The capital cost contribution to the LCOE (CAP in Eq. 5.3) is calculated from the overnight cost, the financing costs (represented in Eq. 5.3 by the parameter I), the capital recovery factor (represented in Eq. 5.3 by the parameter R) and the plant availability.

PCGE8 provides overnight cost data (INVEST in Eq. 5.2) that include a contingency of 15% (usually) for nuclear and 5% for the other technologies. The data show considerable variability — it is not unusual for overnight costs to vary by a factor of two or three between the highest and lowest cost plant. Very low costs, for all technologies, are quoted by China and South Korea. Restricting the data to OECD countries in Europe and North America produces higher values that are also more homogeneous. Table 5.1 presents mean values for this reduced dataset. The highest overnight costs are associated with coal generation when this includes carbon capture (coal+CC) and nuclear. The lowest values occur for CCGT, which is more than four times lower than both coal+CC and nuclear.

Table 5.1 shows that the cost of finance is greatest for nuclear (35%) and least for wind (7.5%). This is a direct consequence of the length of the respective construction times.

PCGE uses an availability figure of 85% for nuclear, coal and gas. This is reasonable for nuclear but is rather greater than is found in practice for gas and (to a lesser extent) coal where owners may have a strategy of avoiding baseload operation so as to take advantage of higher prices. The use of a higher availability is an attempt to offset this: in effect it represents an actual maximisation of operating profit by a hypothetical maximisation of generation. As a first approximation, we adopt it here (Table 5.1). There is further discussion of this in Section 5.2.7. PCGE provides availability figures for onshore wind that range between 22 and 41% with a mean value of 27%, which is the figure used here.

Based on Eq. 5.3, Table 5.1 calculates the capital cost component of the LCOE. The highest value recorded is the one for onshore wind despite the fact that the overnight cost is relatively modest. This is a consequence of its low availability. The lowest capital costs are found for gas and coal while nuclear and coal+CC are similar.