Full Title: The Levelized Cost of Electricity from Existing Generation Resources
Author(s): Thomas Stacey and George Taylor, Phd
Publisher(s): Institute for Energy Research
Publication Date: 07/2015
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In this paper, we analyze publicly available data to establish the average levelized cost of electricity from existing generation sources, or “LCOE-E.” This new measure is a crucial piece of information that has been missing from the electricity policy discussion. The LCOE-E data and framework we introduce in this report offer policymakers a powerful tool as they make decisions that affect the cost of electricity in the U.S.
What is the levelized cost of electricity? The approach taken by the federal Energy Information Administration (EIA) to answer that question is exclusively forward-looking. That is, EIA publishes LCOE calculations for new generation resources only. If no existing generation sources were closed before the end of their economic life, EIA’s approach would provide sufficient information to policymakers on the costs of different electricity policies.
However, in the current context of sweeping environmental regulations on conventional generators—coupled with
mandates and subsidies for intermittent resources—policies are indeed forcing existing generation sources to close early. Federal policies alone threaten to shutter 110 gigawatts of coal and nuclear generation capacity. The LCOE-E we introduce in this paper allows for much-needed cost comparisons between existing resources that face early closure and the new resources favored by current policy to replace them.