Re-Defining System LCOE: Costs and Values of Power Sources

The mass introduction of variable renewable energies, including wind and solar photovoltaic, leads to additional costs caused by the intermittency. Many recent studies have addressed these “integration costs,” and proposed novel metrics that replace the traditional metric known as the levelized cost...

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Main Author: Yuhji Matsuo
Format: Article
Language:English
Published: MDPI AG 2022-09-01
Series:Energies
Subjects:
Online Access:https://www.mdpi.com/1996-1073/15/18/6845
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author Yuhji Matsuo
author_facet Yuhji Matsuo
author_sort Yuhji Matsuo
collection DOAJ
description The mass introduction of variable renewable energies, including wind and solar photovoltaic, leads to additional costs caused by the intermittency. Many recent studies have addressed these “integration costs,” and proposed novel metrics that replace the traditional metric known as the levelized cost of electricity (LCOE). However, the policy relevance of those metrics remains unclear. In this study, the author investigates and re-defines the concept of system LCOE, referring to prior studies, and proposes concrete methods to estimate them. Average system LCOE allocates the integration cost to each power source, dividing that by the adjusted power output. Marginal system LCOE revises the concept of system LCOE and value-adjusted LCOE proposed by prior studies, to be clearer and more policy-relevant. These metrics are also applied to Japan’s power sector in 2050, suggesting the necessity of aiming for a “well-balanced energy mix” in future power systems with decarbonised power sources.
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spelling doaj.art-b150bc1388574192b3f52fce8215374f2023-11-23T16:06:47ZengMDPI AGEnergies1996-10732022-09-011518684510.3390/en15186845Re-Defining System LCOE: Costs and Values of Power SourcesYuhji Matsuo0College of Asia Pacific Studies, Ritsumeikan Asia Pacific University, Oita 874-8577, JapanThe mass introduction of variable renewable energies, including wind and solar photovoltaic, leads to additional costs caused by the intermittency. Many recent studies have addressed these “integration costs,” and proposed novel metrics that replace the traditional metric known as the levelized cost of electricity (LCOE). However, the policy relevance of those metrics remains unclear. In this study, the author investigates and re-defines the concept of system LCOE, referring to prior studies, and proposes concrete methods to estimate them. Average system LCOE allocates the integration cost to each power source, dividing that by the adjusted power output. Marginal system LCOE revises the concept of system LCOE and value-adjusted LCOE proposed by prior studies, to be clearer and more policy-relevant. These metrics are also applied to Japan’s power sector in 2050, suggesting the necessity of aiming for a “well-balanced energy mix” in future power systems with decarbonised power sources.https://www.mdpi.com/1996-1073/15/18/6845levelized cost of electricitysystem LCOEvariable renewable energypower generation costwind powersolar power
spellingShingle Yuhji Matsuo
Re-Defining System LCOE: Costs and Values of Power Sources
Energies
levelized cost of electricity
system LCOE
variable renewable energy
power generation cost
wind power
solar power
title Re-Defining System LCOE: Costs and Values of Power Sources
title_full Re-Defining System LCOE: Costs and Values of Power Sources
title_fullStr Re-Defining System LCOE: Costs and Values of Power Sources
title_full_unstemmed Re-Defining System LCOE: Costs and Values of Power Sources
title_short Re-Defining System LCOE: Costs and Values of Power Sources
title_sort re defining system lcoe costs and values of power sources
topic levelized cost of electricity
system LCOE
variable renewable energy
power generation cost
wind power
solar power
url https://www.mdpi.com/1996-1073/15/18/6845
work_keys_str_mv AT yuhjimatsuo redefiningsystemlcoecostsandvaluesofpowersources