October 11, 2009
Comparative Electric Energy Costs

A recent comparison of electric power generation costs by a big bank illustrate just how much more expensive solar is than other electric power sources.

For instance, HSBC estimates costs per megawatt for different options: Combined-cycle gas, 43 euros; regular coal, 62 euros; onshore wind, 58 euros; nuclear power, 48 euros; geothermal, 43 euros. Photovoltaic solar power costs 290 euros per megawatt; concentrated solar power 181 euros.

Or put another way: What price would oil or gas have to be for each technology to be break-even without subsidies, using combined-cycle gas turbines as the low-cost yardstick?

Geothermal is the cheapest: It is competitive with natural gas at $5.16 per million BTUs or oil at $57 a barrel. Nuclear power breaks even at $6.26 and $69.

If geothermal is so cheap why don't we see more of it?

Click thru to read where the other electric energy sources become competitive. Solar requires very high cost natural gas in order to become competitive.Luckily for solar its costs are dropping. So it still stands a good chance of becoming a contender.

This comparison list is deceptively simple. Solar becomes competitive much sooner in Phoenix Arizona or Las Vegas Nevada than in Stockholm Sweden or Anchorage Alaska. Also, wind doesn't compete in the US southeast due to low wind conditions (and southeastern US politicians are more enthusiastic about nuclear power as a result).

Share |      Randall Parker, 2009 October 11 11:56 PM  Energy Electric Generators

Hong said at October 12, 2009 8:19 AM:

Sounds silly. Heavy govt subsidies to bring parity to solar. How much more good could those subsidies do for other industries or through a simple tax reduction?

K said at October 12, 2009 10:58 AM:

Too bad the article doesn't say if these costs are from existing plant or estimated for new plant. It makes a big difference.

Randall, I suspect geothermal is cheap because it has only been built at the very best sites. Even so I am surprised to see cost that low. Geothermal is a little like wind. No one is going to build wind farms where wind hardly blows.

Look at nuclear's low cost. If they are measuring existing plant then new designs should reduce cost quite a bit.

Briecle said at October 12, 2009 1:08 PM:

It's important to match the power production method with the regional strengths and needs.

People who try to force solar or wind on every region, regardless of its resources, are announcing to the world that they are fools.

The same with geothermal. Geothermal fits some regions, but not others.

Nuclear is suitable for most regions except for geologically active fault lines or volcanic areas. Even in the middle of the oceans or at either polar region, nuclear can function for many years on one fueling.

Natural gas works well almost anywhere there is a pipeline. But watch out for eco terrorists in the Pac Northwest who are starting to target energy pipelines. And watch out for vulnerability to energy blackmailers like Russia.

Coal can be extremely clean, if you understand that CO2 is not a pollutant. Watch for new cleaner coal plants in countries that are not hamstrung by carbon phobia. Coal can be shipped almost anywhere.

Jack said at October 12, 2009 1:41 PM:

That makes a lot of sense, Brecle. If the southeastern US doesn't have wind or reliable sunshine, then nuclear and coal make a better fit. If you have good biomass processing facilities, the southeast might work for biomass too if you can scale it up.

You bet Americans are addicted to their electricity. Just watch this administration try to put the squeeze on American's electrical use. Watch the institutional activists try to wean Americans off of their electric power. Yeah, they're idiots, but they're idiots with their hands on your power switch. To them, you're just a power guzzling peon who needs to be put in your place.

RBL said at October 12, 2009 5:02 PM:

I think the preference for nuclear in the Southeast stems from the decision to site the Oak Ridge plants and the Oak Ridge National lab in Tennessee. This led to a lot of nuclear engineering programs in these states, and then a lot of the nuclear industry locates nearby. This is decades in the making, and wind power is too new to be a factor.

Fat Man said at October 12, 2009 8:08 PM:

The link is only to a Wall St Journal article summarizing the report. Without being able to review the report we cannot snipe at it. But, I will repeat my often stated comment that unless you account for the cost of the back-up for solar or wind, you have no idea of how much they really cost.

Greg said at October 13, 2009 10:48 AM:

The generation cost per megawatt-hour doesn't dive you the entire picture. After all, the electricity is generated in order to consume it, so it's interesting to see how much it costs at consumer's site. And here, the picture becomes more complex.
Consuming wind or solar energy far away from where it's produced adds transmission costs; on the other hand, these are the kinds of generators that can easily be run locally - if there's enough sunshine or wind. Gas turbines can also be operated on small scale, albeit not so efficiently. On the other hand, generating electricity from coal or uranium locally rarely makes sense.
Personally, I feel that solar cell cost is now close to the point where I'll install solar panels on my roof and save money as a result. I could find solar panels on eBay for ~$2.60/watt; that puts payback time to 5-10 years - which is reasonable.

Manny said at October 13, 2009 11:40 AM:

Solar is great if you can consume it close to the source, and don't have to buy huge battery banks. At least you can predict solar radiation for arid climates reasonably well. Wind is a different animal and it's either feast or famine. Too much power from wind, then too little. It's hell for a power manager, even if it's just your own house.

Kralizec said at October 17, 2009 11:43 AM:
For instance, HSBC estimates costs per megawatt for different options: Combined-cycle gas, 43 euros; regular coal, 62 euros; onshore wind, 58 euros; nuclear power, 48 euros; geothermal, 43 euros. Photovoltaic solar power costs 290 euros per megawatt; concentrated solar power 181 euros.
Given that the unit of measurement here is the megawatt, rather than the megawatt-hour, it seems the costs are the initial capital investments. The author doesn't seem to make clear whether maintenance costs are figured, nor whether fuel costs are figured. I'll grant that HSBC's own report may include assessment of these important details.
Engineer-Poet said at October 17, 2009 9:15 PM:

If you could buy a megawatt of PV panel for 181 euros, nobody would bother with anything that burns fuel.  The lack of "-hour" is obviously an error of omission, and you'd have to be a fool to interpret it otherwise.

anonyq said at October 22, 2009 3:50 PM:

Not only production price is important, the selling price is also important. For instance wind sells for less than average and solar for more. There is also the question how they set the expected interest rate and future oil price.

ps. Did they use Higher Enron calculations to find combined gas cycle cheapest? My guess is they put the costs as much as possible on heat and not electricity generation.

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