Annual Energy Outlook - EIA

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April 2017

Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2017 This paper presents average values of levelized costs and levelized avoided costs for generating technologies entering service in 2019, 2022,1 and 2040 as represented in the National Energy Modeling System (NEMS) for the Annual Energy Outlook 2017 (AEO2017) Reference case.2 The costs for generating technologies entering service in 2022 are presented in the body of the report, with those for 20193 and 2040 included in Appendices A and B, respectively. Both a capacity-weighted average based on projected capacity additions across the 22 U.S. regions of the NEMS electricity market module (EMM) and a simple average of the regional values are provided, together with the range of regional values.

Levelized Cost of Electricity (LCOE) and its limitations Levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall competiveness of different generating technologies. It represents the per-kilowatthour cost (in discounted real dollars) of building and operating a generating plant over an assumed financial life and duty cycle4. Key inputs to calculating LCOE include capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, and an assumed utilization rate for each plant type.5 The importance of the factors varies among the technologies. For technologies such as solar and wind generation that have no fuel costs and relatively small variable O&M costs, LCOE changes in rough proportion to the estimated capital cost of generation capacity. For technologies with significant fuel cost, both fuel cost and overnight cost estimates significantly affect LCOE. The availability of various incentives, including state or federal tax credits (see text box), can also impact the calculation of LCOE. As with any projection, there is uncertainty about all of these factors and their values can vary regionally and across time as technologies evolve and fuel prices change. It is important to note that actual plant investment decisions are affected by the specific technological and regional characteristics of a project, which involve numerous other factors not reflected in LCOE values. The projected utilization rate, which depends on the load shape and the existing resource mix in 1

The first year that all technologies are available is 2022, given the long lead time and licensing requirements for some technologies. 2 AEO2017 reports are available at http://www.eia.gov/outlooks/aeo/index.cfm. 3 Appendix A shows levelized cost of electricity values for plants coming online in 2019 for the subset of technologies available to be built in that year. 4 Duty cycle refers to the typical utilization or dispatch of a plant to serve base, intermediate, or peak load. Plants using wind, solar, or other intermittently available resources are not dispatched and do not necessarily follow a duty cycle based on load conditions. 5 The specific assumptions for each of these factors are given in the Assumptions to the Annual Energy Outlook, available at http://www.eia.gov/outlooks/aeo/assumptions/.

U.S. Energy Information Administration | AEO2017 Levelized Costs

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AEO2017 representation of tax incentives for renewable generation Federal tax credits for certain renewable generation facilities have the potential to substantially reduce the realized cost of these facilities. Where applicable, the LCOE tables show both the cost without these tax credits, as well as the cost as adjusted for the tax credits assumed to be available in the year in which the plant enters service, as follows. Production Tax Credit (PTC): New wind, geothermal, and biomass plants receive a $23/MWh ($12/MWh for technologies other than wind, geothermal and closed-loop biomass) inflationadjusted production tax credit over the plant’s first ten years of service if the plants are under construction before the end of 2016. After 2016, wind continues to be eligible for the production tax credit, but at a dollar per kilowatthour rate that declines by 20% in 2017, 40% in 2018, 60% in 2019, and expires completely in 2020. Based on documentation released by the Internal Revenue Service (IRS) (see http://www.irs.gov/irb/2016-23_IRB/ar07.html), EIA assumes that wind plants will be able to claim the credit up to four years after beginning construction. As a result, wind plants entering service in 2019 will receive the full credit, and those entering service in 2022 will receive $14/MWh (inflation-adjusted). Investment Tax Credit (ITC): New solar PV and thermal plants are eligible to receive a 30% investment tax credit on capital expenditures if the plants are under construction before the end of 2019, after which the ITC tapers off for new starts to 26% in 2020, and 22% in 2021. In 2022, the ITC expires for residential systems and declines to 10% for business and utility-scale systems in that year and each year thereafter. All utility-scale plants not placed in service prior to January 1, 2024 receive a 10% ITC regardless of the date construction was commenced. Results in this levelized cost report only include utility-scale solar facilities and do not include distributed solar facilities. In NEMS, EIA assumes that new utility-scale solar PV plants will have a 2-year construction lead time and solar thermal plants a 3-year construction lead time. EIA assumes that all utility-scale solar plants entering service in 2019 receive the full 30% tax credit. PV plants entering service in 2022 receive 26%, whereas solar thermal plants entering service in 2022, having begun construction a year earlier receive 30%. an area where additional capacity is needed, is one such factor. The existing resource mix in a region can directly impact the economic viability of a new investment through its effect on the economics surrounding the displacement of existing resources. For example, a wind resource that would primarily displace existing natural gas generation will usually have a different economic value than one that would displace existing coal generation. A related factor is the capacity value, which depends on both the existing capacity mix and load characteristics in a region. Since load must be balanced on a continuous basis, units whose output can be varied to follow demand (dispatchable technologies) generally have more value to a system than less flexible units (non-dispatchable technologies), or those whose operation is tied to the availability of an intermittent resource. The LCOE values for dispatchable and non-dispatchable technologies are listed separately in the tables, because caution should be used when comparing them to one another.

