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
Chapter 4: Social Costs of Electricity in the EU
Roberto Porchia 4.1 METHODOLOGY AND DATA DESCRIPTION This chapter provides new estimates on the social costs of electricity generation in Europe. Results are obtained by summing the external costs from impacts on human health, the environment, crops, materials, and climate change impacts to private generation costs. This exercise results in levelised and homogenous values for all EU27 countries. Data are levelised since European average values for private costs, emissions inventory and external costs of greenhouse gases and heavy metals are considered. Data are homogeneous as the same set of technologies, which include nuclear and fossil-fired power plants, renewables and combined heat and power plants, is considered for the whole analysis. Results are provided for the present (period 2005–2010), 2020 and 2030.1 Private Costs Included in Social Costs To calculate social costs, private costs calculated with the average levelised generating costs (ALLGC) methodology, as described in Chapter 3, are used. The methodology calculates the generation costs (in EuroCents/kWh) on the basis of net power supplied to the station busbar, where electricity is fed to the grid. This cost estimation methodology discounts the time series of expenditures to their present values in 2005, which is the specified base year, by applying a discount rate. According to the methodology used in the IEA study in 2005,2 the levelised lifetime cost per kWh of electricity generated is the ratio of total lifetime expenses versus total expected outputs, expressed in terms of present value equivalent. The total lifetime expenses include the value of...
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