What Does Levelized Cost of Electricity (LCOE) Mean to the Consumer?

Do Not Be Fooled by the "Renewables are Now Cheaper Than Natural Gas" Misdirection.

Environmentalists, Lobbyists and the Canadian Media would have you believe so, but in Canada, it is simply NOT true.

They offer the following to support their statement. Source

What is Levelized Cost of Energy (LCOE)?Source

The levelized cost of electricity, or LCOE, is an oft-misused measure of the cost of generating electricity over the lifespan of a facility. Because of its simplicity and visual appeal, LCOE makes frequent appearances in the media. It is sometimes used to argue that investors or utilities should build more of the generation technology with the lowest LCOE. This approach misses a big part of the picture - the value to the Grid.

LCOE for a SINGLE energy producer in isolation varies widely based on Location. Wind Speed and Hours of Sunlight vary greatly across the country.

If Total Energy Generated is REDUCED ↓ due to location, average wind speeds, hours of sunlight, etc. the LCOE will ↑ INCREASE.

Location impacts will INCREASE ↑ Capex and Operating Costs which will in turn ↑ INCREASE LCOE.

• Capital Costs are affected by labor costs, Climate, Latitude, Freight Costs, Regulations, etc.
• In Canada, wages are higher and it is more difficult to build during the winter months.
• Operation and Maintenance are often weather dependant. Snow must be cleared from Solar Panels, and Wind Turbine maintenance can be challenging in the winter.

LCOE for an Electricity Grid is the Total Energy Demand over the Total Costs of all sources on the grid.

Wind and Solar is Highly Variable. Output Continually Oscillates between 0% and 100%.

A very typical example is recent performance by the largest Wind Farm in Alberta. Source

Average Generation is Irrelevant to Utility Grid Stability which relies on minute-to-minute (60 Hz) control of Voltage and Frequency.

If Total Generation falls below Total Demand even briefly, voltage and/or frequency control will be lost leading to brownouts, blackouts and potentially complete Grid Collapse if control cannot be immediately restored.

Adding Renewables to a Utility Grid that has the Capability to Meet All Demand increases Grid LCOE by increasing the Total Costs (Capex, ROI, Maintenance, etc.) without a proportional increase in Energy Generated.

Without Wind or Solar, the Alberta Utility Grid can meet demand and control Voltage & Frequency by modulating Fossil Fuel Generation (Coal and Natural Gas.

Adding Wind and Solar does not INCREASE Total Generation. It only displaces existing Fossil Fuel generation while adding to Total Grid Costs.

Displacing Fossil Fuels with Renewables will result in Grid Instability and Ultimately Complete Collapse. Generation Variability will result in loss of Voltage & Frequency Control.

When Wind and Solar Generation is reduced by their characteristic variability, there is insufficient Fossil Fuel generation available to meet demand and therefore Voltage & Frequency control is lost.

Displacing Fossil Fuels with Renewables requires some form of Energy Storage to Maintain Grid Stability.

Li-ion batteries are currently the most technically mature option.
In the following example, maintaining Grid stability requires 1,000,000 Mw of Energy Storage PLUS 35,620 Mw of Wind Generation (19,790 1.8 Mw Wind Turbines)

Other energy storage options include:

• Mechanical Inertia (Flywheel).
• Gravity Storage.
• Thermal Storage.
• Compressed or Liquid Air Storage.
• Pumped Hydro

None of the above are viable at the total capacity necessary.
The addition of a large amount of wind generating capacity PLUS a large amount of energy storage to back it up will significantly increase the cost portion of the LCOE calculation without any increase in energy generated. This will increase the Grid LCOE significantly, resulting in a large increase to the consumer directly or to the taxpayer for subsidies.

1,000,000 Mw Battery Storage Capacity is NOT Technically or Economically Viable.

Currently, the largest battery storage is in Monterey County, California Source It is only 300 Mw or 0.03% of what is required in the above example.
Although the cost for batteries has fallen, they remain prohibitively expensive at $1,211/kw. In this example the total 2025 installed cost of 1,000,000 Mw of battery storage would be at least US$12.1 Trillion .

Relying on One Area to Back-up Another Area is NOT Viable.

Looking at a period when generation from renewables fell to near zero, it is evident that none could back-up the others.

The transmission infrastructure to connect areas over large geographic distances is extremely expensive. A recent project to install a feeder from Pincher Creek, AB to Calgary AB (200 kms) cost $2.0 Billion.

Once connected, the generating Grid must have sufficient capacity to meet the demand in the remote location PLUS to meet their own demand. This would increase their costs substantially. The receiving Grid and therefore the consumer would pay a very large premium for any imported power.

Looking Forward to NetZero 2050. Nuclear is the Only Viable Option.

To achieve NetZero, Alberta residents will be forced to convert home heating from Natural Gas to Electricity. Due to low winter temperatures heat pumps are not viable. Residents will see their utility bills skyrocket forcing many into a "Heat-or-Eat" dillema.

When demand is adjusted for 2050 population growth, with all home heating plus light/medium duty vehicles electric, average Grid Demand is Expected to Increase to > 30,000 Mw.
Maintaining Grid Stability will require 5,000,000 Mw of Energy Storage PLUS Wind Generation Increased to 142,480 Mw (78,166 1.8 Mw Turbines added). That is 8 Turbines plus infrastructure constructed and commissioned each and every day between 2022 and 2050. A logistic and economic impossibility.

To effectively displace fossil fuels requires Nuclear Energy. Currently and into the foreseeable future, it is the only mature and viable option.
New and existing Nuclear facilities would require modifications to respond quickly and effectively to control voltage and frequency.

Wind and Solar are redundant as they only serve to displace Nuclear which is already a near Zero Emission technology.

For more information on the Grid Model used here http://www.goinggreencanada.ca/Alberta_Grid_Model.htm