Main results

Table 5.3 presents the application of Eq. 5.3 when used with the data just described and a discount rate of 7.5%. Decommissioning, fuel, carbon and O&M costs feed directly into the LCOE value while the capital cost is discounted. When the cost of carbon is zero, gas — and coal-fired generation are cheapest. When, however, a carbon cost is included at ($50 per tonne of CO2) nuclear is the cheapest followed by gas. Interestingly, even with CO2 at $50 per tonne, the addition of carbon capture technology (at the coal prices used) does little to make coal a more economic option.

Three of the technologies — nuclear, coal with carbon capture and wind — share a common feature in that all are capital intensive. In all three cases capital costs make up more than about 50% of the LCOE. As expected, the LCOE for gas generation is dominated by fuel and carbon costs, which comprise around 80% of the total.

It is noteworthy that onshore wind struggles to be competitive with the other technologies even with CO2 priced at $50 per tonne. This is a consequence of the high capital cost which, in turn, results from the low availability of this technology. This clearly demonstrates that siting — finding reliably windy places — is an important determinant of the cost of the electricity produced by this technology

and explains why, despite significantly higher overnight costs, offshore wind might be considered viable.

Because thermal efficiency affects fuel and carbon costs, it is clear that improvements in this parameter will mostly affect technologies where fuel and carbon make a large contribution to the LCOE, i. e. coal and gas. Thermal efficiency improvements in nuclear plant, while obviously welcome, will not have a large impact on overall costs.