The cost of a new power plant varies widely by the technology used, and since cost of technology is a constantly changing variable, cost must be revisited regularly. Two valuable sources for gathering accurate information on the cost of power plant are the US Energy Information Administration (EIA) and Lazard, a leading financial advisory and asset management company. In December 2016 Lazard published itsLevelized Cost of Energy Analysis - Version 10
. It compares the cost of key forms of electrical power generation, with a focus on Levelized Cost of Electricity (LCOE). However, information is also presented on the capital cost of new facilities that is a key factor within LCOE. Figure 1 summarizes the capital cost information in dollars per kilowatt ($/KW) where KW is the nameplate capacity of the plant (i.e., the maximum generation to be expected given no constraints on fuel). The key elements from this table arranged from lowest to highest capital cost (excluding subsidies) for a given technology are as follows:
- $800 - $1,000 Gas - conventional turbine (CT)
- $1,000 - $1,300 Gas - combined cycle (CC)
- $1,250 - $1,700 Wind (onshore)
- $1,300 - $1,450 Utility photovoltaic (PV)
- $2,000 - $2,800 Rooftop photovoltaic (PV)
- $3,000 - $8,400* Coal
- $3,625 - Wind (offshore)
- $4,250 - $6,400 Geothermal
- $6,500 - Concentrated Solar Power (CSP) without storage
- $8,650** - Nuclear
- $10,000** - Concentrated Solar Power (CSP) with storage
* the upper cost for a coal plant reflects the cost for including carbon capture, which just about doubles the price and which is not yet proven technology at a commercial level. See OWOE Topic: What is clean coal?
** single values based on information for the most recent nuclear (Plant Vogtle - approximately $15 billion for 2 reactors at 1117 MW each see the OWOE Topic: What does it cost to build a nuclear power plant?
) and CSP (Crescent Dunes - $910 million for 110 MW) plants in the US.
It should be noted that these values do not reflect other key characteristics of the technologies that must be considered when making a decision on the best type of plant to build. Items such as cost of fuel, capacity factors, load intermittency, curtailment, and cost of transmission must ultimately be considered. However, if one were to select a new power generation facility solely on the basis of capital cost, the technology of choice would be a natural gas plant followed by onshore wind.
It is worthwhile to examine at least one of the additional factors a little more closely, however. Differences in fuel type result in significantly different capacity factors (CF = the ratio of actual generation on an annual basis to capacity if running full-time). For example, nuclear plants have the highest annual capacity factor over 90%, while onshore wind is in the low 30% range due to intermittency, and solar is approximately 25% since it only generates electricity during daylight hours. If one adjusts the capital cost per KW by capacity factor, as given by the EIA over all plants currently operating in the US, to get a cost per effective MW, the above numbers (using the low end of the range) become:
- $1,800 CC Gas (56% CF)
- $3,570 Onshore Wind (35% CF)
- $4,800 Utility PV (27% CF)
- $5,700 Coal (53% CF)
- $5,700 Geothermal (74% CF)
- $8,100 Offshore Wind (45% CF)
- $9,400 Nuclear (92% CF)
- $10,000 CT Gas (8% CF)
- $11,100 Rooftop PV (18% CF)
- $29,500 CSP without storage (22%)
- $45,400 CSP with storage (22%)
This information shows that a new CC gas plant is significantly less expensive from an initial capital cost factor than the next competitor, onshore wind, which itself is significantly less expensive than the next group of competitors - utility PV, coal or geothermal plants. It also shows that utility scale PV plant costs have dropped below new coal plant costs. Current production tax credits (PTC) for new wind and investment tax credits (ITC) for new solar plants are helping close the gaps with the natural gas plants, as is technology development, which is rapidly decreasing costs for both wind and solar.
Although critical to the decision process, capital cost to build a plant is only one of the key input values needed to decide which type of plant should be built at any given time and location. LCOE provides a more robust measure for decision making, and the parameter LACE (Levelized Avoided Cost of Electricity) allows regional and local variations in current power costs to be taken into consideration. See the OWOE Topics: What are LCOE and LACE?
and What is the cheapest method for generating electricity today in the US?