This page is supplementary material to the post “Electricity in Texas part II – the cost of a 100% renewable grid” on Climate etc.
The contributions to LCOE from capital costs, fixed O&M and variable O&M plus fuel are taken from the 2016 version of the US EIA (Energy Information Administration) document “Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2016”.
The capital cost LCOE contribution in the EIA document is $14.0 / MWh. The cost model method requires this to be adjusted by the ratio of capacity required (40 GW) to average load (39.5 GW) which gives a high cost of $14.2 / MWh of supply. For the low cost it is assumed that 15% of the deficits can be eliminated by demand response reductions from large industrial users giving $12.1 / MWh. These figures already contain the cost of providing redundancy for the 40 GW of back-up because the EIA document assumes a load factor of 87%, not 100%. In other words for that money 46 GW of back-up capacity is provided and up to 13% of it can fail at the critical time it is needed.
Since ERCOT already has more than 40 GW of gas turbine generation then there are no new additional capital requirements.
Fixed O&M costs of $1.4 / MWh are similarly adjusted up by 40 GW / 39.5 GW, and the low cost is similarly reduced by 15% for the demand response capacity reduction.
As the DoE document does not give a breakdown of the fuel element of variable O&M costs, O&M minus fuel is based on Lazards Version 10 (page 20) figures of $2.0-3.5 / MWh. Since back-up is invoked 6% of the time, this gives contributions of $0.1 low and $0.2 high / MWh.
Renewable methane fuel for back-up gas turbine generation will be manufactured as part of the costed tier 2 renewable gas storage process so the natural gas fuel cost is zero. There are offsetting natural gas fuel line items in the cost model spreadsheet for those who want to play with a grid with less than 100% renewables.
The back-up gas turbine generation capacity requirement should ultimately be confirmed against 10 or 20 years of real demand, wind and solar data rather than just 3 years to which an extra 10 GW allowance has been added.
Hydrogen fuel cells are an alternative to gas turbines for back up. Though more efficient than gas turbines, fuel cells currently have a higher capital cost with scarce historical information on which to base a learning curve for prediction of future prices. At current prices fuel cells for back-up generation would not be competitive with gas turbine generation at the expected load factor of 6%.