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Levelized Avoided Cost of Electricity (LACE) as an additional indicator Since projected utilization rates, the existing resource mix, and capacity values can all vary dramatically across regions where new generation capacity may be needed, the direct comparison of LCOE across technologies is often problematic and can be misleading as a method to assess the economic competitiveness of various generation alternatives. Conceptually, a better assessment of economic competitiveness can be gained through consideration of avoided cost, a measure of what it would cost the grid to generate the electricity that is otherwise displaced by a new generation project, as well as its levelized cost. Avoided cost, which provides a proxy measure for the annual economic value of a candidate project, may be summed over its financial life and converted to a level annualized value that is divided by average annual output of the project to develop its “levelized” avoided cost of electricity (LACE).6 The LACE value may then be compared with the LCOE value for the candidate project to provide an indication of whether or not the project’s value exceeds its cost. If multiple technologies are available to meet load, comparisons of each project’s LACE to its LCOE may be used to determine which project provides the best net economic value. Estimating avoided costs is more complex than estimating levelized costs because it requires information about how the system would have operated without the option under evaluation. In this discussion, the calculation of avoided costs is based on the marginal value of energy and capacity that would result from adding a unit of a given technology to the system as it exists or is projected to exist at a specified future date and represents the potential value available to the project owner from the project’s contribution to satisfying both energy and capacity requirements. While the economic decisions for capacity additions in EIA’s long-term projections use neither LACE nor LCOE concepts, the LACE and net economic values presented in this report are generally more representative of the factors contributing to the projections than looking at LCOE alone. However, both the LACE and LCOE estimates are simplifications of modeled decisions, and may not fully capture all decision factors or match modeled results. Policy-related factors, such as environmental regulations and investment or production tax credits for specified generation sources, can also impact investment decisions. The LCOE and LACE values presented here are derived from the AEO2017 Reference case, which includes the impacts of the Clean Power Plan (CPP), state-level renewable electricity requirements as of November 2016, and an extension and phase-out of federal tax credits for renewable generation. Finally, although levelized cost calculations are generally made using an assumed set of capital and operating costs, the inherent uncertainty about future fuel prices and future policies may cause plant owners or investors who finance plants to place a value on portfolio diversification. While EIA considers many of the factors discussed in the previous paragraphs in its analysis of technology choice in the electricity sector in NEMS, not all of these concepts are included in LCOE or LACE calculations.

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Further discussion of the levelized avoided cost concept and its use in assessing economic competitiveness can be found in this article: http://www.eia.gov/renewable/workshop/gencosts/.

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LCOE and LACE calculations The LCOE values shown for each utility-scale generation technology in Table1a (regional values weighted based on projected capacity additions), Table 1b (unweighted average of regional values), and Table 2 (minimum and maximum range across regions) are calculated based on a 30-year cost recovery period, using a real after-tax weighted average cost of capital (WACC) of 5.5%.7 In reality, the cost recovery period and cost of capital can vary by technology and project type. Because regulators and the investment community have continued to push energy companies to invest in technologies that are less greenhouse gas-intensive, there is considerable financial risk associated with major investments in longlived power plants with a relatively higher rate of carbon dioxide emissions. The trend is captured in the AEO2017 Reference case through a 3-percentage-point adder to the cost of capital when evaluating investments in new coal-fired power plants, new coal-to-liquids (CTL) plants without carbon capture and storage (CCS), and pollution control retrofits. For AEO2017, two new coal-fired technologies are available that are compliant with the new source performance standard for carbon emissions under Section 111(b) of the Clean Air Act. One design only captures 30% of CO2 emissions and would still be considered a high emitter relative to other new sources and thus may continue to face potential financial risk if carbon emission controls are further strengthened. Another design captures 90% of CO2 emissions and would not face the same financial risk, and therefore does not receive the 3-percentagepoint increase in cost of capital. As a result, the LCOE values for the coal-fired plant with 30% CCS are higher than they would be if the same cost of capital was used for all technologies. The levelized capital component reflects costs calculated using tax depreciation schedules consistent with permanent tax law, which vary by technology. Since the literature and common usage of LCOE supports the reporting of LCOE both with and without tax credits, Tables 1a and 1b report both calculations for technologies where an investment or production tax credit is available for plants entering service in 2022. Tax credits are assumed to phase-out and expire based on current laws and regulations. Some technologies, notably solar photovoltaic (PV), are used in both utility-scale generating plants and distributed end-use residential and commercial applications. The LCOE and LACE calculations presented in this paper apply only to the utility-scale use of those technologies. Costs are expressed in terms of net alternating current (AC) power available to the grid for the installed capacity. Tables 1a and 1b show the LCOE for each technology as evaluated based on the capacity factor indicated, which generally corresponds to the high end of its likely utilization range. This convention is consistent with the use of LCOE to evaluate competing technologies in baseload operation. Some technologies, such as combined cycle plants, while sometimes used in baseload operation, are also built to serve load-following or other intermediate dispatch duty cycles.

7The

real WACC of 5.5% corresponds to a nominal after-tax rate of 7.8% for plants entering service in 2022. The WACC used to calculate LCOE for plants coming online in 2040, which is presented in Appendix B, is 7.8% nominal or 5.8% real. An overview of the WACC assumptions and methodology can be found in the Electricity Market Module of the National Energy Modeling System: Model Documentation. This report can be found at http://www.eia.gov/outlooks/aeo/nems/documentation/electricity/pdf/m068(2014).pdf.

