Understanding the US EIAs Levilized Cost of Electric Generation figures

At Watts Up With That?, Willis Eschenbach has a post “The Levelized Cost of Electric Generation“. These are estimated figures by US Energy Information Agency (EIA) for the costs of power by fuel source, for plants with construction started now that would enter service in 2018. The full table from the EIA in $/MwH is reproduced as Table 1 below.

Willis makes the valid point that every unit of “non-dispatchable” power (i.e. renewables with no power on demand) capacity, there must be an equal amount of dispatchable power to back it up. He does not follow this up. Non-dispatchable power does not need to be fully-covered by the expensive high-efficiency fossil-fuelled power stations. The most extreme conditions of peak power demands but no wind can be met by diesel generators. These are relatively low capital cost, but with high unit costs of output. They still add to the costs of renewables, along with reducing the CO2 savings. In terms of the large scale fossil-fuelled power stations gas is clearly better than coal. Combined cycle gas has half the capital cost per unit as conventional coal so dropping the utilisation will have a much smaller impact on unit costs. Further it can be switched on or off much quicker than conventional coal. Combined the actual additional cost of renewables is lower than he implies.

As I have been looking into the subsidies that renewables receive in the UK, I would like to observations. To understand these comments in the context of Willis Eschenbach’s post please note:-

  • In the UK, all generated electricity is paid the wholesale price (approx $0.09 kwh at present).
  • In addition renewables receive renewables obligation credits or ROCs. Biomass (wood pellets usually imported from USA) and onshore wind receive 1 ROC per megawatt hour. Offshore wind receives 2 ROCs. With a ROC worth $0.07 kwh (£42.02 MwH), onshore wind and biomass receives $0.16 kwh and offshore wind $0.23 kwh.
  • Currency conversion is at £1.00 = £1.66. Willis uses kilowatt hours for his simplified summary, whereas as the EIA uses megawatt hours.

Revenue is somewhat different to the costs, but there are a few observations possible.

  1. Capacity utilisation for onshore wind is assumed at 34% and 37% for offshore. For the UK, actual average utilisation as 26% for onshore and 35% for offshore. On that basis, US costs for onshore wind would rise from $0.087 to $0.117 kwh. Here are the figures from the most recent four available years.

  2. Biomass in the UK consists of burning non-fossil fuels in existing coal-fired power stations. It is more expensive than coal because (a) fuel cost per tonne is more than coal and (b) output per tonne is slightly less than coal. I would want to know why the capital cost per kwh is 20% lower and why the variable costs are just 45% higher. On fuel costs alone the 0.2 ROCs per Mwh would be more than generous for biomass. Based on figures from April to August 2013, the full year subsidy saving of this change would be in the order of £300m or $500m per annum.
  3. The transmission investment is vastly understated. Like in the UK, the cost of transmission for a power station investor is likely in connecting the power station to the nearest point on the national grid, regardless of the capacity of the line. To obtain 34% efficiency, wind turbines need to be placed in highly exposed areas, such as hill-tops. Population centres, and established grid networks, tend to be on the plains, or in sheltered valleys. In the UK, the best locations for wind turbines are in the far North of Scotland. To effectively connect this to main grid means upgrading about 400 miles of transmission lines to enable around 5-10GW of power at peak generation. This capital cost could be as much as the wind turbines themselves. Fossil-fuelled power stations tend to be located near existing power stations. These in turn are near to the existing grid infrastructure. The upshot is that wind turbines have much higher transmission costs than fossil-fuelled power stations. The difference could be a number of cents per kilowatt hour.

Kevin Marshall

Climate Change Damage Impacts – A story embellished at every retelling

Willis Eschenbach has a posting on a recent paper on climate change damage impacts. This is my comment, with hyperlinks and tables.

My first reaction was “Oi– they have copied my idea!”

Well the damage function at least!


Actually, this can be found by the claims of the Stern Review or AR4. Try looking at the table in AR4 of “Examples of impacts associated with global average temperature change” and you will get the idea.

A simpler, but more visual, perspective is gained from a slide produced for the launch of the Stern Review.

More seriously Willis, this is worse than you thought. The paper makes the claim that unlikely but high impact events should be considered. The argument is that the likelihood and impacts of potential catastrophes are both higher than previous thought. The paper then states

“Various tipping points can be envisaged (Lenton et al., 2008; Kriegler et al., 2009), which would lead to severe sudden damages. Furthermore, the consequent political or community responses could be even more serious.”

Both of these papers are available online at PNAS. The Lenton paper consisted of a group of academics specialising in catastrophic tipping points getting together for a retreat in Berlin. They concluded that these tipping points needed to include “political time horizons”, “ethical time horizons”, and where a “A significant number of people care about the fate of (a)

component”. That is, there is a host of non-scientific reasons for exaggerating the extent and the likelihood of potential events.

The Krieger paper says “We have elicited subjective probability intervals for the occurrence of such major changes under global warming from 43 scientists.” Is anybody willing to assess if the subjective probability intervals might deviate from objective probability intervals, and in which direction.

So the “Climate Change damage impacts” paper takes two embellished tipping points papers and adds “…the consequent political or community responses could be even more serious.”

There is something else you need to add into the probability equation. The paper assumes the central estimate of temperature rise from a doubling of CO2 levels is 2.8 degrees centigrade. This is only as a result of strong positive feedbacks. Many will have seen the recent discussions at Climateaudit and wattsupwiththat about the Spencer & Bracewell, Lindzen and Choi and Dessler papers. Even if Dessler is given the benefit of the doubt on this, the evidence for strong positive feedbacks is very weak indeed.

In conclusion, the most charitable view is that this paper takes an exaggerated view (both magnitude and likelihood) of a couple of papers with exaggerated views (both magnitude and likelihood), all subject to the occurrence of a temperature rise for which there is no robust empirical evidence.

The Economist on Corn Production over 30 degrees

The Economist gives a positive spin to the article ““Nonlinear heat effects on African maize (corn) as evidenced by historical yield trials”, Lobell et al.” in Nature : Climate Change. I posted the following comment:-

Experimental conditions must be controlled to get comparable results. But this is not real world conditions. In the real world farmers will seek to optimize output given the constraints. When temperature, or rainfall changes, farmers will adapt. It is part of the human condition to adapt, which is why there is agriculture to be found in Southern Sweden and the blazing heat of Minas Gerais. Corn production is to be found in Edinburg, Texas with 136 days a year above 30 degrees. This is achieved through both planting and harvesting earlier in the year than further north.

As well as looking to the negatives of warming, we should look to the positives. More temperate climates should, ceteris paribus, see increasing yields as temperatures get warmer. For instance, Northern Europe, the Steppes of Central Asia and the Canadian plains should benefit from higher temperatures. Also higher temperatures will be caused by higher CO2 levels. Experimental studies have shown a doubling of CO2 will increase maize biomass by around a third. Finally, according to Al Gore, precipitation increased by 20% in the last century, mostly in above mentioned areas, Southern South America and SE Australia.

One of the biggest risks for climate change is supposedly to the stability world food supplies, with possible famines. But, as Amartya Sen has shown, the biggest famines are made serious not by natural factors but by adverse terms of trade. The Bengal famine of 1943, in which more than 3 million died, was exacerbated by a ban on exports between provinces in India, at the same time as extra demand was present from those supplying the troops fighting in Burma.





Al Gore : An Inconvenient Truth pages 114-115