Dec
13
Your Lowest Cost Electricity Source Is?
December 13, 2016 | 4 Comments
University of Texas at Austin researchers have mapped the lowest cost electricity generation by county for the lower 48 states. There aren’t many surprises. Natural gas and wind are said to be the lowest-cost technology options for new electricity generation across much of the U.S. when cost, public health impacts and environmental effects are considered. What’s dubious are the values placed on the public health impacts and environmental effects portions in the calculation.
Click image for the largest view. Image Credit: University of Texas Austin’s Energy Institute.
The researchers assessed multiple generation technologies including coal, natural gas, solar, wind and nuclear. Their findings, as depicted in a series of maps illustrating the cost of each generation technology on a county-by-county basis throughout the U.S., are featured in a new white paper titled “New U.S. Power Costs: by County, with Environmental Externalities.”
The paper is part of a comprehensive study coordinated by UT Austin’s Energy Institute titled the “Full Cost of Electricity (FCe-),” an interdisciplinary project that synthesizes expert analyses from faculty members and other researchers across the university – from engineering, economics, law and public policy.
The research team adopted a holistic approach to probe the key factors affecting the total direct and indirect costs of generating and delivering electricity. Their work resulted in the production of a series of authoritative white papers that provide an in-depth assessment and examination of various electric power system options.
The researchers categorized the electricity system into three principal components: consumers; generation technologies; and the wires, poles, storage and other hardware required to connect end users and generators. Taken as a whole, the white papers assess the interaction among these three components, as well as costs often considered external to the electricity system, such as environmental effects and public health impacts.
Dr. Tom Edgar, director of the Energy Institute said, “These are complex, interrelated issues that cannot be adequately addressed from one perspective. We assembled a cross-disciplinary team to provide a fuller understanding of these costs and their policy implications.”
For the white paper on power generation costs, researchers used data from existing studies to enhance a formula known as the Levelized Cost of Electricity (LCOE). In addition to including public health impacts and environmental effects – which the LCOE typically does not – the research team used data to calculate county-specific costs for each technology.
The team also developed online calculators to facilitate a discussion among policymakers and others about the cost implications of policy actions associated with new electricity generation.
Dr. Joshua Rhodes, postdoctoral research fellow at the Energy Institute and lead author of the paper, said the cost estimates are based on a series of assumptions that researchers debated at length.
“We think our methodology is sound and hope it enhances constructive dialogue,” Rhodes said. “But we also know that cost factors change over time, and people disagree about whether to include some of them. We wanted to provide an opportunity for people to change these inputs, and the tools we’ve created allow for that.”
The researchers analyzed data for the most competitive sources of new electricity generation. Wind proved to be the lowest-cost option for a broad swath of the country, from the High Plains and Midwest and into Texas. Natural gas prevailed for much of the remainder of the U.S.; nuclear was found to be the lowest-cost option in 400 out of 3,110 counties nationwide.
The FCe- study examined numerous factors affecting the cost of electricity generation, including:
· Power Plant Costs (both operating and capital costs)
· Environmental and Health Costs (air quality, greenhouse gases)
· Infrastructure Costs (transmission & distribution lines, rail, pipelines)
· Fuel Cost (variability, full fuel cycle)
· Integration of renewable and distributed energy resources
· Energy Efficiency
· Government financial support for electricity generation (subsidies)
These kinds of thing are great for a happy snapshot experience. But the whole of electricity generation, distribution and consumption are highly dynamic, and the assumptions, used in advance of the calculations are usually static. As academics the idea of “authoritative” is to the practical observer more like “predictive”, with a confidence level based on the predictive probability. Predictive probability is actually – a risk.
Here in the wind zone right now we’re probably getting wind power. But last night the wind died until mid afternoon requiring coal fired steam and natural gas turbines to run for hours. We’re paying for both generation systems, triple the rates compared to the states to the west without the powerful government incentives and penalties.
We’re a decade in on the wind experiment. What we know in hard facts so far is wind triples rates, wind development freezes up when the Federal incentive program is in doubt, the jobs issues is front and center while billionaires make billions more taken from taxpayers and ratepayers. We didn’t see any of that in the hyped predictions 15 and 20 years ago.
Here’s a huge gap that a quick look over the white paper did not show. What is the standby cost for wind? It needs to be 100% of grid demand in a locality, sure to run 24/365 or the lights go out. The study looks at how protocols have changed, but these are still quite new and haven’t been tested in meaningful ways – yet. The results from experience are way beyond predictive, they are consequences.
As you might suspect natural gas, another favorite in the study is stunningly cheap right now. It also has been more than 8 times higher not so many years ago. The study relies on analysis of the natural gas market, which might seem fine in hindsight, but the dynamics of both the supply and the demand have changed and are still changing. For those folks losing their coal fired, dependable, admittedly dirty electricity source, imagine when the natural gas price cycle starts back up. For each $100 spent now you might need $800 or even more, perhaps much more. Losing your coal plant to natural gas? You might want to consider being Terrified of the consequences.
That’s the problem with these kinds of studies. For all the intense intellect, effort and concern the universe doesn’t care. Reality with all its twists and turns, rises and falls – is coming. If academics really want to help and impress it would be better to start with common sense and wisdom up front and use the intellect to mitigate the probabilities to the economy’s and society’s advantage.
If the problem was switched around the premise would be more like the U.S. economy needs more electricity, generated better at lower cost. Now that’s a problem that deserves applied intellect doing worthwhile good. It wouldn’t be a political palliative fed to an ignorant media and an inattentive public.
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The biggest problem with wind is when the wind blows to hard.
The German built massive wind farms along their coast line. When the wind blows too hard they overproduce and blow the grid. Their 30 year grid is now going out at 7 years. Their solution has been to dump excess power on their neighbors. So, the Czechs just built a $100 million dollar resistor complex on the border.
Author’s name and location? Some first person analysis involved, but neither mentioned. This is a must to understand the analysis/opinion portion
If Austin or Texas based, I am skeptical of the claim of “three times higher costs” than neighboring states.
Otherwise good article and mostly reasonable realistic analysis.
OK. Friends in Omaha report 2.7 cents kwh winter rate from Omaha Public Power. In SW Iowa 8.9 cents kwh from REC. Adding a tenth of a penny once in a while over more than a decade eventually becomes serious money.
Thanks. Appreciate your work and writing.
I know a little about both the OPPD situation and Texas de-Reg; and natural gas. Not quite as much about Iowa utilities.
Basically, in de-reg texas I was able to get 2 years at 7.2 c per kwhr. Gas and wind are slowly pushing out coal. Yes, we would be very vulnerable to gas price run up. I suspect we will see more volatility in real time pricing as wind takes a bigger share. It looks to me like gas fired generators are investing in flexibility to ramp and fill in for wind. It won’t be free; but the cost thus far (and we are only at 15% wind/solar) hasn’t been nearly as bad as critics had predicted. But we’ll only find out higher percentages when we get there.