Cost of electricity by sourceThe cost of electricity generated by different sources is a calculation of the cost of generating electricity at

the point of connection to a load or electricity grid. It includes the initial capital, discount rate, as well as the

costs of continuous operation, fuel, and maintenance. This type of calculation assists policy makers,

researchers and others to guide discussions and decision making

Cost factors

While calculating costs, several internal cost factors have to be considered. The use of "costs," which is not the

actual selling price, since this can be affected by a variety of factors such as subsidies and taxes :

Capital costs (including waste disposal and decommissioning costs for nuclear energy) - tend to be low

for fossil fuel power stations; high for wind turbines, solar PV; very high for waste to

energy, wave and tidal, solar thermal, and nuclear.

Fuel costs - high for fossil fuel and biomass sources, low for nuclear, and zero for many renewables.

Factors such as the costs of waste (and associated issues) and different insurance costs are not included

in the following: Works power, own use or parasitic load - that is, the portion of generated power actually

used to run the stations pumps and fans has to be allowed for.

To evaluate the total cost of production of electricity, the streams of costs are converted to a net present

value using the time value of money. These costs are all brought together using discounted cash flow.

The marginal cost of production at very low levels of output should be relatively low. Small amount of wind due

to nature would result in very low levels of output. However, the wind turbine is the initial investment of

producing wind energy; therefore, once the turbine has been built, not much money will be invested into

producing wind energy other than maintenance. Having a very low level of output means the turbines have

already been built, but since wind is free, to produce an extra unit of energy solely depends on nature, which in

this case, wind is free. Therefore, the marginal cost would be relatively low due to the fact that wind, the energy

source is free and the maintenance of the turbines would be relatively low. Wind power normally has a low

marginal cost (zero fuel costs) and therefore enters near the bottom of the supply curve. This shifts the supply

curve to the right, resulting in a lower power price, depending on the price elasticity of the power demand. In

general, the price of power is expected to be lower during periods with high wind than in periods with low wind.

As mentioned above, there may be congestions in power transmission, especially during periods with high wind

power generation. Thus, if the available transmission capacity cannot cope with the required power export, the

supply area is separated from the rest of the power market and constitutes its own pricing area. With an excess

supply of power in this area, conventional power plants have to reduce their production, since it is generally not

possible to limit the power production of wind. In most cases, this will lead to a lower power price in this sub-

market.

Calculations

Levelized Energy Cost (LEC, also known as Levelised Cost of Energy, abbreviated as LCOE ) is the price at

which electricity must be generated from a specific source to break even over the lifetime of the project. It is an

economic assessment of the cost of the energy-generating system including all the costs over its lifetime: initial

investment, operations and maintenance, cost of fuel, cost of capital, and is very useful in calculating the costs

of generation from different sources.

It can be defined in a single formula as

where

 = Average lifetime levelized electricity generation cost

 = Investment expenditures in the year t

 = Operations and maintenance expenditures in the year t

 = Fuel expenditures in the year t

 = Electricity generation in the year t

 = Discount rate

 = Life of the system

Typically LECs are calculated over 20 to 40 year lifetimes, and are given in the units of currency per kilowatt-

hour, megawatt-hour. However, care should be taken in comparing different LCOE studies and the sources of

the information as the LCOE for a given energy source is highly dependent on the assumptions, financing

terms and technological deployment analyzed.] In particular, assumption of Capacity factor has significant

impact on the calculation of LCOE. For example, Solar PV may have a Capacity Factor as low as 10%

depending on location. Thus, a key requirement for the analysis is a clear statement of the applicability of the

analysis based on justified assumptions.[8]

System boundaries[edit source | editbeta]

When comparing LECs for alternative systems, it is very important to define the boundaries of the 'system' and

the costs that are included in it. For example, should transmissions lines and distribution systems be included

in the cost? Typically only the costs of connecting the generating source into the transmission system is

included as a cost of the generator. But in some cases wholesale upgrade of the Grid is needed. Careful

thought has to be given to whether or not these costs should be included in the cost of power.

Should R&D, tax, and environmental impact studies be included? Should the costs of impacts on public health

and environmental damage be included? Should the costs of government subsidies be included in the

calculated LEC?

