Geothermal
Geothermal technology cost and performance projections have been updated with analysis and results from the GeoVision: Harnessing the Heat Beneath our Feet report (DOE, 2019). The GeoVision report is a collaborative multiyear effort with contributors from industry, academia, national laboratories, and federal agencies. The analysis in the report updates resource potential estimates as well as current and projected capital and O&M costs based on rigorous, bottom-up modeling.
Representative Technology
Hydrothermal geothermal technologies encompass technologies for exploring for the resource, drilling to access the resource, and building power plants to convert geothermal energy to electricity. Technology costs depend heavily on the hydrothermal resource temperature and well productivity and depth, so much so that project costs are site-specific and applying a "typical" cost to any given site would be inaccurate. The 2019 ATB uses scenarios developed by the DOE Geothermal Technology Office (Mines, 2013) for representative binary and flash hydrothermal power plant technologies. The first scenario assumes a 175°C resource at a depth of 1.5 km with wells producing an average of 110 kg/s of geothermal brine supplied to a 30-MWe binary (organic Rankine cycle) power plant. The second scenario assumes a 225°C resource at a depth of 2.5 km with wells producing 80 kg/s of geothermal brine supplied to a 40-MWe dual-flash plant. These are mid-grade or "typical" temperatures and depths for binary and flash hydrothermal projects. The ReEDS model uses the full hydrothermal supply curve. The 2019 ATB representative technologies fall in the middle or near the end of the hydrothermal resources typically deployed in ReEDS model runs.
Resource Potential
The hydrothermal geothermal resource is concentrated in the western United States. The total mean potential is 39,090 MW: 9,057 MW identified and 30,033 MW undiscovered (USGS, 2008). The resource potential identified by the U.S. Geological Survey (USGS, 2008) at each site is based on available reservoir thermal energy information from studies conducted at the site. The undiscovered hydrothermal technical potential estimate is based on a series of GIS statistical models for the spatial correlation of geological factors that facilitate the formation of geothermal systems.
The U.S. Geological Survey resource potential estimates for hydrothermal were used with the following modifications:
- Installed capacity of about 3 GW in 2016 is excluded from the resource potential.
- Resources on federally protected and U.S. Department of Defense (DOD) lands, where development is highly restricted are excluded from the resource potential, as are resources on lands where significant barriers that prevent or inhibit development of geothermal projects were identified by Augustine, Ho, and Blair (2019).
Renewable energy technical potential, as defined by Lopez et al. (2012), represents the achievable energy generation of a particular technology given system performance, topographic limitations, and environmental and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand that there are multiple types of potential-resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").
Base Year and Future Year Projections Overview
The Base Year cost and performance estimates are calculated using Geothermal Electricity Technology Evaluation Model (GETEM), a bottom-up cost analysis tool that accounts for each phase of development of a geothermal plant (DOE "Geothermal Electricity Technology Evaluation Model").
- Cost and performance data for hydrothermal generation plants are estimated for each potential site using GETEM. Model results are based on resource attributes (e.g., estimated reservoir temperature, depth, and potential) of each site. GETEM inputs are derived from the Business-as-Usual (BAU) scenario from GeoVision ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)).
- Site attribute values are from (USGS, 2008) for identified resource potential and from capacity-weighted averages of site attribute values of nearby identified resources for undiscovered resource potential.
- GETEM is used to estimate CAPEX, O&M, and parasitic plant losses that affect net energy production.
Capacity factor and O&M costs for plants installed in future years are unchanged from the Base Year. Projections for hydrothermal and EGS technologies are equivalent.
- Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2015 to 2050; consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: CAPEX cost reduction based on assumed minimum learning as implemented in AEO (EIA, 2015): 10% by 2035; this corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050
- Low Technology Cost Scenario: CAPEX based on the Technology Improvement scenario from GeoVision Study ( (DOE, 2019); (Augustine, Ho, & Blair, 2019)); cost and technology improvements change linearly from present values and are fully achieved by 2030.
Representative Technology
As with cost for projects that use hydrothermal resources, EGS resource project costs depend so heavily on the hydrothermal resource temperature and well productivity and depth that project costs are site-specific. The 2019 ATB uses scenarios developed by the DOE Geothermal Technology Office (Mines, 2013) for representative binary and flash EGS power plants assuming current (immature) EGS technology performance metrics. The first scenario assumes a 175°C resource at a depth of 3 km with wells producing an average of 40 kg/s of geothermal brine supplied to a 25-MWe binary (organic Rankine cycle) power plant. The second scenario assumes a 250°C resource at a depth of 3.5 km with wells producing 40 kg/s of geothermal brine supplied to a 30-MWe dual-flash plant. These temperatures and depths are at the low-cost end of the EGS supply curve and would be some of the first developed. The ReEDS model uses the full EGS supply curve. Neither of these technologies is typically used.
