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You are viewing an older version of the ATB. Please view the most current version here.

Equations and Variables in ATB

The ATB includes various aspects of plant investment decision criteria, including:

  • Capital investment
  • Operations and maintenance
  • Expected energy production
  • Interest on debt required to finance a new electricity generating plant.
  • The levelized cost of energy (LCOE) is provided as a summary metric in the ATB. The 2019 ATB Cost and Performance Summary page describes the limitations of LCOE and explains its various components. LCOE is the metric selected to represent typical electricity generation cost elements in a common framework including project finance (FCR), capital expenditures (CAPEX), fixed and variable operations and maintenance costs (FOM and VOM), and annual-energy-production-per-kilowatt plant capacity based on capacity factor, hours in a year (8,760), and fuel costs.

Significant variations in LCOE are inherent due to differences in the nature of the renewable resource, site characteristics, and fuel prices. Significant variations in each component of LCOE (e.g., capital investment) are inherent due to regional cost influences, site specific construction costs, equipment type, market-based pricing, project capital structure and finance terms.The ATB data spreadsheet and accompanying documentation illustrate the range of LCOE for electricity generation technologies. Renewable generation technology cost ranges are generally dictated by natural long-term renewable resource characteristics. Fuel-based technology cost ranges are generally dictated by assumed range of future fuel cost.

ATB emphasizes fundamental, long-term technology changes rather than short-term market changes.

Important Notes

  • The LCOE values presented here represent busbar costs at the plant gate; regional costs associated with materials or labor, transmission spur lines and electric system operation costs are not included. Effects of taxes and tax credits are not included in the R&D Only case but are included in the R&D + Market case.
  • Standard Scenarios results produced with the ReEDS model reflect additional system considerations such as planning and operating reserves, output correlation with nearby plants, transmission infrastructure expansion and regional costs associated with materials and labor. Incentives such as PTC and ITC are included according to existing law.
  • This framework should be suitable to inform input assumptions for capacity expansion models such as the National Energy Modeling System (NEMS), MARKAL/TIMES, and Integrated Planning Model. (These models typically do not use LCOE as an input.)
  • This framework could be adapted to provide similar comparisons of inputs to other model-based studies such as those using System Advisor Model (SAM), Buildings Industry Transportation Electricity Scenarios (BITES), and the Cost of Renewable Energy Spreadsheet Tool (CREST).

Calculation of LCOE

In the ATB, the LCOE is calculated as follows:

LCOE =  
CF × 8,760 hours/yr
  + VOM + FUEL
where CF is the capacity factor.

Assumptions common to all technologies include the following:

  • Variables are defined in the Financial Definitions worksheet in the ATB data spreadsheet, where two sets of financial assumptions are available: R&D Only Financial Assumptions and R&D + Market Financial Assumptions.
  • While the tax rate has been updated to include the changes in corporate taxes in the R&D + Market case, the federal/state blended tax rate is not assumed to vary by technology in our calculations; in practice, depreciation schedules vary by technology based on the tax code.

Technology-specific assumptions are detailed in each technology section and include:

  • We only include declines in performance with time for PV technologies. We do not include performance declines (or increases in O&M) for any other technology, although this could be addressed in future work.
  • Capital expenditures (CAPEX) are represented by the total expenditures per kilowatt of plant capacity that is required to achieve commercial operation in a given year.
  • Operations and maintenance (O&M) costs are represented by average annual fixed O&M (FOM) and variable O&M (VOM) costs over the technical life of the project.
  • Fuel costs derived AEO2019 (EIA, 2019) from are applied to natural gas, coal, and nuclear technologies.
  • The capacity factor is used to represent the average annual energy production per kilowatt of plant capacity over the technical life of the project.