Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies

Abstract

Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected “levelized cost” per MWh supplied. I demonstrate that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear, gas combined cycle, and coal. It overvalues intermittent generating technologies compared to dispatchable base load generating technologies. It also likely overvalues wind generating technologies compared to solar generating technologies. Integrating differences in production profiles, the associated variations in wholesale market prices of electricity, and life-cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them.

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Identifiers

DOI

10.1257/aer.101.3.238

Journal

American Economic Review

Year

2011