Grid Cost Element For Simple Lcoe Model And Critiques On Decc's 2013 Electricity Generation Costs

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Grid Costs-One Additional Cost Element for Simple LCOE Model and Critiques on DECC’s 2013 Electricity Generation Costs Report 1. Introduction As defined by DECC of UK, the Levelised Costs of Electricity Generation (LCOE) is ‘the discounted lifetime cost of ownership and use of a generation asset, converted into an equivalent unit of cost of generation in £/MWh’ (DECC, 2013). In this essay, the author is intended to introduce one more cost element in the given model, populate the model with data used in DECC’s 2013 Electricity Generation Costs Report and critique the uncertainty analysis of DECC’s estimates. 2. One More Cost Element LCOE model is a benchmarking tool which estimates and compares costs of different electricity generation…show more content…
Ueckerdt et al. (2013) define grid costs to be twofold. First is the transmission costs generated because of the distance between power plants and load centres. Second, the fact that diversified energy sources can prosper electricity supply is also a contributor to the increased re-dispatch costs as the result of congested grid. In terms of transmission costs, such costs can vary to a great extent. Some power plants can be far away from the load centres, which drives transmission costs relatively high. Conventional power plants such as coal and gas can be less constrained to geographic location. However, for those renewable energy (RE) plants such as off-shore wind and PV ones which are highly geographic-oriented, it is a considerable proportion of the total cost that cannot be neglected. When speaking of re-dispatch costs, it is often concerned with congestion management. On the one hand, the development of RE relieves the pressure of electricity supply due to constrained amount of conventional energy and escalating consumptions. On the other hand, because of the nature of randomness (or unpredictability) of RE, the electricity generation of RE especially PV and wind are dominated by natural force which is hardly human-manipulated. The electricity dispatch, nevertheless, is the complicated systematic work based on historical consumptions and future predictions. In this case, the RE generation can rarely correspond to
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