Abstract
Economic cost is decisive for the development of different power generation. Life cycle cost (LCC) is a useful tool in calculating the cost at all life stages of electricity generation. This study improves the levelized cost of electricity (LCOE) model as the LCC calculation methods from three aspects, including considering the quantification of external cost, expanding the compositions of internal cost, and discounting power generation. The improved LCOE model is applied to three representative kinds of power generation, namely, coal-fired, biomass, and wind power in China, in the base year 2015. The external cost is quantified based on the ReCiPe model and an economic value conversion factor system. Results show that the internal cost of coal-fired, biomass, and wind power are 0.049, 0.098, and 0.081 USD/kWh, separately. With the quantification of external cost, the LCCs of the three are 0.275, 0.249, and 0.081 USD/kWh, respectively. Sensitivity analysis is conducted on the discount rate and five cost factors, namely, the capital cost, raw material cost, operational and maintenance cost (O&M cost), other annual costs, and external costs. The results provide a quantitative reference for decision makings of electricity production and consumption.
Highlights
Based on three representative enterprises of coal-fired, biomass, and wind power generation in Shandong Province, this study aims to analyze the internal costs and external costs caused by pollutant emissions following the improved levelized cost of electricity (LCOE) method from the framework of the life cycle
The LCOE method is improved from three perspectives, namely, considering the quantification of external cost, expanding the compositions of internal cost, and discount
The LCOE method is improved from three perspectives, namely, considering the quantification of external cost, expanding the compositions of internal cost, and discounting power generation
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Economic progress has been stimulated the demand for electricity production in recent years. The resource and environmental problems caused by fossil fuels have accelerated the development of renewable energy [1]. In the context of global energy transition and emission reduction, renewable energy has exhibited a clear upward trend [2], see Figure 1. The costs of electricity generation directly affect the decision of stakeholders
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