Different electricity generating technologies are often compared by using the Levelized Costs of Electricity (LCOE), which is calculated as the present value of the total costs of construction and operating cost over an assumed lifetime of the generating asset divided by the total amount of electricity generated. This cost metric has been criticized for ignoring the effects of intermittency and non-dispatchability which mostly applies to wind and solar power. 

This article (abstract and introduction only) introduces the Levelized Full System Costs of Electricity (LFSCOE), a new cost evaluation metric that compares the costs of serving the entire market using just one source plus storage. The full preprint version is here. The input requirements are capital costs of the generating facility, the cost of a distribution system, maintenance and operating costs, the cost of capital, capacity factors, ramping up and down times, and the annual electricity demand by hour in the target market. The author wrote “Economically, the fact that intermittent generation has no obligation to meet the demand can be seen as a hidden subsidy. One can even go one step further and argue that intermittent generation is of zero value if it cannot be made available to consumers who demand a steady electricity flow."

The paper calculates the LFSCOE for two markets; Germany and the region of the Electricity Reliability Council of Texas, and several generating technologies with storage. For each generating technology, the installed capacity and the amount of storage are optimized to minimize the total system costs while meeting electricity demand throughout the year. The calculations assume zero storage losses and are averaged over 7 years. The storage can store 3 MWh of energy per installed MW of generating capacity, which is equivalent to current residential battery storage.

Neither wind nor solar nor the wind & solar mix are economically competitive to the dispatchable sources. In Germany and Texas, the wind & solar mix is 13 times and 6 times more expensive than natural gas combined cycle technology, respectively.

The paper also presents costs under the assumption that the given source of electricity plus storage must provide only 95% of the market with the lowest cost source providing 5% of the market. The results of using 100% and 95% of each of four technologies and a wind & solar mix are shown in table 1. The paper also shows values for biomass, natural gas CT and coal.

Table 1;  Levelized Full System Costs of Electricity

Note: For natural gas, CC means combined cycle.

In the 100% usage case, the cost of solar only in Germany is 44 times that of natural gas CC electrical power. Combining solar with wind makes the cost of the wind & solar mix less than the cost of either individual source. The wind & solar mix cost is 13 times greater than the natural gas cost. Reducing the load responsibility of the wind & solar mix from 100% to 95% reduces the costs by 52%. However, the cost of the wind & solar mix in Germany is still over 7 times the cost of natural gas CC.

The cost of solar only in Texas is 10 times that of natural gas CC. The wind & solar mix cost is 6 times the natural gas power cost. The significantly higher LFSCOE for wind and solar in Germany compared to Texas stem from the higher overall capacity factors in Texas (0.35 vs. 0.20 for wind, and 0.23 vs. 0.11 for solar) and because the high power demand period in Texas during summer days are correlated with high capacity factors for solar while the slightly higher demand in winter in Germany occurs during significantly lower solar generation. Reducing the load responsibility of the wind & solar mix from 100% to 95% reduces the costs by 57% in Texas.

The LFSCOE-95% metric, which assumes that 5% of the annual demand can be supplied by a very inexpensive dispatchable source of electricity, the paper shows that reducing the responsibility of intermittent renewables to supply only 95% of the demand will cut the system costs in half.

Table 2 compares the LCOE and the LFSCOE using similar cost assumptions.

Table 2;  Comparison of LCOE and LFSCOE

The most striking differences between the LCOE and LFSCOE can be seen for the intermittent technologies solar and wind. The LCOE costs assume no responsibility in meeting demand while the LFSCOE assume full responsibility of meeting the demand. This responsibility comes at a high price. The LFSCOE for solar PV in Germany is 43 times the LCOE and the LFSCOE for wind is almost 13 time the LCOE.