Publication: Demystifying the Costs of Electricity Generation Technologies
Date
2020-06
ISSN
Published
2020-06
Author(s)
Timilsina, Govinda R.
Abstract
The levelized cost of electricity is the
most common indicator used to compare the cost
competitiveness of electricity-generating technologies.
Several studies claim that some renewable energy
technologies, particularly utility-scale solar photovoltaic
and onshore wind, are cost-competitive with fossil
fuel–based technologies. However, there is no consensus on
this point considering the wide variations in factors that
influence the levelized costs of electricity across
countries and technologies. This study calculates more than
4,000 levelized costs of electricity for 11 technologies,
varying key input variables. The study shows that the
levelized costs of electricity for renewable electricity
technologies, except concentrated solar and offshore wind,
are lower than those for fossil fuel–based technologies at
the lower range of capital costs and discount rates of 10
percent or lower. However, for a reasonable range of input
variables, calculations of the levelized costs of
electricity for renewables based on reasonable parameter
values do not justify the low auction prices for solar
power, below US$20 per megawatt hour, recently observed in
some parts of the world. The study also highlights the
shortcomings of the levelized cost indicator for comparing
the cost-competitiveness of different types of electricity
generation technologies.
Citation
“Timilsina, Govinda R.. 2020. Demystifying the Costs of Electricity Generation Technologies; Demystifying the costs of Electricity Generation Technologies. Policy Research Working Paper;No. 9303. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/77e46c80-aea3-5327-b24d-950799c6590c License: CC BY 3.0 IGO.”
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