Estimation of Levelized Costs of Electricity Generation in Renewable and Fossil Power Plants

Abstract

The existence of a comprehensive model that enables the calculation of the real price of electricity production along with its environmental costs is one of the most important analytical tools in energy economics. It is now different from when virtual water costs and other environmental costs of power generation are taken into account. In this article, information from 56 power plants across the country was used. In this paper, an algorithm for calculating the Levelized Cost of Electricity (LCOE) is presented. Among these, common technologies in the production sector, including heating, gas, combined cycle, wind, and photovoltaic power plants, have been studied from an economic perspective and the results of calculating their cost price have been presented. The results show that the highest costs are related to electricity generation using gas technology (18.86 cents per kilowatt hour with subsidized fuel and 35.98 cents per kilowatt hour with exported fuel) and the lowest cost of generating electricity through a wind farm is 6.59 cents per kilowatt hour. In the calculations, the cost of fuel in the form of subsidies and exports and the cost of virtual water in the production process are also considered. One of the reasons for the slow growth of renewable energy development is that the fuel price of gas and oil for power plants in Iran was not realistic despite the fuel subsidy, so electricity production in thermal power plants is cost-effective and electricity production from renewable energies such as wind and photovoltaic power plants in a superficial view has no economic justification..

Keywords

• keywords: electricity
• renewable power plant
• fossil power plant
• environmental costs
• levelized cost