Resource Potential
The enhanced geothermal system (EGS) resource is concentrated in the western United States. The total potential is greater than 100,000 MW: 1,493 MW of near-hydrothermal field EGS (NF-EGS) and the remaining potential comes from deep EGS.
Renewable energy technical potential as defined by Lopez et al. (2012) represents the achievable energy generation of a particular technology given system performance, topographic limitations, environmental, and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand there are multiple types of potential-resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").
Base Year and Future Year Projections Overview
The Base Year cost and performance estimates are calculated using the Geothermal Electricity Technology Evaluation Model (GETEM), a bottom-up cost analysis tool that accounts for each phase of development of a geothermal plant (DOE "Geothermal Electricity Technology Evaluation Model").
- Cost and performance data for EGS generation plants are estimated for each potential site using GETEM. Model results based on resource attributes (e.g., estimated reservoir temperature, depth, and potential) of each site. GETEM inputs are derived from the GeoVision BAU scenario ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)).
- Approaches to restrict resource potential to about 500 GW based on USGS analysis may be implemented in the future.
- GETEM is used to estimate CAPEX and O&M and parasitic plant losses that affect net energy production.
Capacity factor and O&M costs for plants installed in future years are unchanged from the Base Year. Projections for hydrothermal and enhanced geothermal system technologies are equivalent.
- Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2015 to 2050, consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: CAPEX cost reduction based on assumed minimum learning as implemented in AEO (EIA, 2015): 10% by 2035; this corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050.
- Low Technology Cost Scenario: CAPEX based on the GeoVision Technology Improvement scenario ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)). Cost and technology improvements decrease linearly from present values and are fully achieved by 2030.
Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. These expenditures include the geothermal generation plant, the balance of system (e.g., site preparation, installation, and electrical infrastructure), and financial costs (e.g., development costs, onsite electrical equipment, and interest during construction) and are detailed in CAPEX Definition. In the ATB, CAPEX reflects typical plants and does not include differences in regional costs associated with labor, materials, taxes, or system requirements. The related Standard Scenarios product uses Regional CAPEX Adjustments. The range of CAPEX demonstrates variation with resource in the contiguous United States.
The following figure shows the Base Year estimate and future year projections for CAPEX costs. Three cost scenarios are represented: Constant, Mid, and Low technology cost. The estimate for a given year represents CAPEX of a new plant that reaches commercial operation in that year.
Base Year Estimates
For illustration in the ATB, six representative geothermal plants are shown. Two energy conversion processes are common: binary organic Rankine cycle and flash.
- Binary plants use a heat exchanger to transfer geothermal energy to an organic Rankine cycle. This technology generally applies to lower-temperature systems. These systems have higher CAPEX than flash systems because of the increased number of components, their lower-temperature operation, and a general requirement that a number of wells be drilled for a given power output.
- Flash plants create steam directly from the thermal fluid through a pressure change. This technology generally applies to higher-temperature systems. Due to the reduced number of components and higher-temperature operation, these systems generally produce more power per well, thus reducing drilling costs. These systems generally have lower CAPEX than binary systems.
Examples using each of these plant types in each of the three resource types (hydrothermal, NF-EGS, and deep EGS) are shown in the ATB.
Costs are for new or greenfield hydrothermal projects, not for re-drilling or additional development/capacity additions at an existing site.
Characteristics for the six examples of plants representing current technology were developed based on discussion with industry stakeholders. The CAPEX estimates were generated using GETEM. CAPEX for NF-EGS and EGS are equivalent.