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Simple combustion turbines (conventional or advanced technology) that are typically used for peak load duty cycles are evaluated at a 30% capacity factor, reflecting the upper-end of their potential utilization range. The duty cycle for intermittent renewable resources, wind and solar, is not operator controlled, but dependent on the weather or solar cycle (that is, sunrise/sunset) and so will not necessarily correspond to operator dispatched duty cycles. As a result, their LCOE values are not directly comparable to those for other technologies (even where the average annual capacity factor may be similar) and therefore are shown in a separate section (Non-Dispatchable Technologies) on each of the tables. The capacity factors shown for solar, wind, and hydroelectric resources in Tables 1a and 1b are averages of the capacity factor for the marginal site in each region, weighted by the projected capacity builds in each region for Table 1a and unweighted for Table 1b. These capacity factors can vary significantly by region. Projected capacity factors for these resources in the AEO2017 or other EIA analyses represent cumulative capacity additions (including existing units) and will not necessarily correspond to these levels. The LCOE values shown in Table 1a are a weighted average of region-specific LCOE values using weights reflecting the regional shares of projected capacity builds; Table 1b reports an unweighted average across all 22 EMM regions. Table 2 shows the significant regional variation in LCOE values based on local labor markets and the cost and availability of fuel or energy resources such as windy sites. For example, without consideration of production tax credits, the LCOE for incremental onshore wind capacity coming online in 2022 ranges from $43.4/MWh in the region with the best available resources to $75.6/MWh in the region with lowest quality wind resources and/or higher capital costs for the best sites. In general, onshore wind plants will get built in regions that offer low costs and/or high value, so the weighted average cost across regions is closer to the low-end of the range, at $55.8/MWh. Costs shown for wind generators may include additional costs associated with transmission upgrades needed to access remote resources, as well as other factors that markets may or may not internalize into the market price for wind power. As previously indicated, LACE provides an estimate of the cost of generation and capacity resources displaced by a marginal unit of new capacity of a particular type, thus providing an estimate of the value of building such new capacity. This is especially important to consider for intermittent resources, such as wind or solar, that have substantially different duty cycles than the baseload, intermediate, and peaking duty cycles of conventional generators. Table 3 provides the range of LACE estimates for different capacity types. The LACE estimates in this table have been calculated assuming the same maximum capacity factor as in the LCOE. Values are not shown for combustion turbines, because combustion turbines are generally built for their capacity value to meet a reserve margin rather than to meet generation requirements and avoided energy costs. When the LACE of a particular technology exceeds its LCOE at a given time and place, that technology would generally be economically attractive to build. While the build decisions in the real world, and as modeled in the AEO, are somewhat more complex than a simple LACE to LCOE comparison, including such factors as policy and non-economic drivers, the net economic value, or net difference between LACE and LCOE, provides a reasonable point of comparison of first-order economic competitiveness among a wider variety of technologies than is possible using either LCOE or LACE tables individually. In Table 4a and Table 4b, a negative difference indicates that the cost of the marginal new unit of capacity

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exceeds its value to the system, as measured by LACE; a positive difference indicates that the marginal new unit brings in value in excess of its cost by displacing more expensive generation and capacity options. The “Average Net Difference” represents the average of the “LACE minus LCOE” calculation, where the difference is calculated for each of the 22 regions. This range of differences is not based on the difference between the minimum and maximum values shown in Table 2 and Table 3, but represents the lower and upper bound resulting from the LACE minus the LCOE calculations for each of the 22 regions. The net difference from 2022 to 2040 tends to approach zero as the most economically attractive resources are built.8 The average net differences shown in Table 4a and Table 4b are for plants coming online in 2022, consistent with Tables 1-3. The weighted average net difference is above zero in 2022 for advanced combined cycle units, geothermal, solar PV, and onshore wind, suggesting that these technologies are being built in regions where they are economically viable. Additional tables showing the LCOE cost components, regional variation in LCOE and LACE and net differences for 2040 are provided in Appendix B. Changes in cost from 2022 to 2040 reflect a number of different factors, sometimes working in different directions. Technology improvement tends to reduce LCOE through lower capital costs or improved performance (as measured by heat rate for fossil-fired plants or capacity factor for renewable plants). For fossil-fired plants, changing fuel prices also factor into the change in LCOE. For renewable resources such as wind, hydroelectric, or geothermal, the availability of high quality resources may also be a factor. As the best, least-cost resources are exploited, development will be forced into less favorable areas, potentially resulting in higher development costs, higher costs to access transmission lines, or access to lower-performing resources. Changes in the value of generation are a function of load growth. However, renewables such as wind and solar may show strong daily or seasonal generation patterns. As a result, the value of such renewable generation may see significant reductions as these periods become more saturated with generation and generation from new sources must compete with lower-cost options in the dispatch merit order.

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For a more detailed discussion of the LACE versus LCOE measures, see Assessing the Economic Value of New Utility-Scale Electricity Generation Projects, which can be found at http://www.eia.gov/renewable/workshop/gencosts/pdf/lacelcoe_070213.pdf

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Table 1a. Estimated LCOE (weighted average of regional values based on projected capacity additions) for new generation resources, plants entering service in 2022

Capacity Factor (%)

Plant Type

U.S. Capacity-Weighted1 Average LCOE (2016 $/MWh) for Plants Entering Service in 2022 Variable Levelized O&M Total Levelized Total LCOE Capital Fixed (including Transmission System Tax including Cost O&M fuel) Investment LCOE Credit2 Tax Credit

Dispatchable Technologies Coal 30% with carbon sequestration3

---------------------------------------NB---------------------------------------

sequestration3

---------------------------------------NB---------------------------------------

Coal 90% with carbon Natural Gas-fired

Conventional Combined Cycle

87

14.0

1.4

42.0

1.1

58.6

NA

58.6

Advanced Combined Cycle

87

14.0

1.3

37.5

1.0

53.8

NA

53.8

Conventional Combustion Turbine

30

36.8

6.6

54.3

3.0

100.7

NA

100.7

Advanced Combustion Turbine

30

22.8

2.6

58.8

3.0

87.1

NA

87.1

Advanced Nuclear

90

70.8

12.6

11.7

1.0

96.2

NA

96.2

Geothermal

90

29.2

13.3

0.0

1.5

44.0

-2.9

41.1

Biomass

83

47.2

15.2

34.2

1.2

97.7

NA

97.7

41

39.8

13.1

0.0

2.9

55.8

-11.6

44.3

-15.6

58.1

Advanced CC with CCS

---------------------------------------NB---------------------------------------

Non-Dispatchable Technologies Wind – Onshore Wind – Offshore Solar PV4

---------------------------------------NB--------------------------------------25

Solar Thermal

59.8

10.1

0.0

3.8

73.7

---------------------------------------NB---------------------------------------

Hydroelectric5 60 54.1 3.1 5.2 1.5 63.9 NA 1The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2018-2022. Technologies for which capacity additions are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2The tax credit component is based on targeted federal tax credits such as the production or investment tax credit available for some technologies. It only reflects tax credits available for plants entering service in 2022. Not all technologies have tax credits, and are indicated as “NA” or not available. The results are based on a regional model and state or local incentives are not included in LCOE calculations. See text box on page 2 for details on how the tax credits are represented in the model. 3Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. Two levels of CCS removal are modeled, 30% and 90%. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

