American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies
American Economic Review
vol. 101,
no. 3, May 2011
(pp. 238–41)
Abstract
Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected "levelized cost" per MWh supplied. I demonstrate that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear, gas combined cycle, and coal. It overvalues intermittent generating technologies compared to dispatchable base load generating technologies. It also likely overvalues wind generating technologies compared to solar generating technologies. Integrating differences in production profiles, the associated variations in wholesale market prices of electricity, and life-cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them.Citation
Joskow, Paul L. 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies." American Economic Review, 101 (3): 238–41. DOI: 10.1257/aer.101.3.238JEL Classification
- D24 Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
- L94 Electric Utilities
- Q41 Energy: Demand and Supply
- Q42 Alternative Energy Sources