The Social Cost of Electricity

The Social Cost of Electricity

Scenarios and Policy Implications

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Anil Markandya, Andrea Bigano and Roberto Porchia

This book reports and rationalizes the state-of-the-art concerning the social costs of electricity generation. Social costs are assessed by adding to the private generation costs, the external costs associated with damages to human health, the environment, crops, materials, and those related to the consequences of climate change. The authors consider the evolution of these costs up to 2030 for major electricity generating technologies and, using these estimates, evaluate policy options for external cost internalization, providing quantitative scenarios by country and primary fuel for 2010, 2020 and 2030. While mainly focusing on European countries, the book also examines the situation in key emerging economies such as China, India, Brazil and Turkey.

Chapter 3: Private Costs

Markus Blesl and Steffen Wissel

Subjects: economics and finance, energy economics, environmental economics, environment, environmental economics


Markus Blesl and Steffen Wissel 3.1 INTRODUCTION This chapter analyses the long-term development of electricity generating costs of conventional (inter alia in combination with heat generation) thermal power plants and alternative electricity generating (wind, solar) options. The assumptions are based on the current best predictions to evaluate the further technique-economic parameters (up to 2030) of the selected technologies. The calculated costs follow technology development and energy price assumption up to 2030. Calculations are based on renewable energy sources, fossil fuel technologies, with and without carbon capture, and storage and nuclear-based electricity technologies. After careful consideration of all the options the chapter concludes that fossil- and nuclear-based electricity generation are still projected to be the most competitive technology options for heat and electricity supply from a private cost point of view. The technologies and plant types covered in this present study include units for today as well as for the years 2020 and 2030. Various technological options (fossil, nuclear, renewable) are available to contribute to a secure, cost-effective and environmentally friendly energy and electricity supply system. The complex financial structure of commercial plants means that it is often impossible to compare the capital costs of electricity generation technologies with various options. This study has focused on what we know to be the actual and future costs of building, maintaining and running different types of heat- and electricity-generating systems. To quantify the generating costs of future technologies the levelised generating costs are calculated for each technology considered. These are explained in detail...

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