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1 | Energy Efficiency and Renewable Energy eere.energy.gov
LCOE and LACE
Sam Baldwin Chief Science Officer
Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy
EIA LCOE-LACE Workshop July 25, 2013
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LCOE • A measure of Cost. • Considerations?
– Capital cost, cost of capital/financial structure, interest during construction, commodity material costs, etc.?
– Fuel cost; Resource availability and quality; Site issues; etc.? – Capacity factor realized, etc.? – Transmission; interconnection costs; integration costs? – Operations?
• Dispatchable? Ramp rates? • Reserves?
– Other costs? • Water consumption? • Environmental impacts—land, water, atmosphere, climate, biosphere? • Etc.
It is complicated: technologies have different constraints and serve different purposes. LCOE is a first term in an approximation of cost…. Perhaps add an error term/bar and specify particular role/purpose of the technology?
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LACE • A measure of Value • Regulated utilities • Deregulated markets
– Market operations model needed – NEMS, ReEDS, GridView, (SCUC/SCED), etc.? • Resolution of model: temporal, spatial, system? • Operation of system?
– Value depends on time of day/week/season, location, system, weather, etc.? – Price taker/setter?
• Fuel cost; Resource availability and quality; Site issues; etc.? • Variable O&M, etc.? • Transmission? • LMPs?
– Other values/costs: • (Energy, capacity), but also T&D deferrals, loss savings, ancillary services, portfolio
hedge value, voltage support, grid security (if enabled), etc.? – Investment decision process?
It is complicated: LACE will have many different values depending on local circumstances. It is a first term in an approximation of value…. Would an error term/bar be sufficient?
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Examples Cambridge Energy Research Associates Power Plant Cost Index
0
1
2
3
4
5
6
7
8
9
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2009
Dol
lars
per
MM
Btu
Historical AEO Natural Gas Price Forecasts vs. Actual NG Prices(Average Lower 48 Wellhead Prices)
Actual Average Wellhead Price
Sources: EIA Annual Energy Outlooks
85
86
87 89
90
91
9293
9495
05
0403
02
Forecasts 96 to 01In order of lowest to highest:
97, 98, 99, 00, 96, 01
Forecasts 85 to 97Trended downward in
response to the downward trend in
actual prices.
08
0607
Forecasts 03 to 08Trending upward
with in initial years with declines
09
10
Forecasts 09 to 10Rose and then declined to ref lect spike in actual
prices in 2008
59.90
59.92
59.94
59.96
59.98
60.00
60.02
60.04
5:50 6:00 6:10 6:20 6:30
TIME (pm)
FREQ
UENC
Y (Hz
)
2600-MWGeneration
Lost AGC RESPONSE
GOVERNOR RESPONSE
System Loss / Frequency Excursion Source: NREL
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Northeast Blackout New York City August 2003
Kristina Hamachi LaCommare, and Joseph H. Eto, LBNL
Storms and Power System Interruptions
Hurricane Katrina August 2005
Midwest & Mid-Atlantic Derecho
June 2012
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2010 2050
Renewable Electricity Futures study
• RE generation from technologies that are commercially available today, in combination with a more flexible electric system, is more than adequate to supply 80% of total U.S. electricity generation in 2050—while meeting electricity demand on an hourly basis in every region of the country.
• The abundance and diversity of U.S. renewable energy resources can support multiple combinations of renewable technologies to achieve high levels of renewable electricity use, and result in deep reductions in electric sector greenhouse gas emissions and water use.
• The direct incremental cost associated with high renewable generation is comparable to published cost estimates of other clean energy scenarios. Improvement in the cost and performance of renewable technologies is the most impactful lever for reducing this incremental cost.
http://www.nrel.gov/re_futures/
For more information [email protected]