Environmental Engineering Reference
In-Depth Information
TABLE 7.7
Capital Cost of Renewable Electric Power
Capital Cost
Capacity Factor
Capital Cost of Electricity
Type
($/kW)
(%)
(cents/kWh)
Hydropower
2000
50
6.8
Biomass
a
1000
60
2.9
Geothermal
1500
15
17.1
Wind
1200
25
8.2
Photovoltaic
4000
30
22.8
Tidal
2000
30
11.4
a
Wood-fueled steam plant.
To compare the renewable energy technologies with each other, and with fossil fuel plants,
we computed the component of the cost of producing electricity that is allocated to financing
the capital investment needed to construct the facility, for each type of renewable energy plant
listed in Table 7.7. For each kilowatt of installed power, the annual cost of capital to be recovered
by electricity sales is assumed to be 15% of the capital cost per kilowatt. When this is divided
by the annual average output per kilowatt of installed power, which is the capacity factor times
24
8760 hours per year, the quotient is the capital cost component of the cost of electricity
production at that plant, shown in the last column of Table 7.7.
For the renewable energy systems listed in Table 7.7 the capital cost component of electricity
covers a large range. Part of this variability reflects the difference in unit capital cost, and the
rest is a consequence of different capacity factors. Except for photovoltaic systems, these systems
require turbine-generator machinery that constitutes a large share of the capital cost, which is in
the range of 1000-2000 $/kW. The capacity factors, taken from Table 7.1, are mostly low, for
reasons inherent in the variability of the renewable energy resource.
28
In contrast, the capital cost
for modern efficient fossil fuel plants lie in the range of 500-1300 $/kW and the corresponding
capital cost of electricity is 1.2-3.0 cents/kWh. Taking into account the costs of fuel and operations,
these fossil fuel plants produce electricity at a cost of 4-6 cents/kWh. Only hydropower and wind
energy plants come close to being competitive with new fossil fuel plants.
29
It has been argued that research and production subsidies may so enlarge the market for re-
newable energy technologies that their capital costs will be reduced to the point that they become
economically competitive with fossil fuel plants. In addition, if fossil fuel plants must reduce their
CO
2
emissions by capturing and sequestering the CO
2
, the extra cost of doing so may make renew-
able sources more economically attractive. In either case government intervention, either economic
or regulatory, will be necessary to increase the market share for renewable electric power.
×
365
=
28
The low historic value of 15 % for geothermal power is a consequence of the market utilization for this
power in California. Otherwise, the capacity factor should be in the range of 50 %.
29
The wood-fueled steam plant of Table 7.7 may have low capital cost, but the fuel cost is high because of
low thermal efficiency, compared to fossil-fueled plants. To improve this efficiency, and thereby lower fuel
cost, the fuel must be gasified and a combined cycle plant constructed, increasing the capital cost.
