cost of electricity

Introduction
In the first part of this report we want to evaluate the electricity cost for different technology power plants, form the reference country Germany. In the second part we will use the linear programming approach in order to minimize the total activity cost of the electricity generation and find the optimal configuration of the different energy production technologies.
First part
The data used in order to calculate the cost of electricity for different of technologies are extracted by the IEA/NEA document  “Projected Costs of Generating Electricity” (update 2005). This document presents and analyses projected costs of generating electricity calculated with input data provided by participating experts and generic assumptions adopted by the Group. The leveled lifetime cost methodology was applied by the joint IEA/NEA Secretariat to estimate generation costs for more than a hundred plants relying on various fuels and technologies, including coal-fired, gas-fired, nuclear, hydro, solar and wind power plants.
The reference country for the analysis is Germany. Moreover we analyzed the cost of producing electricity by Concentrating Solar Power (in this case, data of Desertec Project document has been used).
Methodology
We evaluated the full cost of electricity produced simply by summing up the investment cost, the operability and maintenance cost (O&M) and the input cost (fuel cost).
The Investment cost and the FIXOM cost are related to the size of the plant, so to its capacity.
The VAROM costs and the fuel cost are related to the operation of the power plant, so to its activity.
The total activity cost [M$/y] will be given by:

Dividing by the Activity we obtain the specific activity cost [M$/MWh] which we are interested in:

Where the availability is the number of hours of operation of the plant over the total hours in one year.
Because of the difficulties in the evaluation of the variable costs we decided to neglect that term in our calculations.
Calculations and results
The results obtained for German fossil fuels and nuclear power plants are shown in the following tables and figures.

Figure 1. Specific activity cost for fossil fuels and nuclear power plants [$/MWh]

  Coal Nuclear IGCC CCGT  
Investment 10,17 14,09 10,17 3,91  
O&M 6,72 8,73 12,37 4,69  
Fuel 9,12 12,92 14,54 40,24  
Total 26,01 35,73 37,09 48,84
Table 1. Specific activity cost for fossil fuels plants and nuclear [$/MWh]

Coal-fired generating technologies
As reported in the IEA document, most coal-fired power plants have specific overnight construction costs ranging between 1000 and 1500 $/kWe. For German power plants it is equal to 1300 $/kWe for the lignite Pulverized Coal plant (PC), and a little bit higher in the case of the Integrated Gasification Combined Cycle plant (IGCC). Construction times are around four years for most plants. The fuel prices (coal, brown coal or lignite) assumed by respondents during the economic lifetime of the plants vary widely from country to country. Expressed in the same currency using official exchange rates, the coal prices in 2010 vary by a factor of twenty. Roughly half of the responses indicate price escalation during the economic lifetime of the plant while the other half indicates price stability.
At 5% discount rate, leveled generation costs range between 25 and 50 $/MWh for most coal-fired power plants. Generally, investment costs represent slightly more than a third of the total, while O&M costs account for some 20% and fuel for some 45%.
Gas-fired generating technologies
For the gas-fired power plants the specific overnight construction costs in most cases ranges between 400 and 800 $/kWe. In our case (Combined Cycle Gas Turbine) it is equal to 500 $/kWe. In all countries, the construction costs of gas-fired plants are lower than those of coal-fired and nuclear power plants. Gas-fired power plants are built rapidly and in most cases expenditures are spread over two to three years. The O&M costs of gas-fired power plants are significantly lower than those of coal-fired or nuclear power plants.
At a 5% discount rate, the leveled costs of generating electricity from gas-fired power plants vary between 37 and 60 $/MWh but in most cases it is lower than 55 $/MWh. The investment cost represents less than 15% of total leveled costs; while O&M cost accounts for less than 10% in most cases. Fuel cost represents on average nearly 80% of the total leveled cost and up to nearly 90% in some cases.

Nuclear generating technologies
For the nuclear power plants the specific overnight investment costs, not including refurbishment or decommissioning, vary between 1000 and 2000 $/kWe for most plants. In our case it amounts to 1800 $/kWe. The total leveled investment costs calculated in the study include refurbishment and decommissioning costs and interest during construction. For the different countries considered in the IEA document, the total expense period ranges from five to ten years. In nearly all countries 90% or more of the expenses are incurred within five years or less.
At a 5% discount rate, the leveled costs of nuclear electricity generation ranges between 21 and 31 $/MWh. Investment costs represent the largest share of total leveled costs, around 50% on average, while O&M costs represent around 30% and fuel cycle costs around 20%.