Estimating the Impact of Residual Value for Electricity Generation Plants on Capital Recovery, Levelized Cost of Energy, and Cost to Consumers

Technical Report · Tue Jan 29 04:00:00 EST 2019

DOI:https://doi.org/10.2172/1493401· OSTI ID:1493401

Jenkin, Thomas J. ^[1]; Feldman, David J. ^[1]; Kwan, Alan ^[2]; Walker, Brian J. ^[2]

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1. National Renewable Energy Lab. (NREL), Golden, CO (United States)
2. U.S. Dept. of Energy (DOE), Washington, D.C. (United States)

There is often a benefit to continue operating electricity generating assets after their initial contracts expire. This report discusses these benefits and associated risks, using data and illustrative calculations. The key findings are: the realized operational lives of generation technologies before retirement are typically much longer than typical measures of economic lives. The cost impact of a life extension can be comparable to the impact of other factors considered for generation investment decisions, and suggests that R&D and commercial efforts to extend generator life may be valuable. Refurbishment has a useful and economic role, but the option is often neglected during initial investment. Estimating follow-on value at the time of the original investment is complex and often neglected, but may be valuable.

• Research Organization: National Renewable Energy Laboratory (NREL), Golden, CO (United States)
• Sponsoring Organization: USDOE Office of Energy Efficiency and Renewable Energy (EERE), Strategic Priorities and Impact Analysis Office (EE-61)
• DOE Contract Number: AC36-08GO28308
• OSTI ID: 1493401
• Report Number(s): NREL/TP--6A20-72217
• Country of Publication: United States
• Language: English

Related Subjects

24 POWER TRANSMISSION AND DISTRIBUTION
29 ENERGY PLANNING, POLICY, AND ECONOMY
LCOE
NPV
economic lives
levelized cost of energy
lifetime
net present value
refurbishment
residual value