Inter-fuel competition in electricity generation
A Latin America and Caribbean experience
by Jed Bailey | December 15, 2012
This study compares the levelized cost of electricity generated with fossil fuels (including coal, natural gas, fuel oil, and diesel) and renewable or carbon-free energy sources (including hydro, wind, solar, nuclear and geothermal).
A meta-study of power generation technology capital costs determined the range of capital costs across the various technologies as well as the range of cost estimates for each individual technology from the various data sources that were examined. Applying these capital costs to a range of operating assumption (such as fuel price and plant utilization rate) resulted in a range of levelized cost of electricity for each technology.
In addition, the study examined how the cost of electricity was affected by applying a cost for CO2 emissions and a cost to build new transmission infrastructure to link the power plant in question to the national grid. Finally, the study examined the potential investment cost and benefits in reducing CO2 emissions and levelized costs of electricity by repowering existing thermal power plants or switching high-carbon fuels to lower carbon alternatives.
This analysis included two case studies: repowering an older natural-gas fired combustion turbine unit in Peru and repowering and fuel switching an oil-fired steam turbine unit to natural gas in Nicaragua.
This report was commissioned by the Inter-American Development Bank and published as Technical Note No. IDB-TN-504. The report can be downloaded from the IDB’s website here.