Discount rate[edit source | editbeta]

Another key issue is the decision about the value of the discount rate  . The value that is chosen for   can

often 'weigh' the decision towards one option or another, so the basis for choosing the discount must clearly be

carefully evaluated. See internal rate of return. The appropriate discount rate is not the actual cost of capital,

but typically 3.5%.[9]

Marginal cost of electricity[edit source | editbeta]

A more telling economic assessment might be the marginal cost of electricity. This value would serve the

purpose of comparing the added cost of increasing electricity generation by one unit from different sources of

electricity generation (see Merit Order).

Estimates[edit source | editbeta]

US Department of Energy estimates[edit source | editbeta]

The tables below list the estimated cost of electricity by source for plants entering service in 2017. The tables

are from a January 23, 2012 report of the Energy Information Administration (EIA) of the U.S. Department of

Energy (DOE) called "Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012".[10]

Total System Levelized Cost (the rightmost column) gives the dollar cost per megawatt-hour that must

be charged over time in order to pay for the total cost. These calculations reflect an adjustment to account

for the high level of carbon dioxide produced by coal plants. From the EIA report:

"a 3-percentage point increase in the cost of capital is added when evaluating investments in

greenhouse gas (GHG) intensive technologies like coal-fired power and coal-to-liquids (CTL) plants

without carbon control and sequestration (CCS). While the 3-percentage point adjustment is somewhat

arbitrary, in levelized cost terms its impact is similar to that of a $15 per metric ton of carbon dioxide

(CO2) emissions fee. ... As a result, the levelized capital costs of coal-fired plants without CCS are

higher than would otherwise be expected."[10]

No tax credits or incentives are incorporated in the tables. From the EIA report (emphasis added):

"Levelized cost represents the present value of the total cost of building and operating a generating

plant over an assumed financial life and duty cycle, converted to equal annual payments and

expressed in terms of real dollars to remove the impact of inflation. Levelized cost reflects overnight

capital cost, fuel cost, fixed and variable O&M cost, financing costs, and an assumed utilization

rate for each plant type. The availability of various incentives including state or federal tax

credits can also impact the calculation of levelized cost. The values shown in the tables below do

not incorporate any such incentives."[10]

Incentives, tax credits, production mandates, etc. are discussed in the overall comprehensive EIA

report: "Annual Energy Outlook 2012".[11][12][13]

Photovoltaics (solar PV) can be used both by distributed residential or commercial users and utility

scale power plants. The costs shown are for utility scale photovoltaic power plants.[10]

Estimated Levelized Cost of New Generation Resources, 2017[10]

U.S. Average Levelized Cost for Plants Entering Service in 2017(2010 USD/MWh)

Plant Type

Capacity

Factor(%)

Levelized

CapitalCost

FixedO&M

VariableO&M

(including

fuel)

Transmission

Investment

TotalSystemLevelize

dCost

Conventional Coal 85 65.8 4.0 28.6 1.2 99.6

Advanced Coal 85 75.2 6.6 29.2 1.2 112.2

Advanced Coal with CCS

85 93.3 9.3 36.8 1.2 140.7

Natural Gas Fired

NG: Conventional Combined

87 17.5 1.9 48.0 1.2 68.6

Estimated Levelized Cost of New Generation Resources, 2017[10]

U.S. Average Levelized Cost for Plants Entering Service in 2017(2010 USD/MWh)

Plant Type

Capacity

Factor(%)

Levelized

CapitalCost

FixedO&M

VariableO&M

(including

fuel)

Transmission

Investment

TotalSystemLevelize

dCost

Cycle

NG: Advanced Combined Cycle

87 17.9 1.9 44.4 1.2 65.5

NG: Advanced CC with CCS

87 34.9 4.0 52.7 1.2 92.8

NG: Conventional Combustion Turbine

30 46.0 2.7 79.9 3.6 132.0

NG: Advanced Combustion Turbine

30 31.7 2.6 67.5 3.6 105.3

Advanced Nuclear 90 88.8 11.3 11.6 1.1 112.7

Geothermal 92 76.6 11.9 9.6 1.5 99.6

Biomass 83 56.8 13.8 48.3 1.3 120.2

Estimated Levelized Cost of New Generation Resources, 2017[10]

