The Future Costs of Power Generation

The Future Costs of Power Generation
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Summary

The power generation and supply industries are facing unparalleled changes as renewable generating technologies are promoted to reduce atmospheric carbon emissions, challenging the dominance of fossil fuel based technologies in the process. Grid operation is beginning to change to accommodate these new resources and the structure of grid systems is beginning to fragment as distributed generation grows. Meanwhile a revolution in oil and gas production in the USA is having ramifications for gas and coal costs that has already spread to other regions.

The capital cost of a power plant is, along with the cost of fuel, one of the key determinants of the cost of electricity. Capital cost trends are therefore one of the most important indicators of the changing balance between different technologies. For renewable technologies the capital cost is the main cost determinant since there is no fuel cost. Renewable plants generally have lower capacity factors than conventional and nuclear plants and this must also be taken into account when assessing overall economic performance.

In order to identify the best technology for a given power development, one of the key determining factors will be the cost of electricity from the plant. To determine the future cost of power an economic model called the levelized cost of electricity model is used. When this modelling is carried out the cheapest source of power in the USA is a combined cycle power plant burning natural gas. However elsewhere nuclear and even coal-fired generation can theoretically be more cost effective. Of the main renewable technologies, hydropower can be cost effective in many parts of the world although opportunities in the developed world are scarce.

The production of electricity will double, globally over the next thirty years. Much of this growth will take place in the developing world but there will be some increase in capacity within the developed world too. Trends differ between the two groups however with fossil fuel production continuing to grow in the developing world while across the developed world there is a more pronounced shift towards renewable generation. In both regions, however, natural gas will become increasingly popular for power generation too and this could accelerate if oil and gas from shale deposits is exploited in regions other than the USA.

Key Questions Answered

  • What are the drivers shaping and influencing power plant development in the electricity industry?
  • What is power generation going to cost?
  • Which power generation technology types will be the winners and which the losers in terms power generated, cost and viability?
  • Which power generation types are likely to find favour with manufacturers moving forward?
  • Which emerging technologies are gaining in popularity and why?

Reason to buy

  • Realize up to date competitive intelligence through a comprehensive power cost analysis in electricity power generation markets.
  • Assess power generation costs and analysis including capital costs, overnight costs, levelized costs and risk analysis.
  • Identify which key trends will offer the greatest growth potential and learn which technology trends are likely to allow greater market impact.
  • Quantify capital and levelized cost trends and how these vary regionally.

Date Published

October, 2014

Format / Pages

PDF / 123