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Electricity Generation: Costs

Energy and Climate Change written question – answered on 3rd May 2011.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

To ask the Secretary of State for Energy and Climate Change what estimate his Department has made of the levelised cost of each electricity generating technology; and what modelling assumptions were made in reaching this figure.

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

The tables are taken from Mott MacDonald (2010) and give 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 tables only give either ‘FOAK’ (first-of-a-kind) prices or ‘NOAK’ (nth-of-a-kind) prices for each technology. NOAK is given for established technologies and FOAK for those technologies which are yet to be built in the UK or benefit from learning. These are appropriate comparators for current costs.

The full report including methodology and assumptions can be accessed via this link:

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

Table 1: 10% discount rate, 2009 project start at today’s EPC prices, with mixed FOAK/NOAK
Levelised cost Gas CC GT 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: Matt 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 ETS allowance prices, operating costs, load factor, and other drivers, meaning that there is significant uncertainty around these estimates.

In the year 2017, assuming that all technologies have been built at least once in the UK, the following NOAK costs may apply to all technologies, however, it should be noted that these costs are not considered achievable today.

Table 2: 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: Matt 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

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