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Energy System Comparisons discussion   --  LCOE & Renewable Energy Cost Comparison Calculator

1.  Global Electricity Generation 2011 & 2050



Global Electricity Net Generation, 2011   = 21 TWh 1

                                                         2050 =  50 TWh 2

























16.8 TWh (83%) of electric energy was consumed by final users.

 The difference of 3.5 TWh (17%) was consumed in the process of
generating power and lost in transmission to end users.



2. LCOE  --  the Levelised Cost of Electricity metric


Finding an accurate schedule to compare the costs and earnings of different energy system to generate electricity is difficult because the commonly used Levelised Cost of Electricity (LCOE) metric has limitations 5 when comparing traditional systems with renewable generating systems. 


The LCOE metric was originaly created to provide the owners of large power plants, such as governments & large "fortune 500" corporations, with a life cycle cost number for long term budgeting purposes and so existing multi billion dollar systems could be compared to proposed, (not yet built) systems of the same type (Coal fired, Gas, large Hydro & Nuclear) and, in an oblique way, to compare different system types with each other.


Yet, despite limitations, “leveling costs is often a necessary prerequisite for making comparisons on an equal footing before demand profiles are considered, and the levelized-cost metric is widely used for comparing technologies at the margin, where grid implications of new generation can be neglected”.6


The main problem with the LCOE method is the lack of explicitly defined parameters by the different parties creating LCOE schedules.  Some economists who create LCOEs use different parameters than others who create LCOEs and some use different parameters for different energy system types. Some paramenters, for example the number of years used in the life cycle parameter, is often not explicity defined and can range from 20 to 40 years. Future cost parameters are based on varing assumptions made as a best guess to be reasonable at the time the LCOE is made, these include  assumptions made for the futue cost of money and fuel, for future operation and maintenance costs and for future environmental related costs such as carbon taxes, class action suit costs and soft political costs.

Other problems inherent in using LCOE to compare traditional energy with renewable energy are:


 (a) that it was originally developed for comparing the 4 traditional energy systems (Coal, Gas, Hydro & Nuclear) which share the the fact that the prime mover energy source is available in greater quantities than is required for the plant to operate at nameplate capacity, in other words if the plant is not working at capacity the operator can simply add more fuel (or turn up the blower in the case of coal and gas fired plants) to get the maximum (or greater) electrical output; whereas,

(b) the in the 4 renewables energy systems (Solar, Wind, Tidal & Wave) the operator does not have any control over the prime mover source as it is available in variable intensity and sometimes is not available so the annual electrical output amount (in MWh) is certain in one and uncertain in the other.


(c) Also, confusion occus because the "Capacity Factor" is often just
stated as a percentage without explicitly declaring the factors used.
The term refers to the net capacity factor and is defined as:

     “The net capacity factor of a power plant is the ratio of its actual output  
     over a period of time (usually 1 year defined as 8,760 hours), to its
     potential output if it were possible for it to operate at full nameplate
     capacity continuously over the same period of time.

    "To calculate the capacity factor, take the total amount of energy the plant
     produced during a period of time and divide by the amount of energy the
     plant would have produced at full capacity. Capacity factors vary greatly
     depending on the type of fuel that is used and the design of the plant. The
     capacity factor should not be confused with the availability factor, capacity
     credit (firm capacity) or with efficiency.”


The name plate capacity in small to midsized renewable energy systems can be based more on theory than actual output at specific energy levels and since the operator cannot “turn up the heat” to reach the name plate capacity therefore the sales brochure “capacity factor” may be erroneous (either too low or too high) and if a LCOE is based on this data the end values will be skewed. 


Here is part of a LCOE comparative schedule from The World Energy Council 2013 report 1


LCOE comparative values 2013 (in USD/MWh)



















In a gerneral way the far right column provides average comparison values for the different energy systems.

For example, taking On Shore Wind as a base this chart tells us that:

                                 US & EU Avgerages               US only Averages

Off Shore Wind is     3 x as expensive,                 2.6 x
that PV Solar is        2.6 x as expensive                1.8 x

that Tidal  is             5.1 x as expensive                4.6 x

that Wave is             5.6 x as expensive                5.0 x


Because of the concerns raised with the LCOE model we have made a easy to use, simple to understand, open and transparent "renewable energy cost comparison calculator" --  see right side for details.

Global Wave Energy
is considered to be

greater than
21,000 TWh / year

Global Electrical Generation 2011 1

2.  Calculator for Comparing Renewable  
      "Clean" Energy Systems


The set of data presented under the Renewable Energy System Comparisons Tab (above) is an example from this calculator.


You can get a copy for free and enter your own values for comparison with other renewable energy systems.



Renewable Energy Comparison Calculator


There are 6 sections in this calculator:


1.  Average Available Energy Hours per Year (hrs)                    -- start with the actual annual hours of peak prime mover energy (watts) required for each system
This value is based on the system type and the location where it will be used, try to use actual values rather than sales brochure values.


2.  Net Electricity Output of System (Watts per sq. m)          
-- determine the net electricity created by the system                    (per sq. m / hour) by multiplying the energy density                        available (based mainly on location) by the efficiency of the system

You need to determine and enter the Energy Density and System Efficiency values here, or use the provided default values.


3.  Electricity Output per Year of System (kwh per sq. m)        --  by multiplying  results in sections 1 and 2 to get kWh / year per sq. m   
To know how much electricity the system actually produces in a year simply multiply the value for section 3 by total sq. m of your system, as provided for in the calculator.                                                                                            

4. Income per Year per sq. m at various kWh Sell Rates
-- purchase rates are available from utility companies 

This section gets the Electrical Output per Year value from section 3.


5. Enter Cost  per sq. m of System & View Income per Year    
     at various $ per kWh
-- the important part here is determining the cost of the system you want to use, here enetr the cost amount that includes as many of the coast factors you want to consider,
for example: 
start with total installed cost, then add grid tie in or
battery system cost as appropriate, your cost of borrowing money over a certain term, operations & maintenace costs over the life of the system, etc.

The income at various purchase rates allows another comparison of this important metric, as per section 4


6.  Years to Payback System Costs at various kWh Sell Rates  -- based on the costs entered in 5, determines Payback Time & Profits at various kWh sell rates

This section gets the Cost value from section 5.  


7.  Simplified LCOE to compare Systems that cost the same

-- This LCOE allows you to change the sq. m area of each system until you get them all costing the same price.

Then the calculator shows the USD / MWh for each system for the number of life cycle years entered.


8.  Worksheet for Using Custom Values 
essentially the previous 6 sections on one sheet without any values

This sheet enables the quantifying the values for one specific energy system at a time.



References to Global Energy & LCOE (left panel)






     Proceedings of OMAE2010 29th International Conference on
     Ocean, Offshore Mechanics and Arctic Engineering June 6-11,
     2010, Shanghai, China.

     "The global gross theoretical resource is about 3.7 TW, 3.5 TW
      is the resource computed excluding areas with a benign wave
      climate (definition ii) and the net resource (option iii) is
      about 3 TW;"


     at 7,000 peak energy hours per year (80% of 8,760 hours / yr)
     the result is   3TW x 7,000 Hours  =  21,000TWh.




5.  "Comparing the Costs of Intermittent and Dispatchable   
      Electricity-Generating Technologies", by Paul Joskow,
      Massachusetts Institute of Technology, September 2011


       accessed Sept 20, 20153. 


        accessed September 22, 2015


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