Provides an alternative to the standard levilised cost of energy calculation based on a systems cost to include back-up generation
The ETI has developed and made available a new analysis tool that will allow system operators and other users to explore the interaction and cost effectiveness of different energy generation sources, including back-up generation, to help them to understand the true cost of the energy source.
The easy to use, Excel spreadsheet Technology Comparator tool will calculate the expected Levelised Cost of Energy (LCOE) for chosen technologies, but also links this into the average annual cost of electricity with and without a carbon price. The tool can then compare how well a range of generating technologies can match half hourly electricity demand through a number of sample years and what the total cost might be.
Allowing users to input their own data, the tool will cost optimise selected generation technologies and uses either batteries or gas-turbines as the back-up generation deployed to match demand through the year. By using this combination, the ETI believes it can provide a more realistic cost of energy rather than a net present value calculated over the lifetime of a generating asset, which is how LCOE is presently used.
The tool allows users to customise for their own purposes by adding additional technologies, or setting new demand levels for calculation. Users can also test the sensitivity of the cost optimised combination of the selected technology and backup technology, by using different data sets.
The tool is free and available to be downloaded from the ETI website together with a user manual and an explanatory perspective report on the tool, its characteristics and why the ETI chose to develop it.
Though the LCOE calculation is useful, it’s theoretical analysis can sometimes be misleading and hide the true system costs incurred by different technologies under different operating conditions. We therefore decided to develop a tool that will help anyone tasked with matching supply with demand at the lowest cost to consumers and society, identify the costs that would be incurred by using different technologies under changing conditions. Using the default data that comes included in the tool, users will see that deep decarbonisation of electricity production using renewables alone is more expensive than a simple LCOE analysis would suggest. The tool can also show how the relative attractiveness of various technologies changes as battery prices reduce, as well as the required scale of batteries that enable those generation technologies to become a major supplier of electricity in a fully decarbonised world. It is hoped that in creating this tool we are helping people to make more informed decisions upon an evidence base that is open and transparent to users.
The ETI hopes that the Technology Comparator tool will help to provide insight into the profile of different technologies and their potential system impact out to around 2030. However they recommend that any analysis of potential future energy systems should be undertaken using a whole systems tool such as ESME, the institute’s internationally peer reviewed energy system modelling environment to fully understand the interactions and reactions of energy generation choices across heat, power, transport and the infrastructure that links them.
To view the perspective report, user guide and technology comparator tool click here