The following table shows the range of OCC associated with the resource characteristics for potential sites throughout the United States.
| Temp (°C) | >=200C | 150-200 | 135-150 | <135 | |
| Hydrothermal | Number of identified sites | 21 | 23 | 17 | 59 |
| Total capacity (MW) | 15,338 | 2,991 | 820 | 4,632 | |
| Average OCC ($/kW) | 3,906 | 7,720 | 8,794 | 16,248 | |
| Min OCC ($/kW) | 3,000 | 4,140 | 7,004 | 10,950 | |
| Max OCC ($/kW) | 5,491 | 29,135 | 11,027 | 21,349 | |
| Example of plant OCC ($/kW) | 4,229 | 5,455 | |||
| NF-EGS | Number of sites | 12 | 20 | ||
| Total capacity (MW) | 787 | 596 | |||
| Average OCC ($/kW) | 11,041 | 26,077 | |||
| Min OCC ($/kW) | 8,778 | 18,172 | |||
| Max OCC ($/kW) | 18,009 | 39,987 | |||
| Example of plant OCC ($/kW) | 14,512 | 32,268 | |||
| Deep EGS (3-6 km) | Number of sites | n/a | n/a | ||
| Total capacity (MW) | 100,000+ | ||||
| Average OCC ($/kW) | 28,418 | 60,170 | |||
| Min OCC ($/kW) | 18,320 | 39,329 | |||
| Max OCC ($/kW) | 54,047 | 77,983 | |||
| Example of plant OCC ($/kW) | 14,512 | 32,268 | |||
Future Year Projections
Projection of future geothermal plant CAPEX for the Low case is based on the GeoVision Technology Improvement scenario (DOE, 2019).
A detailed description of the methodology for developing future year projections is found in Projections Methodology.
Technology innovations that could impact future O&M costs are summarized in LCOE Projections.
CAPEX Definition
Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.
For the ATB – and based on (EIA, 2016) and GETEM component cost calculations – the geothermal plant envelope is defined to include:
- Geothermal generation plant
- Exploration, confirmation drilling, well field development, reservoir stimulation (EGS), plant equipment, and plant construction
- Power plant equipment, well-field equipment, and components for wells (including dry/non-commercial wells)
- Balance of system (BOS)
- Installation and electrical infrastructure, such as transformers, switchgear, and electrical system connecting turbines to each other and to the control center
- Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
- Financial costs
- Owners' costs, such as development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, and property taxes during construction
- Electrical interconnection and onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (<1 mile), and necessary upgrades at a transmission substation; distance-based spur line cost (GCC) not included in the ATB
- Interest during construction estimated based on four-year and five-year duration for hydrothermal and EGS respectively (for the low scenario) and an eight-year duration and ten-year duration for hydrothermal and EGS respectively (for the mid- and constant-scenario) accumulated at different intervals for hydro and EGS based on scheduled at outlined by the GeoVision Study (ConFinFactor).
CAPEX can be determined for a plant in a specific geographic location as follows:
Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).
In the ATB, CAPEX is shown for six representative plants. Examples of CAPEX for binary organic Rankine cycle and flash energy conversion processes in each of three geothermal resource types are presented. CAPEX estimates for all hydrothermal NF-EGS potential results in a CAPEX range that is much broader than that shown in the ATB. It is unlikely that all the resource potential will be developed due to the high costs for some sites. Regional cost effects and distance-based spur line costs are not estimated.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
The ReEDS model represents cost and performance for hydrothermal, NF-EGS, and EGS potential in 5 bins for each of 134 geographic regions, resulting in a greater CAPEX range in the reference supply curve than what is shown in examples in the ATB.
CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., and neither does the ReEDS model.
CAPEX in the ATB does not include geographically determined spur line (GCC) from plant to transmission grid, and neither does the ReEDS model.
Operations and maintenance (O&M) costs represent average annual fixed expenditures (and depend on rated capacity) required to operate and maintain a hydrothermal plant over its lifetime of 30 years (plant and reservoir), including:
- Insurance, taxes, land lease payments, and other fixed costs
- Present value and annualized large component overhaul or replacement costs over technical life (e.g., downhole pumps)
- Scheduled and unscheduled maintenance of geothermal plant components and well field components over the technical lifetime of the plant and reservoir.
The following figure shows the Base Year estimate and future year projections for fixed O&M (FOM) costs. Three cost scenarios are represented. The estimate for a given year represents annual average FOM costs expected over the technical lifetime of a new plant that reaches commercial operation in that year.
Base Year Estimates
FOM is estimated for each example of a plant based on technical characteristics.
GETEM is used to estimate FOM for each of the six representative plants. FOM for NF-EGS and EGS are equivalent.
Future Year Projections
Future FOM cost reductions are based on results from the GeoVision scenario (DOE, 2019) and are described in detail in Augustine, Ho, and Blair (2019).
Capacity Factor: Expected Annual Average Energy Production Over Lifetime
The capacity factor represents the expected annual average energy production divided by the annual energy production, assuming the plant operates at rated capacity for every hour of the year. It is intended to represent a long-term average over the technical lifetime of the plant. It does not represent interannual variation in energy production. Future year estimates represent the estimated annual average capacity factor over the technical lifetime of a new plant installed in a given year.
