By - Jim Vess

Natural gas and wind are cheapest clean generation technologies, Texas study finds

Energize Weekly, February 1, 2017

Natural gas and wind are the lowest cost options for new electricity generation in the vast majority of the United States when health and environmental impacts are factored in along with traditional costs, according to a University of Texas study.

Wind energy dominates in the core of the country—home to a high-wind corridor—from north Texas to North Dakota—as well as in parts of New England. Natural gas turbines are the low-cost technology for most of the country, though solar wins in the high-sun, desert areas of California, Nevada and Arizona.

“In a way, the findings may not be that surprising because those are the technologies that have been installed in the last few years,” said Carey King, a research scientist and assistant director of the University of Texas’ Energy Institute and a co-author of the study, U.S. Power Costs: by County, with Environmental Externalities.

Generation costs are usually measured by so-called levelized cost of energy (LCOE) analysis, which take the cost of building and running a plant over its lifetime and dividing that by the amount of energy the unit produces over the same time span—leading to a cost per kilowatt-hour (kWh).

The Texas research group took the analysis a step further adding in the environmental and health impacts, which economists call externalities, and adjusting the costs for differences in geographic locations.

“We wanted to add a spatial aspect to the numbers,” King said. The study calculates a cost for 12 different types of generating technology for every county in the country. “Although we are pretty sure not every county is going to install solar,” King said.

The model used 11 location criteria, including population density, 100-year flood plains, water availability, access to fuel from railroads and pipelines.

In a county far removed from pipelines, for example, the cost of natural gas turbine technology increased as did the cost of a thermal plant where there was a problem with water availability.

“While the average increased cost for internalizing the environmental externalities is small for some technologies,” the study said, “the local cost differences can be rather high, i.e. $0.05 to $0.62/ kWh for coal.”

That difference for coal is the result of whether the site was in a remote area or a city, which may have trouble complying with clear-air regulations. “That is basically rural versus urban,” said King.

Among the other inputs were costs for emissions of carbon dioxide, sulfur dioxide, oxides of nitrogen and particulates.

When those externalities and geographical constraints were not included, leaving a dollars and cents assessment, the Texas researchers found that natural gas combined cycle turbines were the low-cost technology in 38 states and parts of seven others (2,316 counties). Wind was the cheapest in six states and parts of seven other states (742 counties). Nuclear power was the cheapest in small part of Wisconsin (23 counties). In Northern Michigan and Wisconsin, coal was the low-cost technology (29 counties).

When the external costs and the geographical constraints were added, the area in the center of the nation where wind is the lowest cost technology expands greatly as it does in New England, to a total of 1,347 counties.

Utility-scale solar, which did not even register in the dollars-and-cents analysis, is the low-cost technology for parts of California, Nevada, Arizona, Utah and Colorado, a total of 85 counties.

In the parts of southeastern U.S., where the wind resource and solar resource are more limited, nuclear turns out to be the cheapest clean technology. “That’s because of the carbon costs,” King said. “That doesn’t mean nuclear plants get built.”

The research team also developed online calculators that allow a user to plug in different numbers for a host of variables from capital costs to fuel costs to the cost of carbon and other pollutants.

“We think our methodology is sound and hope it enhances constructive dialogue,” said Joshua Rhodes, postdoctoral research fellow at the Energy Institute and lead author of the paper. “But we also know that cost factors change over time, and people disagree about whether to include some of them. We wanted to provide an opportunity for people to change these inputs, and the tools we’ve created allow for that.”

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