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63.9

Table 1b. Estimated LCOE (simple average of regional values) for new generation resources, for plants entering service in 2022

Capacity Factor (%)

Plant Type

U.S. Average LCOE (2016 $/MWh) for Plants Entering Service in 2022 Variable Levelized O&M Total Levelized Capital Fixed (including Transmission System Tax Cost O&M fuel) Investment LCOE Credit1

Total LCOE including Tax Credit

Dispatchable Technologies Coal 30% with carbon sequestration2

85

94.9

9.3

34.6

1.2

140.0

NA

140.0

sequestration2

85

78.0

10.8

33.1

1.2

123.2

NA

123.2

Conventional Combined Cycle

87

13.9

1.4

40.8

1.2

57.3

NA

57.3

Advanced Combined Cycle

87

15.8

1.3

38.1

1.2

56.5

NA

56.5

Advanced CC with CCS

87

29.5

4.4

47.4

1.2

82.4

NA

82.4

Conventional Combustion Turbine

30

40.7

6.6

58.6

3.5

109.4

NA

109.4

Advanced Combustion Turbine

30

25.9

2.6

62.7

3.5

94.7

NA

94.7

Advanced Nuclear

90

73.6

12.6

11.7

1.1

99.1

NA

99.1

Geothermal

91

32.2

12.8

0.0

1.5

46.5

-3.2

43.3

Biomass

83

44.7

15.2

41.2

1.3

102.4

NA

102.4

Wind – Onshore

39

47.2

13.7

0.0

2.8

63.7

-11.6

52.2

Wind – Offshore

45

133.0

19.6

0.0

4.8

157.4

-11.6

145.9

Solar PV3

24

70.2

10.5

0.0

4.4

85.0

-18.2

66.8

Solar Thermal

20

191.9

44.0

0.0

6.1

242.0

-57.6

184.4

Coal 90% with carbon Natural Gas-fired

Non-Dispatchable Technologies

Hydroelectric4

59 56.2 3.4 4.8 1.8 66.2 NA tax credit component is based on targeted federal tax credits such as the production or investment tax credit available for some technologies. It only reflects tax credits available for plants entering service in 2022. Not all technologies have tax credits, and are indicated as “NA” or not available. The results are based on a regional model and state or local incentives are not included in LCOE calculations. See text box on page 2 for details on how the tax credits are represented in the model. 2Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. Two levels of CCS removal are modeled, 30% and 90%. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. 4As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1The

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66.2

Table 2. Regional variation in levelized cost of electricity (LCOE) for new generation resources, 2022

Plant Type

Minimum

Range for Total System Levelized Costs (2016 $/MWh) NonCapacityweighted weighted2 average average

Maximum

Range for Total System Levelized Costs with Tax Credits1 (2016 $/MWh) NonCapacityweighted weighted Minimum average average Maximum

Dispatchable Technologies Coal with 30% carbon sequestration3

128.9

140.0

NB

196.3

128.9

140.0

NB

196.3

sequestration3

102.7

123.2

NB

142.5

102.7

123.2

NB

142.5

Conventional Combined Cycle

52.4

57.3

58.6

83.2

52.4

57.3

58.6

83.2

Advanced Combined Cycle

51.6

56.5

53.8

81.7

51.6

56.5

53.8

81.7

Advanced CC with CCS

63.1

82.4

NB

90.4

63.1

82.4

NB

90.4

Conventional Combustion Turbine

98.8

109.4

100.7

148.3

98.8

109.4

100.7

148.3

Advanced Combustion Turbine

85.9

94.7

87.1

129.8

85.9

94.7

87.1

129.8

Advanced Nuclear

95.9

99.1

96.2

104.3

95.9

99.1

96.2

104.3

Geothermal

42.8

46.5

44.0

53.4

40.0

43.3

41.1

49.3

Biomass

84.8

102.4

97.7

125.3

84.8

102.4

97.7

125.3

Wind – Onshore

43.4

63.7

55.8

75.6

31.9

52.2

44.3

64.0

Wind – Offshore

136.6

157.4

NB

212.9

125.1

145.9

NB

201.4

58.3

85.0

73.7

143.0

46.5

66.8

58.1

110.5

176.7

242.0

NB

372.8

134.6

184.4

NB

284.3

Coal with 90% carbon Natural Gas-fired

Non-Dispatchable Technologies

Solar PV4 Solar Thermal Hydroelectric5

57.4 66.2 63.9 69.8 57.4 66.2 63.9 cost with tax credits reflects tax credits available for plants entering service in 2022, See note in Tables 1a and 1b. 2The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2018-2022. Technologies for which capacity additions are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 3Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Note: The levelized costs for non-dispatchable technologies are calculated based on the capacity factor for the marginal site modeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as follows: Wind Onshore – 36% to 45%, Wind Offshore – 41% to 50%, Solar PV – 21% to 32%, Solar Thermal – 11% to 26%, and Hydroelectric – 30% to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as resource availability. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1Levelized

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69.8

Table 3. Regional variation in levelized avoided costs of electricity (LACE) for new generation resources, 2022

