Abstract
Life cycle costs of energy (LCOEs) are commonly employed to estimate the economic costs of energy supplies. This chapter offers a step-by-step calculation of the components comprising LCOE for a wide range of power generation technologies. This includes the capital recovery factor, variable costs, fuel costs, and externalities or subsidies. Among these variables, fuel cost variations significantly account for LCOE volatility among fossil fuel-based supplies. For this reason, each technology’s “competitiveness” dynamically shifts with fuel cost volatility. The use of LCOE provides a common language for understanding the economic costs of supply for firms, in addressing strategic, policy and societal issues.
References
BP Statistical Review. (2016). Accessed 16 December 2016. http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf.
BP Energy Outlook. (2016). Accessed 16 December 2016. http://www.bp.com/en/global/corporate/energy-economics/energy-outlook-2035.html.
California Energy Commission—CEC. (1998). Energy technology status report, 1996. Sacramento: California Energy Commission.
California Energy Commission—CEC. (2003). Comparative costs of California central station electricity generation technologies. Sacramento: California Energy Commission.
Energy Information Administration—EIA. (2015). Energy Outlook 2015. Washington, DC: Energy Information Administration. Previous editions provide data for 2008 and 2010.
Enzensberger, N., Wietschel, M., & Rentz, O. (2002). Policy instruments fostering wind energy projects—A multi perspective evaluation approach. Energy Policy, 30(9), 793–801.
Eskeland, G. S. (1994). A presumptive Pigovian tax: Complementing regulation to mimic an emissions fee. World Bank Economic Review, 8(3), 373–394.
Fullerton, D. (1997). Environmental levies and distortionary taxation. Comment. The American Economic Review, 87(1), 245–251.
Roth, I. F., & Ambs, L. L. (2004). Incorporating externalities into a full cost approach to electric power generation life-cycle costing. Energy, 29, 2125–2144.
Jaffe, A. B., Newell, R. G., & Stavins, R. N. (2005). A tale of two market failures: Technology and environmental policy. Ecological Economics, 54(2–3), 164–174.
Stern, N. (2006). The economics of climate change: The Stern review. Cambridge, United Kingdom: Cambridge University Press.
Author information
Authors and Affiliations
Corresponding author
Appendices
Appendices
Copyright information
© 2017 The Author(s)
About this chapter
Cite this chapter
Barcelona, R.G. (2017). Costing Energy. In: Energy Investments. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-59139-5_14
Download citation
DOI: https://doi.org/10.1057/978-1-137-59139-5_14
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-137-59138-8
Online ISBN: 978-1-137-59139-5
eBook Packages: Business and ManagementBusiness and Management (R0)