The Price of Power

What does it cost to build and operate a utility-scale electric power plant? That’s a question that California Energy Commission analysts have been working on answering. Their findings can be found in a report called the Estimated Cost of New Renewable and Fossil Generation in California.



The report looked at natural gas, solar, wind, geothermal, and biomass systems. Here are some highlights about the different issues affecting costs for each technology:

• Natural gas-fired generation remains the backbone of California’s electricity generation. The underlying technologies are mature and the prices are stable. But the lifetime costs for these facilities are expected to rise because of the price of fuel, emission reduction credits and greenhouse gas emission credits.
• The cost of solar photovoltaic power plants has declined in recent years because of the dramatically lower costs for photovoltaic modules. 
• Technology advances, such as improved inverters, and a change in focus to maximizing energy output over peak generation capacity are expected to increase overall production and decrease costs. 
• Overall costs for geothermal facilities are expected to increase slightly. The major factors are the highly variable costs of drilling and well development.
• Biomass facilities depend on nearby fuel. If fuel is not close by, the cost of transporting the fuel to the generation site can add significant cost to a project’s viability.

In addition to studying the different types of power plants, the report also examined factors such as financing costs, operation and maintenance, and tax implications.

The report is part of the Energy Commission’s role as California’s primary energy policy and planning agency. The forecast report will help in the development of energy infrastructure planning. For example, the document will help the California Public Utilities Commission plan for power purchases and the California Independent System Operator in preparing for future transmission needs.