U.S. Average Levelized Cost for Plants Entering Service in 2017(2010 USD/MWh)

Plant Type

Capacity

Factor(%)

Levelized

CapitalCost

FixedO&M

VariableO&M

(including

fuel)

Transmission

Investment

TotalSystemLevelize

dCost

Wind1 34 83.3 9.7 0.0 3.7 96.8

Solar PV1,2 25 144.9 7.7 0.0 4.2 156.9

Solar Thermal1 20 204.7 40.1 0.0 6.2 251.0

Hydro1 53 76.9 4.0 6.0 2.1 89.9

1Non-dispatchable (Hydro is dispatchable within a season, but nondispatchable overall-limited by site

and season)

2Costs are expressed in terms of net AC power available to the grid for the installed capacity

Regional Variation in Levelized Costs of New Generation Resources, 2017[11]

Plant Type

Range for Total System Levelized Costs

(2010 USD/MWh)

Minimum Average Maximum

Conventional Coal 90.1 99.6 116.3

Advanced Coal 103.9 112.2 126.1

Advanced Coal with CCS 129.6 140.7 162.4

Natural Gas Fired

Conventional Combined Cycle 61.8 68.6 88.1

Advanced Combined Cycle 58.9 65.5 83.3

Advanced CC with CCS 82.8 92.8 110.9

Conventional Combustion Turbine 94.6 132.0 164.1

Advanced Combustion Turbine 80.4 105.3 133.0

Advanced Nuclear 108.4 112.7 120.1

Geothermal 85.0 99.6 113.9

Biomass 101.5 120.2 142.8

Wind 78.2 96.8 114.1

Solar PV 122.2 156.9 245.6

Solar Thermal 182.7 251.0 400.7

Hydro[14] 57.8 88.9 147.6

O&M = operation and maintenance.

CC = combined cycle.

CCS = carbon capture and sequestration.

PV = photovoltaics.

GHG = greenhouse gas.

UK 2010 estimates[edit source | editbeta]

In March 2010, a new report on UK levelised generation costs was published by Parsons

Brinckerhoff.[15] It puts a range on each cost due to various uncertainties. Combined cycle

gas turbines without CO2 capture are not directly comparable to the other low carbon

emission generation technologies in the PB study. The assumptions used in this study are

given in the report.

UK energy costs for different generation technologies in pounds permegawatt hour (2010)

Technology Cost range (£/MWh)[citation needed]

New nuclear 80–105

Onshore wind 80–110

Biomass 60–120

Natural gas turbines with CO2 capture 60–130

Coal with CO2 capture 100–155

Solar farms 125–180

Offshore wind 150–210

Natural gas turbine, no CO2 capture 55–110

UK energy costs for different generation technologies in pounds permegawatt hour (2010)

Technology Cost range (£/MWh)[citation needed]

Tidal power 155–390

Divide the above figures by 10 to obtain the price in pence per kilowatt-hour.

More recent UK estimates are the Mott MacDonald study released by DECC in June

2010 [16] and the Arup study for DECC published in 2011.[17]

French 2011 estimates[edit source | editbeta]

The International Agency for the Energy and EDF have estimated for 2011 the following

costs. For the nuclear power they include the costs due to new safety investments to

upgrade the French nuclear plant after the Fukushima Daiichi nuclear disaster; the cost for

those investments is estimated at 4 €/MWh. Concerning the solar power the estimate at 293

€/MWh is for a large plant capable to produce in the range of 50-100 GWh/year located in a

favorable location (such as in Southern Europe). For a small household plant capable to

produce typically around 3 MWh/year the cost is according to the location between 400 and

700 €/MWh. Currently solar power is by far the most expensive renewable source to produce

electricity, although increasing efficiency and longer lifespan of photovoltaic panels together

with reduced production costs could make this source of energy more competitive.

French energy costs for different generation technologies in Euros per megawatt hour (2011)

Technology Cost (€/MWh)

Hydro power 20

Nuclear 50

Natural gas turbines without CO2 capture 61

French energy costs for different generation technologies in Euros per megawatt hour (2011)

Technology Cost (€/MWh)

Onshore wind 69

Solar farms 293

Analysis from different sources[edit source | editbeta]

█ Conventional oil █ Unconventional oil █ Biofuels █ Coal █ Nuclear █ WindColored vertical lines indicate various historical oil prices. From left to right:— 1990s average — January 2009 — 1979 peak — 2008 peak

Price of oil per barrel (bbl) at which energy sources are competitive.

