Value chain · CLM-0307
In plain terms
The US government's avoided-cost metric shows that, for the power plants it expects to be built, value and cost are within about 25 percent of each other; for some plants it does not expect to be built, such as offshore wind, coal and nuclear, value is half of cost or less.
The claim as recorded
EIA defines levelized avoided cost of electricity (LACE) as the annualised marginal value of energy and capacity a new generator would provide by displacing another asset on the projected future grid, and its own 2027-vintage value-cost ratios (LACE divided by LCOE or LCOS, both in 2021 USD/MWh), as capacity-weighted averages for the technologies expected to be built, are: combined-cycle gas 1.01, geothermal 1.25, onshore wind 0.92, standalone solar 1.02, hybrid solar 0.94, combustion turbine 0.87, battery storage 0.85, none differing from 1.0 by more than about a quarter; the unweighted averages, which include technologies not expected to be built, run from 0.34 for offshore wind to 1.20 for geothermal, with coal, nuclear and biomass below 0.5.
Scope and limits
US-market-specific, 2027-vintage only; each figure is an average of 25 regional ratios, and regional ratios range more widely. These ratios describe existing technology classes and have not been calculated for anything resembling SBSP. The quarter bound holds only for capacity-weighted averages of technologies expected to be built; it is not a bound on how far value-based adjustment can move a technology, since unweighted averages reach 0.34.
What it assumes
AEO2022 Reference case, National Energy Modeling System, new resources entering service in 2027, capacity-weighted by projected regional capacity additions.
Where it comes from
p.4: "to develop the levelized avoided cost of electricity (LACE)... based on the marginal value of energy and capacity that would result from adding a unit of a given technology to the grid as it exists or as we project it to exist at a specific future date." Table 4a, p.12: Combined cycle LCOE $37.05, LACE $37.45, ratio 1.01; Geothermal LCOE $37.43, LACE $46.52, ratio 1.25; Wind onshore LCOE $37.80, LACE $34.37, ratio 0.92; Solar standalone LCOE $33.46, LACE $33.82, ratio 1.02; Combustion turbine LCOE $123.84, LACE $107.82, ratio 0.87; Battery storage LCOS $124.84, LACE $106.08, ratio 0.85; Solar hybrid LCOE $54.71, LACE $50.82, ratio 0.94. Table 4b, p.13 (unweighted, including technologies not expected to be built), average value-cost ratios: ultra-supercritical coal 0.47, advanced nuclear 0.47, biomass 0.45, wind offshore 0.34, hydroelectric 0.60, geothermal 1.20; regional range 0.27 to 0.43 for offshore wind and 0.60 to 1.03 for onshore wind.
Basis: USD2021
Related records
- Answers question
- QST-021 not published in this release
Cite this
energyaperture.com/c/clm-0307
CLM-0307, Energy Aperture, as of 2022-03.
Connected records
Other published records linked to this one. A list, not a judgement.
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