Plant Type

Minimum

Range for Levelized Avoided Costs (2016 $/MWh) Capacity Non-weighted weighted1 Average average

Maximum

Dispatchable Technologies Coal 30% with carbon sequestration2

47.4

58.7

NB

80.2

sequestration2

47.4

58.7

NB

80.2

Conventional Combined Cycle

47.3

58.1

58.4

80.0

Advanced Combined Cycle

47.3

58.1

59.3

80.0

Advanced CC with CCS

Coal 90% with carbon

Natural Gas-fired Combined Cycle

47.3

58.1

NB

80.0

Advanced Nuclear

47.6

57.3

59.3

64.5

Geothermal

51.5

65.3

70.4

79.8

Biomass

47.5

58.3

54.6

80.3

Wind – Onshore

44.1

53.2

54.0

76.3

Wind – Offshore

Non-Dispatchable Technologies 47.1

57.8

NB

79.0

PV3

42.5

64.7

66.8

82.9

Solar Thermal

39.7

69.9

NB

92.3

Solar

Hydroelectric4 46.1 57.4 58.2 79.5 capacity-weighted average is the average levelized avoided cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2018-2022. Technologies for which capacity additions are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. 4As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1The

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Table 4a. Difference between capacity-weighted levelized avoided costs of electricity (LACE) and capacity-weighted levelized costs of electricity (LCOE) for plants entering service in 2022 Comparison of capacity-weighted1 LCOE with tax credits and capacityweighted LACE (2016 $/MWh) Plant Type

Average LCOE

Average LACE

Average Net Difference2

Dispatchable Technologies Coal 30% with carbon sequestration 3

-----------------NB-----------------

Coal 90% with carbon sequestration3

-----------------NB-----------------

Natural Gas-fired Conventional Combined Cycle

58.6

58.4

-0.2

Advanced Combined Cycle

53.8

59.3

5.4

Advanced CC with CCS

-----------------NB-----------------

Advanced Nuclear

96.2

59.3

-36.9

Geothermal

41.1

70.4

29.4

Biomass

97.7

54.6

-43.0

Wind – Onshore

44.3

54.0

9.7

Wind – Offshore

-----------------NB-----------------

Non-Dispatchable Technologies

Solar

PV4

Solar Thermal

58.1

66.8

8.6

-----------------NB-----------------

Hydroelectric5

63.9 58.2 -5.7 The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2018-2022. Technologies for which capacity additions are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2The “Average Net Difference” represents the net economic value or the average of the (LACE minus LCOE) calculation, where the difference is calculated for each of the 22 regions based on the cost with tax credits for each technology, where tax credits are applicable. 3Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1

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11

Table 4b: Difference between levelized avoided costs of electricity (LACE) and levelized costs of electricity (LCOE) for plants entering service in 2022 Comparison of non-weighted average LCOE with tax credits and non-weighted average LACE (2016 $/MWh) Range of NonAverage Average Average Net Weighted Differences2 LCOE LACE Difference1 Minimum Maximum

Plant Type Dispatchable Technologies Coal 30% with carbon sequestration3

140.0

58.7

-81.3

-116.2

-70.7

sequestration3

123.2

58.7

-64.5

-77.4

-50.2

Conventional Combined Cycle

57.3

58.1

0.9

-5.1

9.3

Advanced Combined Cycle

56.5

58.1

1.7

-4.2

9.0

Advanced CC with CCS

82.4

58.1

-24.2

-35.2

-9.5

Advanced Nuclear

99.1

57.3

-41.7

-56.3

-34.6

Geothermal

43.3

65.3

21.9

10.9

39.8

102.4

58.3

-44.1

-70.6

-27.6

Wind – Onshore

52.2

53.2

1.0

-17.4

20.9

Wind – Offshore

145.9

57.8

-88.1

-141.9

-52.1

66.8

64.7

-2.0

-42.5

21.4

184.4

69.9

-114.5

-215.3

-57.7

Coal 90% with carbon Natural Gas-fired

Biomass Non-Dispatchable Technologies

Solar PV4 Solar Thermal Hydroelectric5

66.2 57.4 -8.8 -20.6 9.8 The “Average Net Difference” represents the average of the (LACE minus LCOE) calculation, where the difference is calculated for each of the 22 regions based on the cost with tax credits for each technology, where tax credits are applicable. 2This “range of differences” is not based on the difference between the minimum values shown in Table 2 and Table 3, but represents the lower and upper bound resulting from the LACE minus LCOE calculations for each of the 22 regions. 3Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1

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12

Appendix A: LCOE tables for plants entering service in 2019 Table A1a. Estimated LCOE (weighted average of regional values based on projected capacity additions) for new generation resources, for plants entering service in 2019

Plant Type

Capacity Factor (%)

U.S. Capacity-Weighted1 Average LCOE (2016 $/MWh) for Plants Entering Service in 2019 Variable Levelized O&M Total Total LCOE Capital Fixed (including Transmission System Levelized with Tax Cost O&M fuel) Investment LCOE Tax Credit Credit2

Dispatchable Technologies Natural Gas-fired Conventional Combined Cycle

87

11.6

1.4

35.2

1.1

49.3

NA

49.3

Advanced Combined Cycle

87

11.9

1.3

30.9

1.0

45.2

NA

45.2

Conventional Combustion Turbine

30

34.2

6.6

48.6

3.3

92.7

NA

92.7

Advanced Combustion Turbine

30

19.8

2.6

53.1

2.9

78.3

NA

78.3

39

36.0

13.7

0.0

2.7

52.4

-17.8

34.5

26

56.4

9.6

0.0

4.0

70.1

-16.9

Non-Dispatchable Technologies Wind – Onshore Solar

PV3

Solar Thermal 26 122.7 31.1 0.0 5.1 158.9 -36.8 1The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region are based on additions in 2017-2019. Technologies for which no new capacity builds are expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2Levelized cost with tax credits reflects tax credits available for plants entering service in 2019, see note 2 in Tables 1a. Not all technologies have tax credits, and are marked as “NA” or not available. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

