Jul 20, 2017

Cost of Electricity in the United States

Forbes has an interesting article about the total costs of producing electricity in the United States. Nuclear power is the lowest cost option, followed by hydro, coal, and wind.  Solar is the highest, but costs are dropping fast as the technology matures.
"the world needs about 30 trillion kWhrs of electricity per year to eradicate global poverty and war, twice what we produce now. But what is this going to cost society? In the long-run? What are the actual costs to produce energy - not the fixed price, not the financing, not the tax breaks and subsidies, or the mandates, not all of the artificial add-ons that we demand in order to make someone rich or to fit into our economic model. These other costs are what go into calculating levelized costs, lossely defined as a break-even point for investors, utilities and consumers.  Levelized costs are critical for short-term economic planning and financing, but society needs to know the actual total life-cycle costs so we can plan beyond our captive 4-year intervals. Otherwise, short-term profits will drive us down the fossil-fuel path by default and we will have no hope of breaking this costly cycle."

"By life-cycle costs, I mean the total costs of building, operating, maintaining, fueling and decommissioning a thermal power plant, a solar array, a wind farm or hydroelectric dam over its life, that is, 15 years for a wind turbine, 40 years for a fossil fuel plant, 60 years for a nuclear plant, or 80 years for a large hydroelectric dam.  Dividing those total costs by the amount of energy actually produced, not theoretically possible or installed capacity but actually produced, gives a life-cycle cost in ¢/kWhr.  How we finance this cost is a totally different issue, one at which we generally fail as a society."
"To calculate these costs, each source must be normalized to the capacity factor and the life span and a specific total energy production, such as 0.5 trillion kWhrs. Although it is cheap to build a gas-fired plant, the fuel costs become more important as time goes on, even with the present gas surge.  While it is expensive to build a nuclear plant, the fuel costs are low and the capacity factor high, so the longer it operates the cheaper it becomes.  Similarly for wind and solar, expensive to build but no fuel means the longer they are operating the cheaper they become.  On the other hand, the longer fossil fuel plants operate the more expensive they become because it is all about the fuel."

Lateral wind turbines at Altamont, CA. Source: DOE EERE.
"If readers are interested, it will take a few posts to go over the details of calculating these costs for each of the primary energy sources of coal, natural gas, nuclear, wind, solar and hydro, but the results are: 4.1 ¢/kWhr for coal, 5.2 ¢/kWhr for natural gas, 3.5 ¢/kWhr for nuclear, 4.3 ¢/kWhr for wind, 7.7 ¢/kWhr for solar, and 3.3 ¢/kWhr for hydro."
"These costs are for the entire life-span of the units, after running them to death. These costs are separate from investments, taxation, subsidies, loan structure, and other costs that are associated more with pricing and financing than with what the actual costs are to produce that energy."
4.1 ¢/kWhr for coal
5.2 ¢/kWhr for natural gas 
3.5 ¢/kWhr for nuclear 
4.3 ¢/kWhr for wind
7.7 ¢/kWhr for solar 
3.3 ¢/kWhr for hydro