Right end of bar is viability without subsidy.

Left end of bar requires regulation or government subsidies.

Wider bars indicate uncertainty.Source: Financial Times (edit)

A draft report of LECs used by the California Energy Commission is available.[18] From this

report, the price per MWh for a municipal energy source is shown here:

California levelized energy costs for different generation technologies inUS dollars per megawatt hour (2007)

Technology Cost (US$/MWh)

Advanced Nuclear   67

Coal   74–88

Gas   87–346

Geothermal   67

Hydro power   48–86

Wind power   60

Solar   116–312

Biomass   47–117

Fuel Cell   86–111

Wave Power   611

Note that the above figures incorporate tax breaks for the various forms of power plants.

Subsidies range from 0% (for Coal) to 14% (for nuclear) to over 100% (for solar).

The following table gives a selection of LECs from two major government reports from

Australia.[19][20] Note that these LECs do not include any cost for the greenhouse

gasemissions (such as under carbon tax or emissions trading scenarios) associated with the

different technologies.

Levelised energy costs for different generation technologies in Australian dollars per megawatt hour(2006)

Technology Cost (AUD/MWh)

Nuclear (to COTS plan)[20]   40–70

Nuclear (to suit site; typical)[20]   75–105

Coal   28–38

Coal: IGCC + CCS   53–98

Coal: supercritical pulverized + CCS   64–106

Open-cycle Gas Turbine   101

Hot fractured rocks   89

Gas: combined cycle   37–54

Gas: combined cycle + CCS   53–93

Small Hydro power   55

Wind power: high capacity factor   63

Solar thermal   85

Biomass   88

Levelised energy costs for different generation technologies in Australian dollars per megawatt hour(2006)

Technology Cost (AUD/MWh)

Photovoltaics   120

In 1997 the Trade Association for Wind Turbines (Wirtschaftsverband Windkraftwerke e.V. –

WVW) ordered  a study into the costs of electricity production in newly constructed

conventional power plants from the Rheinisch-Westfälischen Institute for Economic

Research –RWI). The RWI predicted costs of electricity production per kWh for the basic

load for the year 2010 as follows:[citation needed]

FuelCost per kilowatt

hour in euro cents.

Nuclear Power 10.7 €ct – 12.4 €ct

FuelCost per kilowatt

hour in euro cents.

Brown Coal (Lignite) 8.8 €ct – 9.7 €ct

Black Coal (Bituminous)

10.4 €ct – 10.7 €ct

Natural gas 11.8 €ct – 10.6 €ct.

The part of a base load represents approx. 64% of the electricity production in total. The

costs of electricity production for the mid-load and peak load are considerably higher. There

is a mean value for the costs of electricity production for all kinds of conventional electricity

production and load profiles in 2010 which is 10.9 €ct to 11.4 €ct per kWh. The RWI

calculated this on the assumption that the costs of energy production would depend on the

price development of crude oil and that the price of crude oil would be approx. 23 US$ per

barrel in 2010. In fact the crude oil price is about 80 US$ in the beginning of 2010. This

means that the effective costs of conventional electricity production still need to be higher

than estimated by the RWI in the past.

The WVW takes the legislative feed-in-tariff as basis for the costs of electricity production out

of renewable energies because renewable power plants are economically feasible under the

German law (German Renewable Energy Sources Act-EEG).

The following figures arise for the costs of electricity production in newly constructed power

plants in 2010:[citation needed]

Energy source Costs of electricity production in euros per megawatt hour

Nuclear Energy 107.0 – 124.0

Brown Coal 88.0 –   97.0

Energy source Costs of electricity production in euros per megawatt hour

Black Coal 104.0 – 107.0

Domestic Gas 106.0 – 118.0

Wind Energy Onshore 49.7 –   96.1

Wind Energy Offshore

35.0 – 150.0

Hydropower 34.7 – 126.7

Biomass 77.1 – 115.5

Solar Electricity 284.3 – 391.4

Other estimates[edit source | editbeta]

