Cost comparisons for wind and thermal power generation

Partridge, Ian

doi:10.1016/j.enpol.2017.10.006

Cited by 56 publications

(31 citation statements)

References 6 publications

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“…At present, offshore wind projects around the world are not directly cost-competitive with other forms of electricity generation [4]. In the UK, offshore wind projects are supported by government-mandated Contracts for Difference (CfDs).…”

Section: Introductionmentioning

confidence: 99%

Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT

2019

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Around the world, government policies to support new renewable energy technologies rely on accurate estimates of Levelised Cost of Energy (LCOE). This paper reveals that such estimates are based on "public domain" data which may be unreliable. A new approach and methodology has been developed which uses United Kingdom (UK) "audited" data, published in company accounts that has been obtained from Companies House, to determine more accurate LCOE estimates. The methodology is applicable to projects configured within Special Purpose Vehicle (SPV) companies. The methodology is then applied to a number of UK offshore wind farms and one Combined Cycle Gas Turbine (CCGT) project, with cost data then compared to that presently in the public domain. The analysis reveals that recent offshore wind projects show a slightly declining LCOE and that public domain cost estimates are unreliable. But of most concern is that offshore wind farm costs are still much higher than those implied by recent bids for UK government financial support via Contracts for Difference (CfDs). The paper concludes by addressing further the question of how offshore wind projects can achieve the degree of LCOE reductions required by recent CfD bids.

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Section: Introductionmentioning

confidence: 99%

Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT

2019

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“…Williams et al (2017) show that wind power costs are expected to decrease due to technological progress but Liebe et al (2017) point out that site-specific characteristics such as landscape, circulation pattern, and seasonality that have great influences on wind stability must be properly estimated to estimate wind power. Therefore, although a considerable amount of wind power studies have been conducted (Gillenwater, 2013;Hu et al, 2013;Partridge, 2018;Shoaib et al, 2019;Thøgersen and Noblet, 2012), no single parameter can be applied universally due to the above reasons, and the estimation of turbines' power curves for different sites must be implemented and tested prior to any wind power development.…”

Section: Literature Reviewmentioning

confidence: 99%

An economic analysis on Taiwanese wind power and regional development

Chen

Zhang

Kung

2020

Energy Exploration & Exploitation

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Due to environmental concern, Taiwan aims to remove nuclear power from its energy structure. Since an increase in fossil fuel-based generation is foreboded by law, the lost nuclear power can only be replaced by renewable energy sources. The maritime climate and constant monsoons make wind power a feasible alternative energy source to Taiwan. With more than 300 potential wind farm sites under consideration, the government does not have enough information to determine the best sites in terms of power generation and capital investments. To explore such information, this study employs a lifecycle analysis to identify the economic components of these sites under the estimates of wind speed data and potential wind power generation obtained in our previous study. We also use a sensitivity analysis to examine the impact of construction cost, maintenance cost, energy sale, and emission trade on the site selection decision. We show that variations in construction costs and energy prices have larger impacts than greenhouse gases prices. In addition, the results point out that most sites pass the cost-benefit examination, but site rankings may alter in the face of capital rationing and climate change. Some policy implications derived from the results are discussed in detail.

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“…This approach is more complicated but can consider the differences between LP and OP. However, this one has to assume or calculate the discount rate, which sometimes evokes the subjective evaluation issues [24,25]. So, some researchers suggested several alternative metrics such as undiscounted cost of energy approach, discounted cost of energy approach and total cost of energy [8,26].…”

Section: Various Approaches For Better Economic Competitiveness Evalumentioning

confidence: 99%

“…Input variables such as OCC, CP, F_OM, V_OM, and CF are difficult to be determined by one value. So, many researchers prefer using probablistic approach rather than deterministic approach [5][6][7]9,25]. Particularly, Monte Carlo simulation is preferred to predict and compare the energy competitiveness with uncetain situations [5][6][7].…”

Section: Various Approaches For Better Economic Competitiveness Evalumentioning

confidence: 99%

Economic Competitiveness Evaluation of the Energy Sources: Comparison between a Financial Model and Levelized Cost of Electricity Analysis

Sung

Jung

2019

Energies

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The levelized cost of electricity (LCOE) is used widely to compare the economic competitiveness of the energy mix. This method is easy to understand and simple to apply, which makes it preferable for many energy policymakers. However, the method has several disadvantages from the energy business perspective. First, the LCOE approach does not consider revenue, and a high-interest rate usually correlates with the tariff growth rate. Thus, if a high-interest rate increases the cost, that high rate increases the revenue, which can affect economic competitiveness. Second, the LCOE does not consider different stakeholders. Equity investors and loan investors have different interests depending on different financial indicators, which influence the same energy sources’ differential economic attractiveness. This study analyzes and compares the LCOE, Project Internal Rate of Return (Project IRR), Equity Internal Rate of Return (Equity IRR), and Debt Service Coverage Ratio (DSCR) of an illustrative wind, coal, and nuclear power project using Monte-Carlo simulations. The results show that energy sources’ economic competitiveness can vary depending on financial indicators. This study will help energy policymakers develop more economically realistic energy portfolios.

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Cost comparisons for wind and thermal power generation

Cited by 56 publications

References 6 publications

Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT

Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT

An economic analysis on Taiwanese wind power and regional development

Economic Competitiveness Evaluation of the Energy Sources: Comparison between a Financial Model and Levelized Cost of Electricity Analysis

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