ETI Strategy Report - Comparing Generating Technologies

Abstract:

Differing generating technologies are often compared using simple Levelised Cost of Energy (LCOE) analysis. Whilst useful in some circumstances, LCOE analysis can be misleading and hide the true system costs incurred by different technologies under different conditions. In practice, the average cost achieved may be very different to the theoretical LCOE. Simple LCOE analysis is therefore often not an effective way of robustly comparing the real overall system cost of various generating technologies. The ETI has produced the tool to enable anyone with a basic understanding of electricity balancing to explore the effect of different assumptions on the total cost of meeting electricity demand, as it varies through the year. The tool has enough functionality to be useful and to allow non-expert users to explore themes and trends, and looks at meeting electricity demand from a single generating technology with the flexibility to match supply to demand provided either through batteries or combined cycle gas turbines (CCGTs). This report explains at a high level how the tool works and show examples of different results that can be derived from it by using the built-in data, at the same time illustrating some of the weaknesses of using LCOE in isolation. The real value of the tool comes from users using their own data to understand sensitivities to assumptions. This report deliberately has no findings or recommendations, other than to use the tool freely and thoughtfully. The worked examples in this report show: How significant hidden systems costs and carbon emissions can be. The risks that might arise through not estimating potential global impacts of embedded greenhouse gas emissions, whether in fuels, construction materials or even electricity supplied through interconnector.

Publication Year:

2018

Publisher:

ETI

DOI:

No DOI minted

Author(s):

Haslett, A.