A 2010 study by the Japanese government (pre-Fukushima disaster), called the Energy

White Paper, concluded the cost for kilowatt hour was ¥49 for solar, ¥10 to ¥14 for wind, and

¥5 or ¥6 for nuclear power. Masayoshi Son, an advocate for renewable energy, however,

has pointed out that the government estimates for nuclear power did not include the costs for

reprocessing the fuel or disaster insurance liability. Son estimated that if these costs were

included, the cost of nuclear power was about the same as wind power.[21][22][23]

Beyond the power station terminals, or system costs[edit

source | editbeta]

The raw costs developed from the above analysis are only part of the picture in planning and

costing a large modern power grid. Other considerations are the temporal load profile, i.e.

how load varies second to second, minute to minute, hour to hour, month to month. To meet

the varying load, generally a mix of plant options is needed, and the overall cost of providing

this load is then important. Wind power has poor capacity contribution, so during windless

periods, some form of back up must be provided. All other forms of power generation also

require back up, though to a lesser extent. To meet peak demand on a system, which only

persist for a few hours per year, it is often worth using very cheap to build, but very

expensive to operate plant - for example some large grids also use load shedding coupled

with diesel generators [24] at peak or extreme conditions - the very high kWh production cost

being justified by not having to build other more expensive capacity and a reduction in the

otherwise continuous and inefficient use of spinning reserve (see Operating reserve).

In the case of wind energy, the additional costs in terms of increased back up and grid

interconnection to allow for diversity of weather and load may be substantial. This is because

wind stops blowing frequently even in large areas at once and for prolonged periods of time.

Some wind advocates have argued that in the pan-European case back up costs are quite

low, resulting in overall wind energy costs about the same as present day power.[25] However,

such claims are generally considered too optimistic, except possibly for some marginal

increases that, in particular circumstances, may take advantage of the existing infrastructure.

[citation needed]

The cost in the UK of connecting new offshore wind in transmission terms, has been

consistently put by Grid/DECC/Ofgem at £15billion by 2020. This £15b cost does not include

the cost of any new connections to Europe - interconnectors, or a supergrid, as advocated by

some. The £15b cost is the cost of connecting offshore wind farms by cables typically less

than 12 km in length, to the UK's nearest suitable onshore connection point. There are total

forecast onshore transmission costs of connecting various new UK generators by 2020, as

incurred from 2010, of £4.7 billion, by comparison.

When a new plant is being added to a power system or grid, the effects are quite complex -

for example, when wind energy is added to a grid, it has a marginal cost associated with

production of about £20/MWh (most incurred as lumpy but running-related maintenance -

gearbox and bearing failures, for instance, and the cost of associated downtime), and

therefore will always offer cheaper power than fossil plant - this will tend to force the

marginally most expensive plant off the system. A mid range fossil plant, if added, will only

force off those plants that are marginally more expensive. Hence very complex modelling of

whose systems is required to determine the likely costs in practice of a range of power

generating plant options, or the effect of adding a given plant.

With the development of markets, it is extremely difficult for would-be investors to estimate

the likely impacts and cost benefit of an investment in a new plant, hence in free market

electricity systems, there tends to be an incipient shortage of capacity, due to the difficulties

of investors accurately estimating returns, and the need to second guess what competitors

might do.[citation needed]

The Institution of Engineers and Shipbuilders in Scotland commissioned a former Director of

Operations of the British National Grid, Colin Gibson, to produce a report on generation

levelised costs that for the first time would include some of the transmission costs as well as

the generation costs. This was published in December 2011 and is available on the

internet :.[26] The institution seeks to encourage debate of the issue, and has taken the

unusual step among compilers of such studies of publishing a spreadsheet showing its data

available on the internet :[27]

OECD/NEA Estimates for USA[edit source | editbeta]

Estimated Grid-Level Systems Cost, 2013 (USD/MWh)[28]

Technology Nuclear Coal GasOnshore

WindOffshore

WindSolar

Penetration Level

10%

30% 10%30%

10% 30% 10% 30% 10% 30% 10% 30%

Backup costs (adequacy)