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13

53.1 122.1

Table A1b. Estimated LCOE (simple average of regional values) for new generation resources, for plants entering service in 2019

Plant Type

Capacity Factor (%)

U.S. Average LCOE (2016 $/MWh) for Plants Entering Service in 2019 Variable Levelized O&M Total Levelized Capital Fixed (including Transmission System Tax Cost O&M fuel) Investment LCOE Credit1

Total LCOE with Tax Credit

Dispatchable Technologies Natural Gas-fired Conventional Combined Cycle

87

11.9

1.4

35.6

1.2

50.1

NA

50.1

Advanced Combined Cycle

87

13.6

1.3

32.7

1.2

48.8

NA

48.8

Conventional Combustion Turbine

30

35.2

6.6

50.5

3.5

95.8

NA

95.8

Advanced Combustion Turbine

30

22.5

2.6

56.7

3.5

85.3

NA

85.3

Wind – Onshore

40

40.8

13.6

0.0

2.8

57.1

-17.8

39.3

Solar PV2

24

62.8

10.5

0.0

4.4

77.7

-18.9

58.8

Solar Thermal 20 167.6 44.0 0.0 6.1 217.6 -50.3 cost with tax credits reflects tax credits available for plants entering service in 2019, see note in Tables 1a and 1b. Not all technologies have tax credits, and are marked as “NA” or not available. 2 Costs are expressed in terms of net AC power available to the grid for the installed capacity. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

167.3

Non-Dispatchable Technologies

1Levelized

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14

Table A2. Regional variation in levelized cost of electricity (LCOE) for new generation resources, plants entering service in 2019 Range for Total LCOE with Tax Credits1 (2016 $/MWh)

Range for Total System LCOE (2016 $/MWh)

Minimum

Nonweighted average

Capacityweighted2 average

Maximum

Conventional Combined Cycle

45.8

50.1

49.3

Advanced Combined Cycle

45.1

48.8

Conventional Combustion Turbine

87.2

Advanced Combustion Turbine

77.6

Wind – Onshore Solar PV3

Plant Type

Minimum

Nonweighted average

Capacityweighted average

Maximum

58.9

45.8

50.1

49.3

58.9

45.2

56.2

45.1

48.8

45.2

56.2

95.8

92.7

107.6

87.2

95.8

92.7

107.6

85.3

78.3

96.7

77.6

85.3

78.3

96.7

40.4

57.1

52.4

69.4

22.6

39.3

34.5

51.6

53.5

77.7

70.1

129.9

41.3

58.8

53.1

96.4

Dispatchable Technologies Natural Gas-fired

Non-Dispatchable Technologies

Solar Thermal 158.9 217.6 158.9 335.3 122.1 167.3 122.1 cost with tax credits reflects tax credits available in 2019, see note 2 in Tables 1a. 2The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2017-2019.Technologies for which new capacity builds are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. Note: The levelized costs for non-dispatchable technologies are calculated based on the capacity factor for the marginal site modeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as follows: Wind Onshore – 36% to 45%, Solar PV – 21% to 32%, and Solar Thermal – 11% to 26%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as resource availability. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1Levelized

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15

258.0

Appendix B: LCOE and LACE tables for plants entering service in 2040 Table B1a. Estimated LCOE (weighted average of regional values based on projected capacity additions) for new generation resources, for plants entering service in 2040

Plant Type

Capacity Factor (%)

U.S. Capacity-Weighted1 Average LCOE (2016 $/MWh) for Plants Entering Service in 2040 Variable Levelized O&M Total Total LCOE Capital Fixed (including Transmission System Levelized with Tax Cost O&M fuel) Investment LCOE Tax Credit2 Credit

Dispatchable Technologies Coal 30% with carbon sequestration3

---------------------------------------NB---------------------------------------

Coal 90% with carbon sequestration3

---------------------------------------NB---------------------------------------

Natural Gas-fired Conventional Combined Cycle Advanced Combined Cycle

---------------------------------------NB--------------------------------------87

11.7

1.3

41.8

1.0

55.8

Advanced CC with CCS

---------------------------------------NB---------------------------------------

Conventional Combustion Turbine

---------------------------------------NB---------------------------------------

Advanced Combustion Turbine

30

Advanced Nuclear

18.4

2.6

66.3

3.4

90.7

NA

55.8

NA

90.7

---------------------------------------NB---------------------------------------

Geothermal

91

24.7

16.5

0.0

1.5

42.6

-2.5

40.2

Biomass

83

34.9

15.2

24.5

1.1

75.7

NA

75.7

42

44.4

13.0

0.0

2.9

60.3

NA

60.3

-4.5

54.9

Non-Dispatchable Technologies Wind – Onshore Wind – Offshore Solar

PV4

---------------------------------------NB--------------------------------------24

Solar Thermal

45.3

10.4

0.0

3.8

59.5

---------------------------------------NB---------------------------------------

Hydroelectric5 37 43.4 2.9 3.3 1.3 50.9 NA 1The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2036-2040. Technologies for which no new capacity builds are expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2Levelized cost with tax credits reflects tax credits available in 2040, which includes a permanent 10% investment tax credit for geothermal and solar technologies, based on the Energy Policy Act of 1992. Not all technologies have tax credits, and are marked as “NA” or not available. 3Due to new regulations (CAA 111b), coal plants cannot be built without CCS because they are required to meet specific CO emission 2 standards. Two levels of CCS removal are modeled, 30% and 90%. The coal with 30% removal is assumed to incur a 3 percentage-point adder to their cost-of-capital to represent risk associated with higher emissions. 4 Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

