๐ง๐ต๐ถ๐ ๐ฒ๐๐ผ๐๐ฒ๐ฟ๐ถ๐ฐ ๐ฑ๐ฒ๐ฏ๐ฎ๐๐ฒ ๐ต๐ฎ๐ ๐บ๐ฎ๐ท๐ผ๐ฟ ๐ถ๐บ๐ฝ๐น๐ถ๐ฐ๐ฎ๐๐ถ๐ผ๐ป๐
Aโ๏ธ437-wordโ๏ธ2-minuteโ๏ธread
Given recent posts, this esoteric debate is timely.
๐ง๐ต๐ฒ ๐๐๐ฏ๐ท๐ฒ๐ฐ๐: calculating the cost of generating electricity.
๐ง๐ต๐ฒ ๐ฑ๐ฒ๐ฏ๐ฎ๐๐ฒ: LCOE (levelized costs of energy) versus LVOE (levelized value of energy).
๐ง๐ต๐ฒ ๐ถ๐ป๐๐ฒ๐ฟ๐ฒ๐๐๐ฒ๐ฑ ๐ฝ๐ฎ๐ฟ๐๐ถ๐ฒ๐: solar versus nuclear.
๐ง๐ต๐ฒ ๐ฏ๐ฎ๐ฐ๐ธ๐ด๐ฟ๐ผ๐๐ป๐ฑ:
โถ LCOE is the recognized standard to estimate the cost of producing a megawatt-hour of electricity. Investment bank Lazardโ has published an annual LCOE report for 18 years.
โถ The report consistently indicates that solar offers the lowest cost of energy production (as low as $29 per MWh) and nuclear is expensive (as high as $222).
The LCOE calculation takes a generator discounted for future costs, adds the generatorโs operating and capital expenditures, then divides it by the energy a system is projected to output over its discounted life.
The problem is that LCOE leaves out some potentially vital variables. These include required infrastructure upgrades, operating parameters (intermittent versus baseload) and project lifespan. All seem like logical inputs if the goal is to accurately estimated the cost of energy over a projectโs life, and not just at a single point in time.
The infrastructure upgrade expense relates to Mondayโs post that highlighted New Yorkโs need to build expensive transmission infrastructure to move solar power generate in the sparsely populated north, down-state to where most of the population resides.
The LCOE versus LVOE debate wasnโt top of mind when I stated that this cost should be a consideration. Logic was. If one power source requires an upgrade and another doesnโt (and never will), thatโs a key factor to estimate the actual cost of energy production.
Today, FTI Consulting published a report examining two new metrics: LVOE and levelized net benefit (LNB) which quantifies a projects overall value. These metrics indicated that in both ERCOT in Texas and PJM โ the countryโs largest RTO โ solar was about 40% lower in cost based on LCOE while nuclear generated an LVOE value roughly 10 times greater.
This isnโt an endorsement of LVOE.
FTI is a public company, but counts among its clients, companies that profit from nuclear technology.
The Clean Air Task Force (CATF) also believes a reassessment of LCOE is in order. However, according to IA, although CATF is not considered โbiasedโ in the traditional sense, it has long advocated for nuclear energy.
Therefore, both organizations may be somewhat biased. Regardless, it seems that the debate is valid and it would be worthwhile to have both sides present their best case, and allow an impartial third-party to decide which approach is better suited to achieve our climate goals.
#LCOE #LVOE #nuclearenergy #solarenergy