreadsheet containing these costs can be found at CPUC GHG Modeling.

Select GHG Calculator v2b. This is a 5.7 MB compressed file in ZIP format. Decompressing the ZIP file produces an Excel spreadsheet.

On this spreadsheet, look for the tab on the bottom of the page that says "Gen Cost"

This opens another spreadsheet. Now look for "All-in Levelized Busbar Cost California." The results are in $/MWh and are readily converted to cents per kwh. For example, $85.52 per MWh is the same as 8.552 cents per kwh

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Comparative costs data: Lazard analysis (June 2008)

The investment banking company Lazard Ltd. released the following comparison among generation technologies. The levelized costs include production tax credits, investment tax credits, and accelerated asset depreciation as applicable. Assumptions include: busbar costs (cents per kilowatt-hour) in 2008 dollars, 60% debt at 7% interest rate, 40% equity at 12% cost, 20-year economic life, 40% tax rate, 5-20 year tax life, coal at $2.50 per million Btu, and natural gas at $8.00 per million Bt.^[2]

Coal/Nuclear/Gas:

Gas peaking: 22.1 - 33.4
IGCC: 10.4 - 13.4
Nuclear: 9.8 - 12.6
Advanced supercritical coal: 7.4 - 13.5 (high end includes 90% carbon capture and storage)
Gas combined cycle: 7.3 - 10.0

Alternatives:

Solar PV (crystalline): 10.9 - 15.4
Fuel cell: 11.5 - 12.5
Solar PV (thin film): 9.6 - 12.4
Solar thermal: 9.0 - 14.5 (low end is solar tower; high end is solar trough)
Biomass direct: 5.0 - 9.4
Landfill gas: 5.0 - 8.1
Wind: 4.4 - 9.1
Geothermal: 4.2 - 6.9
Biomass cofiring: 0.3 - 3.7
Energy efficiency: 0.0 - 5.0

Comment: the California Public Utilities Commission used a low range of costs for natural gas: $5.50 - $6.50 per MMBtu (million British thermal units, a measure of heat) - while today's price is $8.00 per MMBtu, and was over $12/MMBtu early this summer. Since the cost of gas is about 70% of the cost of producing natural gas-fired electricity, the price of gas is CRITICAL. Every dollar the cost of gas goes up -- from say $8.00/MMBtu to $9.00/MMBtu, the cost of natural gas-fired electricity increases about a penny. So when natural gas increases from $8.00/MMBtu to $12.00/MMBtu, that means the cost of gas-fired electricity increases a stunning 4 cents/kWh. The Lazard study below uses a much more realistic cost estimate of $8.00/MMBtu.

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Capacity costs

According to the California regulatory agency study, the capital cost of a new integrated gasification combined cycle (IGCC) coal plant without carbon capture and storage (CCS) is $3,087 per kilowatt (kW), and the cost of a new IGCC coal plants with 90% CCS is $5,127 per kW, both in 2008 dollars.^[1]

According to the Lazard study, the cost of a new IGCC coal plant without CCS is $3,750 per kW. The cost of a new IGCC coal plant with 90% CCS is $5,050 per kW. According to the Lazard study, the cost of a new supercritical coal plant without CCS is $2,550 per kW. The cost of a new supercritical plant with 90% CCS is $5,350 per kW. Lazard does not specify the year in which the costs are denominated, but the study was released in 2008.^[2]

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