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Annual Energy Outlook 2019

Release date: January 24, 2019   |  Next release date:  January 2020   |  full report

Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2019

Release date: February 26, 2019


This paper presents average values of levelized costs and levelized avoided costs for electric generating technologies entering service in 2021, 2023,[1] and 2040 as represented in the National Energy Modeling System (NEMS) for the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2019 (AEO2019) Reference case.[2] Both values estimate the factors contributing to the capacity expansion decisions modeled, which also consider policy, technology, and geographic characteristics that are not easily captured in a single metric.

The build decisions in the real world and as modeled in AEO2019, however, are more complex than a simple LACE-to-LCOE comparison presented in the paper, because they include such factors as policy and non-economic drivers. Nevertheless, the value-cost ratio (the ratio of LACE-to-LCOE) provides a reasonable point of comparison of first-order economic competitiveness among a wider variety of technologies than is possible using either LCOE or LACE metric individually.

The costs for electric generating facilities entering service in 2023 are presented in the body of the report, with those for 2021[3] and 2040 included in Appendices A and B, respectively. Both a capacity-weighted average based on projected capacity additions and a simple average (unweighted) of the regional values across the 22 U.S. supply regions of the NEMS electricity market module (EMM) are provided, together with the range of regional values.


Footnotes

[1] Given the long lead-time and licensing requirements for some technologies, the first feasible year that all technologies are available is 2023.

[2] AEO2019 reports are available at http://www.eia.gov/outlooks/aeo/.

[3] Appendix A shows LCOE and LACE for the subset of technologies available to be built in 2021.