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50.9

Table B1b. Estimated LCOE (simple average of regional values) for new generation resources, for plants entering service in 2040

Capacity Factor (%)

Plant Type

U.S. Average LCOE (2016 $/MWh) for Plants Entering Service in 2040 Variable Levelized O&M Total Capital Fixed (including Transmission System Levelized Cost O&M fuel) Investment LCOE Tax Credit1

Total LCOE with Tax Credit

Dispatchable Technologies Coal 30% with carbon sequestration2

85

77.7

9.3

34.6

1.2

122.8

sequestration2

85

63.9

10.8

34.4

1.2

110.3

Conventional Combined Cycle

87

11.8

1.4

45.6

1.2

60.0

NA

60.0

Advanced Combined Cycle

87

12.6

1.3

43.2

1.2

58.3

NA

58.3

Advanced CC with CCS

87

22.4

4.4

53.9

1.2

81.9

NA

81.9

Conventional Combustion Turbine

30

34.5

6.6

66.8

3.5

111.4

NA

111.4

Advanced Combustion Turbine

30

19.6

2.6

67.7

3.5

93.4

NA

93.4

Advanced Nuclear

90

59.4

12.6

16.5

1.1

89.6

NA

89.6

Geothermal

92

35.6

20.3

0.0

1.5

57.4

-3.6

53.8

Biomass

83

37.1

15.2

37.5

1.3

91.0

NA

91.0

Coal 90% with carbon

NA

122.8 110.3

Natural Gas-fired

Non-Dispatchable Technologies Wind – Onshore

41

41.7

13.1

0.0

2.7

57.6

NA

57.6

Wind – Offshore

45

104.4

19.6

0.0

4.9

128.8

NA

128.8

Solar PV3

24

54.5

10.5

0.0

4.4

69.4

-5.4

63.9

Solar Thermal

20

154.2

44.0

0.0

6.1

204.3

-15.4

188.9

Hydroelectric4

57 52.5 3.5 4.6 1.8 62.4 NA cost with tax credits reflects tax credits available in 2040, which includes a permanent 10% investment tax credit for geothermal and solar technologies, based on the Energy Policy Act of 1992. Not all technologies have tax credits, and are marked as “NA” or not available. 2Due to new regulations (CAA 111b), coal plants cannot be built without CCS because they are required to meet specific CO emission 2 standards. Two levels of CCS removal are modeled, 30% and 90%. The coal with 30% removal is assumed to incur a 3 percentage-point adder to their cost-of-capital to represent risk associated with higher emissions. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. 4As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1Levelized

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17

62.4

Table B2. Regional variation in levelized cost of electricity (LCOE) for new generation resources, plants entering service in 2040 Range for Total LCOE with Tax Credits1 (2016 $/MWh)

Range for Total System LCOE (2016 $/MWh)

Minimum

Nonweighted average

Capacityweighted2 average

Maximum

Coal 30% with carbon sequestration3

112.2

122.8

NB

Coal 90% with carbon sequestration3

102.6

110.3

NB

Conventional Combined Cycle

54.8

60.0

Advanced Combined Cycle

53.2

Advanced CC with CCS

65.9

Plant Type

Minimum

Nonweighted average

Capacityweighted2 average

Maximum

180.4

112.2

122.8

NB

180.4

124.6

102.6

110.3

NB

124.6

NB

86.8

54.8

60.0

NB

86.8

58.3

55.8

84.2

53.2

58.3

55.8

84.2

81.9

NB

90.2

65.9

81.9

NB

90.2

102.0

111.4

NB

152.1

102.0

111.4

NB

152.1

Dispatchable Technologies

Natural Gas-fired

Conventional Combustion Turbine

86.0

93.4

90.7

129.1

86.0

93.4

90.7

129.1

Advanced Nuclear

Advanced Combustion Turbine

87.1

89.6

NB

93.8

87.1

89.6

NB

93.8

Geothermal

35.3

57.4

42.6

78.1

33.3

53.8

40.2

72.9

Biomass

73.2

91.0

75.7

114.5

73.2

91.0

75.7

114.5

Wind – Onshore

37.7

57.6

60.3

69.4

37.7

57.6

60.3

69.4

Wind – Offshore

Non-Dispatchable Technologies 111.8

128.8

NB

172.7

111.8

128.8

NB

172.7

PV4

48.1

69.4

59.5

115.1

44.6

63.9

54.9

105.4

Solar Thermal

149.1

204.3

NB

314.8

137.8

188.9

NB

291.1

Solar

Hydroelectric5

55.3 62.4 50.9 69.7 55.3 62.4 50.9 cost with tax credits reflects tax credits available in 2040, which includes a permanent 10% investment tax credit for geothermal and solar technologies, based on the Energy Policy Act of 1992. 2The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2036-2040. Technologies for which new capacity builds are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 3Due to new regulations (CAA 111b), coal plants cannot be built without CCS because they are required to meet specific CO emission 2 standards. Two levels of CCS removal are modeled, 30% and 90%. The coal with 30% removal is assumed to incur a 3 percentage-point adder to their cost-of-capital to represent risk associated with higher emissions. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Note: The levelized costs for non-dispatchable technologies are calculated based on the capacity factor for the marginal site modeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as follows: Wind Onshore – 38% to 52%, Wind Offshore – 41% to 50%, Solar PV – 21% to 32%, Solar Thermal – 11% to 26%, and Hydroelectric – 46% to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as resource availability. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1Levelized

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18

69.7

Table B3: Regional variation in levelized avoided costs of electricity (LACE) for new generation resources, plants entering service in 2040

Plant Type

Minimum

Range for Levelized Avoided Costs (2016 $/MWh) NonCapacityweighted Weighted1 Average average

