Addendum to Comparative Energy Costs Lecture

Addendum to Comparative Energy Costs Lecture - Addendum to...

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Unformatted text preview: Addendum to Comparative Energy Costs Lecture The lecture notes for the comparative energy costs lecture were all fine. However, my table that I wrote on the board had problems, and was erroneous in certain columns because of my errors in translating between dollars per mega watt hour ($/MWh) and cents per killowat hour (¢/kWh). I apologize and have since checked my orders of magnitude with Prof. Tim Mount, who is the energy expert in AEM and one of the reviewers of the refernced AEO report in Table 4.2 below. In brief I was trying to combine the information from the three slides on the next page (see lecture notes if larger images are needed). The appropriate comparisons between Coal, Natural Gas, and Wind are: Electricity Source Levelized Costs of Energy (LCOE) Production for new plants coming on line in 2012 8.71 ¢/kWh 8.07 ¢/kWh 9.11 ¢/kWh CO2 Externality at Other Air $30 per ton Pollution Costs ‐ Weighted Total LCOE and Pollution for Combustion Costs Pulverized Coal Conventional Gas Combined Cycle Wind 3.00 ¢/kWh 1.50 ¢/kWh n.a. 3.20 ¢/kWh 0.16 ¢/kWh n.a. 14.91 ¢/kWh 9.73 ¢/kWh 9.11 ¢/kWh Three lessons to be learned. 1. Taking into account only the standard elements in the levelized costs of energy prodcution (Capital costs, fixed operation and maintenance, variable operation and maintenance/fuel costs, and transmission infrastructure) natural gas is the cheapest. This is consistent with recent conversions of “Eisenhower era” coal plants to natural gas as discussed in lecture. When external air pollution costs are added to the levelized costs of energy (in the homework these are pollution damages) wind becomes the cheapest. This suggest that if these external costs were internalized (say via a tax), wind would be the cheapest alternative. The external costs of “localized” air pollution from coal are as high as the CO2 costs, and even higher if you use a lower dollar per ton damage for carbon. Hence there is just as much of an imperative to reduce coal use from a non‐CO2 perspective. 2. 3. I hope that this correction is useful and informative. Again, I apologize form my erros in preparting this lecture. Prof. Poe ...
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