What is the Least-cost Source of Electricity in Your Community?

by Bob Shively, Enerdynamics President and Lead Instructor

Average Costs Across the U.S.

In our June 2016 blog post titled Economics, Not Policy Mandates, Drive the Growth of Renewables we described how the price of utility-scale wind and solar projects was becoming competitive with traditional forms of generation. The discussion was centered on data developed in 2015. Costs for renewables are decreasing so rapidly that an update using more recent numbers shows even more dramatic results. Stunningly, wind and utility-scale solar PV are now the two lowest-cost generation sources.

Levelized Gen Costs 2016

Source: Lazard’s Levelized Cost of Energy Analysis – Version 10.0, December 2016

Costs in Your Community

The University of Texas at Austin recently performed a related study titled New U.S. Power Costs: by County, with Environmental Externalities that takes into account generation costs similar to those shown above, but it also considered additional externalities. The complete list of factors considered include:

  • Power plant costs including operating plus capital costs
  • Fuel costs
  • Environmental and health costs including air quality and greenhouse gases
  • Infrastructure costs including transmission and distribution, rail, and gas pipelines
  • Integration costs for renewables and distributed energy resources
  • Opportunities for energy efficiency
  • Government financial support for electricity

The University of Texas study analyzed the lowest-cost form of generation by county across the U.S.:

lowest cost generation map.png

Source: Natural gas and wind are the lowest-cost generation technologies for much of the U.S., new UT Austin research shows, December 8, 2016

Here we see the dominance of wind in the Midwest, solar in sunny regions of the West, and natural gas combined-cycle turbines in much of the rest of the country. Interestingly, in a smaller number of counties nuclear power is the low-cost resource.

How Costs Affect U.S. Generation Mix

Not surprisingly, planned generation additions and retirements are reflective of cost data. 

Summer capacity additions.png

Source:  EIA website as of March 2017

Given that generation decisions are made at the local and state levels, it seems logical to conclude that regardless of federal policies the movement to gas and renewable generation will continue.

 

 

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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