Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty
Cost uncertainty has latterly come to be presented in the UK’s Department of Energy and Climate Change (DECC) Levelised Cost of Electricity (LCOE) estimates using sensitivities; ‘high’ and ‘low’ figures are presented alongside ‘central’ estimates. This presentation of uncertainty is limited in its provision of context, and as an overall picture of how costs and uncertainty vary over time. This study aims to address these two shortcomings. Two analyses are performed using reported DECC LCOE estimates for three important electricity generation technologies for the UK; nuclear, offshore wind and coal with carbon capture and storage. The first analysis composes LCOE estimate trajectories from previous years’ DECC estimates and presents them alongside contextual data, including some out-turn costs. The second quantifies the variability presented in the LCOE estimate trajectories for commissioning dates in the decade 2020–2030. Nuclear costs are presented as both the most consistent and lowest in magnitude. An imminently forecast steep fall in the LCOE of offshore wind raises questions about the timing of investment and deployment. In most cases estimate variability decreases over the estimation horizon, strangely suggesting greater levels of certainty for further flung commissioning dates. Further observations and implications for policy stemming from the analyses are discussed.
Levi, P. G., & Pollitt, M. G. (2015). Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty. Energy Policy, 87, 48-59.