Electricity Generation

Energy and Climate Change written question – answered on 10th November 2010.

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Photo of Graeme Morrice Graeme Morrice Labour, Livingston

To ask the Secretary of State for Energy and Climate Change what assessment he has made of the electricity production technologies which would (a) enable affordable domestic and industrial prices and (b) enable the UK to meet its emissions reduction targets.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

The following table is taken from Mott Macdonald (2010) and gives levelised cost estimates (average generation cost per megawatt-hour) for new build plants in the main large-scale electricity generation technologies in the UK, including both fossil fuel and low carbon plant, at current engineering, procurement and construction (EPC) contract prices.

It should be noted that for the purposes of presentation, the table only gives either 'FOAK' (first-of-a-kind) prices or 'NOAK' (nth-of-a-kind) prices for each technology.

Case 1: 10% discount rate, 2009 project start at today's EPC prices, with mixed FOAK/NOAK
Levelised cost Gas CCGT Gas CCGT with CCS (FOAK) ASC Coal ASC Coal with CCS (FOAK) Coal IGCC (FOAK) Coal IGCC with CCS (FOAK) Onshore wind Offshore wind (FOAK) Offshore wind R3 (FOAK) Nuclear PWR (FOAK)
Capital costs 12.4 29.8 33.4 74.1 61.7 82.0 79.2 124.1 144.6 77.3
Fixed operating costs 3.7 7.7 8.6 18.6 9.7 17.7 14.6 36.7 45.8 12.2
Variable operating costs 2.3 3.6 2.2 4.7 3.4 4.6 - - - 2.1
Fuel costs 46.9 65.0 19.9 28.7 20.3 28.3 - - - 5.3
Carbon Costs 15.1 2.1 40.3 6.5 39.6 5.5 - - - -
Decomm and waste fund - - - - - - - - - 2.1
CO2 transport and storage - 4.3 - 9.6 - 9.5 - - - -
Steam revenue - - - - - - - - - -
Total levelised cost 80.3 112.5 104.5 142.1 134.6 147.6 93.9 160.9 190.5 99.0
Source:

Mott Macdonald (2010), UK Electricity Generation Costs Update, available at:

http://www.decc.gov.uk/assets/decc/statistics/projections/71-uk-electricity-generation-costs-update-.pdf

As new technologies are deployed it is likely that costs will fall due to learning. The following table sets out the estimated levelised costs for projects started in 2017 with the assumption that all technologies have reached 'nth of a kind' status.

Case 5: 10% discount rate, 2017 start at projected EPC prices, all NOAK
Levelised cost Gas CCGT Gas CCGT with CCS ASC Coal ASC Coal with CCS Coal IGCC Coal IGCC with CCS Onshore wind Offshore wind Offshore wind R3 Nuclear PWR
Capital costs 11.2 20.7 28.7 47.8 33.7 46.5 71.7 89.4 97.0 49.6
Fixed operating costs 3.7 6.0 8.6 13.8 8.0 12.3 - 23.0 30.9 9.1
Variable operating costs 2.3 3.6 2.2 3.7 2.7 3.6 - - - 1.8
Fuel costs 49.8 64.7 19.9 27.6 19.6 27.2 - - - 5.2
Carbon costs 29.6 4.1 73.8 11.4 72.0 10.0 - - - -
Decomm and waste fund - - - - - - - - - 2.1
CO2 transport and storage - 3.5 - 7.6 - 7.5 - - - -
Steam revenue - - - - - - - - - -
Total levelised cost 96.5 102.6 133.2 111.9 136.0 107.1 86.3 112.4 127.9 67.8
Source:

Mott Macdonald (2010), UK Electricity Generation Costs Update, available at:

http://www.decc.gov.uk/assets/decc/statistics/projections/71-uk-electricity-generation-costs-update-.pdf

It should be noted that the estimates of levelised costs for different types of electricity generation are highly sensitive to the assumptions used for capital costs, fuel and EU emissions trading scheme allowance prices, operating costs, load factor, and other drivers, meaning that there is significant uncertainty around these estimates.

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