0.00 0.00 0.04 0.04 0.00 0.00 5.61 6.14 2.10 6.85 0.00 10.45

Balancing costs 0.16 0.10 0.00 0.00 0.00 0.00 2.00 5.00 2.00 5.00 2.00 5.00

Grid connection 1.56 1.56 1.03 1.03 0.51 0.51 6.50 6.50 15.24 15.24 10.05 10.05

Grid reinforcement & extension

0.00 0.00 0.00 0.00 0.00 0.00 2.20 2.20 1.18 1.18 2.77 2.77

Total Grid-level System Costs

1.72 1.67 1.07 1.07 0.51 0.51 16.30 19.84 20.51 28.26 14.82 28.27

External costs of energy sources[edit source | editbeta]

See also: Environmental impact of the energy industry and Economics of new nuclear power

plants

Typically pricing of electricity from various energy sources may not include all external costs

- that is, the costs indirectly borne by society as a whole as a consequence of using that

energy source. These may include enabling costs, environmental impacts or beyond-

insurance accident effects.

The US Energy Information Administration predicts that coal and gas are set to be

continually used to deliver the majority of the world's electricity,[29] this is expected to result in

the evacuation of millions of homes in low lying areas, and an annual cost of hundreds of

billions of dollars worth of property damage.[30][31][32][33][34][35][36]

Furthermore, with the ongoing process of whole nations being slowly plunged underwater,

due to fossil fuel use,[37] massive international climate litigation lawsuits against fossil fuel

users are currently beginning in the International Court of Justice.[38][39]

An EU funded research study known as ExternE, or Externalities of Energy, undertaken over

the period of 1995 to 2005 found that the cost of producing electricity from coal or oil would

double over its present value, and the cost of electricity production from gas would increase

by 30% if external costs such as damage to the environment and to human health, from

the particulate matter,nitrogen oxides, chromium VI, river water alkalinity, mercury

poisoning and arsenic emissions produced by these sources, were taken into account. It was

estimated in the study that these external, downstream, fossil fuel costs amount up to 1%-

2% of the EU’s entire Gross Domestic Product (GDP), and this was before the external cost

of global warming from these sources was even included.[40] [41]

Nuclear power has largely worked under an insurance framework that limits or structures

accident liabilities in accordance with the Paris convention on nuclear third-party liability, the

Brussels supplementary convention, and the Vienna convention on civil liability for nuclear

damage [42]  and in the U.S. the Price-Anderson Act. It is often argued that this potential

shortfall in liability represents an external cost not included in the cost of nuclear electricity.

However these beyond-insurance costs for worst case scenarios are not unusual to nuclear

power, as hydroelectric power plants are similarly not fully insured against a catastrophic

event such as the Banqiao Dam disaster, where 11 million people lost their homes and from

30,000 to 200,000 people died, or large dam failures in general. As private insurers base

dam insurance premiums on limited scenarios, major disaster insurance in this sector is

likewise provided by the state.[43] Also of note is that more modern reactors than those of

the Fukushima Daiichi Nuclear Power Plant vintage, such as the proven Onagawa nuclear

plant design,[44] demonstrated that it can survive 13 meter high tsunamis and safely shut

down without incident, despite being the closest nuclear plant to the epicenter of the 2011

earthquake and tsunami.[45]

Photovoltaics[edit source | editbeta]

Photovoltaic prices have fallen from $76.67/Watt in 1977 to an estimated $0.74/Watt in 2013,

for crystalline silicon solar cells.[46] This is seen as evidence supporting Swanson's law, an

observation similar to the famous Moore's Law that states that solar cell prices fall 20% for

every doubling of industry capacity.[46]

As of 2011, the price of PV modules per MW has fallen by 60% since the summer of 2008,

according to Bloomberg New Energy Finance estimates, putting solar power for the first time

on a competitive footing with the retail price of electricity in a number of sunny countries; an

alternative and consistent price decline figure of 75% from 2007 to 2012 has also been

published,[47] though it is unclear whether these figures are specific to the United States or

generally global. The levelised cost of electricity (LCOE) from PV is competitive with

conventional electricity sources in an expanding list of geographic regions,[7] particularly

when the time of generation is included, as electricity is worth more during the day than at

night.[48] There has been fierce competition in the supply chain, and further improvements in

the levelised cost of energy for solar lie ahead, posing a growing threat to the dominance of

fossil fuel generation sources in the next few years.[49] As time progresses, renewable energy

technologies generally get cheaper,[50][51] while fossil fuels generally get more expensive:

The less solar power costs, the more favorably it compares to conventional power,

and the more attractive it becomes to utilities and energy users around the globe.

