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Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty

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  • Peter G. Levi

    (Department of Engineering, University of Cambridge)

  • Michael G. Pollitt

    (Cambridge Judge Business School, University of Cambridge)

Abstract

Cost uncertainty has latterly come to be presented in the UK’s Department of Energy and Climate Change (DECC) Levelised Cost of Electricity (LCOE) estimates using sensitivities; ‘high’ and ‘low’ figures presented alongside central estimates. This presentation of uncertainty is limited in its provision of context, and of an overall picture of how costs and uncertainty vary over time. Two analyses are performed using the published DECC cost estimates for three electricity generation technologies – nuclear, offshore wind and Carbon Capture and Storage (CCS). The first analysis analyses cost trajectories from selected DECC LCOE estimates and presents them alongside contextual data, resulting in contextual cost landscapes. The second evaluates the associated temporal estimate uncertainty in the decade 2020-2030; an approach aimed at capturing the temporal consistency of estimates, alongside variations in magnitude. Nuclear estimates are found to be both the most consistent and lowest in magnitude. Offshore wind and CCS suffer from comparatively large cost and uncertainty premiums. The implications for the direction of policy are then discussed in the context of conflicting past experience and hidden costs.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Peter G. Levi & Michael G. Pollitt, 2015. "Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty," Working Papers EPRG 1501, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1501
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    Cited by:

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    2. Tu, Qiang & Mo, Jianlei & Liu, Zhuoran & Gong, Chunxu & Fan, Ying, 2021. "Using green finance to counteract the adverse effects of COVID-19 pandemic on renewable energy investment-The case of offshore wind power in China," Energy Policy, Elsevier, vol. 158(C).
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    4. Willems, Bert & Pollitt, Michael & von der Fehr, Nils-Henrik & Banet, Catherine, 2022. "The European Wholesale Electricty Market: From Crisis to Net Zero," Other publications TiSEM 2f225964-853e-4d30-a46d-0, Tilburg University, School of Economics and Management.
    5. Raugei, Marco & Leccisi, Enrica, 2016. "A comprehensive assessment of the energy performance of the full range of electricity generation technologies deployed in the United Kingdom," Energy Policy, Elsevier, vol. 90(C), pages 46-59.
    6. Claire Nicolas & Stéphane Tchung-Ming & Emmanuel Hache, 2016. "Energy transition in transportation under cost uncertainty, an assessment based on robust optimization," Working Papers hal-02475943, HAL.
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    More about this item

    Keywords

    cost projections; nuclear; wind power; carbon capture and storage;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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