Maximum

Dispatchable Technologies Coal 30% with carbon sequestration2

57.4

66.8

NB

81.5

sequestration2

57.4

66.8

NB

81.5

Conventional Combined Cycle

57.2

66.1

NB

81.3

Advanced Combined Cycle

57.2

66.1

64.9

81.3

Advanced CC with CCS

Coal 90% with carbon Natural Gas-fired

57.2

66.1

NB

81.3

Advanced Nuclear

57.3

65.8

NB

73.8

Geothermal

56.7

68.7

75.7

80.8

Biomass

57.2

66.1

70.8

80.8

Wind – Onshore

50.3

60.9

59.8

75.8

Wind – Offshore

83.8

Non-Dispatchable Technologies 56.9

65.5

NB

PV3

49.7

72.2

73.4

91.2

Solar Thermal

48.7

76.9

NB

101.3

Solar

Hydroelectric4 56.9 62.9 46.4 68.0 capacity-weighted average is the average levelized avoided cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2036-2040. Technologies for which new capacity builds are not projected do not have a capacity-weighted average, and are marked as “NB” or not built. 2Due to new regulations (CAA 111b), coal plants cannot be built without CCS because they are required to meet specific CO emission 2 standards. Two levels of CCS removal are modeled, 30% and 90%. The coal with 30% removal is assumed to incur a 3 percentage-point adder to their cost-of-capital to represent risk associated with higher emissions. 3Costs are expressed in terms of net AC power available to the grid for the installed capacity. 4As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017). 1The

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19

Table B4a: Difference between capacity-weighted levelized avoided costs of electricity (LACE) and capacity-weighted levelized costs of electricity (LCOE), plants entering service in 2040 Comparison of capacity-weighted1 LCOE with tax credits and capacityweighted LACE (2016 $/MWh) Average Average Average Net LCOE LACE Difference2

Plant Type Dispatchable Technologies Coal 30% with carbon sequestration3

-----------------NB-----------------

sequestration3

-----------------NB-----------------

Coal 90% with carbon Natural Gas-fired

Conventional Combined Cycle

-----------------NB-----------------

Advanced Combined Cycle

55.8

Advanced CC with CCS

-----------------NB-----------------

64.9

9.1

Advanced Nuclear

-----------------NB-----------------

Geothermal

40.2

75.7

35.5

Biomass

75.7

70.8

-4.9

Wind – Onshore

60.3

59.8

-0.4

Wind – Offshore

-----------------NB-----------------

Non-Dispatchable Technologies

Solar

PV4

Solar Thermal

54.9

73.4

18.5

-----------------NB-----------------

Hydroelectric5 50.9 46.4 -4.5 1The capacity-weighted average is the average levelized cost per technology, weighted by the new capacity coming online in each region. The capacity additions for each region were based on additions in 2036-2040. Technologies for which capacity additions are not expected do not have a capacity-weighted average, and are marked as “NB” or not built. 2The “Average Net Difference” represents the average of the LACE minus LCOE calculation, where the difference is calculated for each of the 22 regions based on the cost with tax credits for each technology, where tax credits are applicable. This “range of difference” is not based on the difference between the minimum values shown in Table B2 and Table B3, but represents the lower and upper bound resulting from the LACE minus LCOE calculations for each of the 22 regions. 3 Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

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20

Table B4b: Difference between levelized avoided costs of electricity (LACE) and levelized costs of electricity (LCOE), plants entering service in 2040 Comparison of LCOE with tax credits and LACE (2016 $/MWh) Range of NonWeighted Differences2 Minimum Maximum

Average LCOE

Average LACE

Average Net Difference1

Coal 30% with carbon sequestration3

122.8

66.8

-56.1

-98.9

-42.0

sequestration3

110.3

66.8

-43.6

-61.6

-33.1

Conventional Combined Cycle

60.0

66.1

6.1

-5.5

12.7

Advanced Combined Cycle

58.3

66.1

7.8

-2.8

13.7

Advanced CC with CCS

81.9

66.1

-15.7

-23.7

-7.2

Advanced Nuclear

89.6

65.8

-23.8

-36.3

-16.3

Geothermal

53.8

68.7

14.9

-4.2

47.4

Biomass

91.0

66.1

-24.9

-53.0

-1.7

Wind – Onshore

57.6

60.9

3.3

-11.1

22.6

Wind – Offshore

-63.3

-103.1

-33.1

Plant Type Dispatchable Technologies Coal 90% with carbon Natural Gas-fired

Non-Dispatchable Technologies 128.8

65.5

PV4

63.9

72.2

8.2

-32.3

32.4

Solar Thermal

188.9

76.9

-112.0

-214.3

-57.2

Solar

Hydroelectric5 62.4 62.9 0.5 -8.5 12.4 1The “Average Net Difference” represents the average of the LACE minus LCOE calculation, where the difference is calculated for each of the 22 regions based on the cost with tax credits for each technology, where tax credits are applicable. 2This “range of differences” is not based on the difference between the minimum values shown in Table B2 and Table B3 but represents the lower and upper bound resulting from the LACE minus LCOE calculations for each of the 22 regions. 3Due to new regulations (CAA 111b), conventional coal plants cannot be built without CCS because they are required to meet specific CO 2 emission standards. The coal plant with 30% removal is assumed to incur a 3 percentage-point adder to its cost-of-capital to represent the risk associated with higher emissions from a plant of that design. 4Costs are expressed in terms of net AC power available to the grid for the installed capacity. 5As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall operation is limited by resources available by site and season. Source: U.S. Energy Information Administration, Annual Energy Outlook 2017, January 2017, DOE/EIA-0383(2017).

U.S. Energy Information Administration | AEO2017 Levelized Costs

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Annual Energy Outlook - EIA

April 2017 Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2017 This paper presents average values...

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