Projected Costs of Generating Electricity - 2015 Edition
Key Organizations Involved:
- International Energy Agency (IEA): Established in 1974, focusing on energy security and promoting sustainable energy policies.
- Nuclear Energy Agency (NEA): Established in 1958, aiming to assist member countries in the safe and efficient use of nuclear energy.
- Organisation for Economic Co-operation and Development (OECD): A forum for 34 democracies to address global challenges and promote economic growth.
Introduction:
Electricity is the fastest-growing form of energy, but its future composition remains uncertain. This report examines the levelized costs of electricity (LCOE) for various technologies, highlighting key trends and insights relevant to policymakers.
Main Findings:
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Drivers of Cost:
- Market and Technology-Specific: The cost of different generating technologies varies based on market conditions and technological specifics.
- Capital Intensity: Low-carbon technologies remain highly capital-intensive, with overall costs depending significantly on the cost of capital.
- Fuel Costs: The relative cost of coal and natural gas-fired generation is heavily influenced by fuel costs and CO2 emission prices.
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Key Trends:
- Renewable Energy: Significant declines in the cost of renewable generation due to improved technologies and continued governmental support.
- Nuclear Energy: Costs remain competitive with other baseload technologies, despite persistent reports to the contrary.
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Market and Policy Environment:
- Market Structure: Market structure plays a strong role in determining the final LCOE.
- Policy Environment: The policy environment influences the overall cost of investments.
- Resource Endowments: Resource availability affects the cost of generation.
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LCOE Relevance:
- Simplicity and Comparability: The LCOE metric remains valuable for its simplicity and ease of comparison.
- Liberalized Power Markets: The relevance of LCOE in a world with increasing penetrations of variable renewable generation has been questioned.
Methodology:
- Data Sources: A database including a variety of technologies and countries.
- Methodological Issues: Advice provided by the Expert Group on Projected Costs of Generating Electricity (EGC Expert Group).
Authors and Contributors:
- Lead Authors: Matthew Wittenstein (IEA) and Geoffrey Rothwell (NEA).
- Contributors: Various experts from OECD member and non-member countries.
This comprehensive report highlights the evolving landscape of electricity generation costs, providing valuable insights for policymakers and stakeholders.
