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A review of the IEA/NEA Projected Costs of Electricity – 2015 edition

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  • Khatib, Hisham

Abstract

The IEA/NEA recently issued their eighth edition of the Study on the “Projected Costs of Generating Electricity” – 2015 edition. The Study is mainly concerned with calculating the levelised cost of electricity (LCOE). The LCOE calculations are based on a levelised average life time cost approach using the discounted cash flow (DCF) method. The analysis was this year, and for the first time, performed using three discount rates (3%, 7%, and 10%). The LCOE can serve as a tool for calculating the cost of different generation technologies. However the Study's usefulness is affected by its narrow base of a limited set of countries that are not necessarily representative. It ignored the negative role of subsidies and did not provide a methodology for selective application of the discount rates and costing of carbon. The global power generation scene is changing. Generation growth in OECD countries has become very limited; simultaneously there is rapid growth of varying renewables (VRE) generation which needs special criteria for assessing its system cost. All this demands a rethinking of the application and usefulness of the LCOE in future generation planning.

Suggested Citation

  • Khatib, Hisham, 2016. "A review of the IEA/NEA Projected Costs of Electricity – 2015 edition," Energy Policy, Elsevier, vol. 88(C), pages 229-233.
    • Handle: RePEc:eee:enepol:v:88:y:2016:i:c:p:229-233
    DOI: 10.1016/j.enpol.2015.10.030
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    References listed on IDEAS

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    1. Lina Escobar Rangel and Francois Leveque, 2015. "Revisiting the Cost Escalation Curse of Nuclear Power: New Lessons from the French Experience," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
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    2. Shen, Wei & Chen, Xi & Qiu, Jing & Hayward, Jennifier A & Sayeef, Saad & Osman, Peter & Meng, Ke & Dong, Zhao Yang, 2020. "A comprehensive review of variable renewable energy levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    3. Khatib, Hisham & Difiglio, Carmine, 2016. "Economics of nuclear and renewables," Energy Policy, Elsevier, vol. 96(C), pages 740-750.
    4. Xiao, Chao & Fu, Qian & Liao, Qiang & Huang, Yun & Xia, Ao & Chen, Hao & Zhu, Xun, 2020. "Life cycle and economic assessments of biogas production from microalgae biomass with hydrothermal pretreatment via anaerobic digestion," Renewable Energy, Elsevier, vol. 151(C), pages 70-78.

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