LCOE By Region and Technology

The levelized cost of energy (LCOE) is presented by region and for different power generation technologies.  The simple model ignores the impact of subsidies, financing and tax impacts to focus on relative performance by technology.  

pn.lcoe

The LCOE data is compared to annual average power prices.  In practice, price levels can vary over wide ranges, especially given winter weather.  Several noteworthy conclusions are evident when average prices are used:

  • Baseload natural gas CCGT plants are not profitable in the majority of regions and require demand or weather induced price shocks to achieve positive returns;
  • Wind energy has achieved grid parity with wholesale prices in the majority of markets with the exception of the MENA region where power prices are subsidized;
  • Solar energy is best compared to NG OCGT plants used for day-time peaking.  The data confirms that solar PV compares favorably to gas peaking plants in the MENA region and across developing Asia (India and China);
  • Winter gas prices are preventing coal-to-gas switching, complicating carbon abatement especially in developing Asia.

The inclusion of carbon capture systems for coal defines LCOE results for carbon abatement strategies:

  • Coal-to-gas switching, as promoted by major oil and gas companies, is a cost effective solution for carbon control.  Actual switching is complicated by differences in fuel prices around the world.  Currently, coal is cheap and gas is costly in the majority of regions with the exception of the U.S.;
  • In the U.S., cheap gas supports power production at $49/MWh and outperforms a low carbon combination of coal and wind energy at $73/MWh, which achieves the same carbon reduction;
  • Across the MENA, combinations of coal and wind energy come in at $71/MWh and achieve low cost carbon abatement when compared to natural gas at $110/MWh;
  • Across developing Asia, combinations of coal and wind energy also achieve meaningful carbon reductions at low cost ($65/MWh) when compared to coal-to-gas switching.  The best option for developing Asia is a combination of hydro and nuclear, which averages $48/MWh;
  • Carbon capture technology would require a carbon price of $64/ton in Europe, $43/ton in developing Asia and $71/ton in the US to ensure broad adoption.  At these levels, coal-to-gas switching would be assured.  However, market incentives for RE would achieve the same result at significantly lower cost.

The chart is a basic histogram, combined with line segments for average wholesale prices.  Defining the line segments is complicated by the fact that categorical (not numeric) data lies on the x-axis.  Defining the regions as factors with numeric levels is the solution below.

 

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