Utility-scale solar power can now be delivered in California at prices well below

$100/MWh ($0.10/kWh) less than most other peak generators, even those running

on low-cost natural gas. Lower solar module costs also stimulate demand from

consumer markets where the cost of solar compares very favorably to retail electric

rates.[52]

As of 2011, the cost of PV has fallen well below that of nuclear power and is set to fall

further. The average retail price of solar cells as monitored by the Solarbuzz group fell from

$3.50/watt to $2.43/watt over the course of 2011.[53]

For large-scale installations, prices below $1.00/watt were achieved. A module price

of 0.60 Euro/watt (0.78 $/watt) was published for a large scale 5-year deal in April

2012.[54]

In some locations, PV has reached grid parity, which is usually defined as PV production

costs at or below retail electricity prices (though often still above the power station prices for

coal or gas-fired generation without their distribution and other costs). Photovoltaic power is

also generated during a time of day that is close to peak demand (precedes it) in electricity

systems with high use of air conditioning. More generally, it is now evident that, given a

carbon price of $50/ton, which would raise the price of coal-fired power by 5c/kWh, solar PV

will be cost-competitive in most locations. The declining price of PV has been reflected in

rapidly growing installations, totaling about 23 GW in 2011. Although some consolidation is

likely in 2012, due to support cuts in the large markets of Germany and Italy, strong growth

seems likely to continue for the rest of the decade. Already, by one estimate, total investment

in renewables for 2011 exceeded investment in carbon-based electricity generation.[53]

In the case of self consumption payback time is calculated based on how much electricity is

not brought from the grid. Additionally, using PV solar power to charge DC batteries, as used

in Plug-in Hybrid Electric Vehicles and Electric Vehicles, leads to greater efficiencies.

Traditionally, DC generated electricity from solar PV must be converted to AC for buildings,

at an average 10% loss during the conversion. An additional efficiency loss occurs in the

transition back to DC for battery driven devices and vehicles, and using various interest rates

and energy price changes were calculated to find present values that range from $2,057.13

to $8,213.64 (analysis from 2009). [55]

For example in Germany with electricity prices of 0.25 euro/KWh and Insolation of 900

KWh/KW one KWp will save 225 euro per year and with installation cost of 1700 euro/KWp

means that the system will pay back in less than 7 years.[56]

Additional cost factors[edit source | editbeta]

Extraction, emissions, transmission, health[edit source | editbeta]

This calculation does not include wider system costs associated with each type of plant, such

as long distance transmission connections to grids, balancing and reserve costs, and does

not include externalities such as health damage by coal plants, nor the effect of CO2

emissions on the whole biosphere (climate change, ocean

acidification and eutrophication, ocean current shifts), nor decommissioning costs of nuclear

plants(although in the USA, the cost of decommissioning is included in the price of electricity,

as per the Nuclear Waste Policy Act), is therefore not full cost accounting: These types of

items can be explicitly added as necessary depending on the purpose of the calculation. It

has little relation to actual price of power, but assists policy makers and others to guide

discussions and decision making.

These are not minor factors but very significantly affect all responsible power decisions:

Comparisons of life-cycle greenhouse gas emissions  show coal, for instance, to be

radically higher in terms of GHGs than any alternative. Accordingly, in the analysis

below, carbon capturedcoal is generally treated as a separate source rather than being

averaged in with other coal.

Other environmental concerns with electricity generation include acid rain, ocean

acidification and effect of coal extraction on watersheds.

Various human health concerns with electricity generation, including asthma and smog,

now dominate decisions in developed nations that incur health care costs publicly.

A Harvard UniversityMedical School study estimates the US health costs of coal alone

at between 300 and 500 billion US dollars annually.[57]

While cost per kWh of transmission varies drastically with distance, the long complex

projects required to clear or even upgrade transmission routes make even attractive new

supplies often uncompetitive with conservation measures (see below), because the

timing of payoff must take the transmission upgrade into account.