Geothermal plant capacity factor is influenced by diurnal and seasonal air temperature variation (for air-cooled plants), technology (e.g., binary or flash), downtime, and internal plant energy losses.
The following figure shows a range of capacity factors based on variation in the resource for plants in the contiguous United States. The range of the Base Year estimates illustrates Binary or Flash geothermal plants. Future year projections for the Constant, Mid, and Low technology cost scenarios are unchanged from the Base Year. Technology improvements are focused on CAPEX cost elements.
Base Year Estimate
The capacity factor estimates are developed using GETEM at typical design air temperature and based on design plant capacity net losses. An additional reduction is applied to approximate potential variability due to seasonal temperature effects.
Some geothermal plants have experienced year-on-year reductions in energy production, but this is not consistent across all plants. No approximation of long-term degradation of energy output is assumed.
Ongoing work at NREL and the Idaho National Laboratory is helping improve capacity factor estimates for geothermal plants. As this work progresses, it will be incorporated into future versions of the ATB.
Future Year Projections
Capacity factors remain unchanged from the Base Year through 2050. Technology improvements are focused on CAPEX costs. Estimates of capacity factor for geothermal plants in the ATB represent typical operation. The dispatch characteristics of these systems are valuable to the electric system to manage changes in net electricity demand. Actual capacity factors will be influenced by the degree to which system operators call on geothermal plants to manage grid services.
Plant Cost and Performance Projections Methodology
The site-specific nature of geothermal plant cost, the relative maturity of hydrothermal plant technology, and the very early stage development of EGS technologies make cost projections difficult. No thorough literature reviews have been conducted for cost reduction of hydrothermal geothermal technologies or EGS technologies. However, the GeoVision BAU scenario is based on a bottom-up analysis of costs and performance improvements. The inputs for the BAU scenario were developed by the national laboratories as part of the GeoVision effort, and it was reviewed by industry experts.
Projection of future geothermal plant CAPEX for the Low cost case is based on the GeoVision Technology Improvement scenario. It assumes that cost and technology improvements are achieved by 2030 and that costs decrease linearly from present values to the 2030 projected values. The Mid cost case is based on minimum learning rates as implemented in AEO (EIA, 2015): 10% by 2035. This corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050. The Constant technology cost scenario retains all cost and performance assumptions equivalent to the Base Year through 2050.
Levelized Cost of Energy (LCOE) Projections
Levelized cost of energy (LCOE) is a simple metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies such as geothermal, can provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.
The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for geothermal across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, technology-specific tariffs, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform, tax credits, and tariffs. The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term geothermal plants are associated with Hydrothermal/Flash. Data for all the resource categories can be found in the ATB Data spreadsheet; for simplicity, not all resource categories are shown in the figures.
R&D Only | R&D + Market
The methodology for representing the CAPEX, O&M, and capacity factor assumptions behind each pathway is discussed in Projections Methodology. In general, the degree of adoption of technology innovation distinguishes the Constant, Mid, and Low technology cost scenarios. These projections represent trends that reduce CAPEX and improve performance. Development of these scenarios involves technology-specific application of the following general definitions:
- Constant Technology: Base Year (or near-term estimates of projects under construction) equivalent through 2050 maintains current relative technology cost differences
- Mid Technology Cost Scenario: Technology advances through continued industry growth, public and private R&D investments, and market conditions relative to current levels that may be characterized as "likely" or "not surprising"
- Low Technology Cost Scenario: Technology advances that may occur with breakthroughs, increased public and private R&D investments, and/or other market conditions that lead to cost and performance levels that may be characterized as the " limit of surprise" but not necessarily the absolute low bound.
To estimate LCOE, assumptions about the cost of capital to finance electricity generation projects are required, and the LCOE calculations are sensitive to these financial assumptions. Two project finance structures are used within the ATB:
- R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA, 2019) and excludes effects of tax reform, tax credits, and tariffs.
- R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2018, as well as effects of tax reform, tax credits, and technology-specific tariffs. For a detailed discussion of these assumptions, see Changes from 2018 ATB to 2019 ATB.
A constant cost recovery period – over which the initial capital investment is recovered – of 30 years is assumed for all technologies throughout this website, and can be varied in the ATB data spreadsheet.
The equations and variables used to estimate LCOE are defined on the Equations and Variables page. For illustration of the impact of changing financial structures such as WACC, see Project Finance Impact on LCOE. For LCOE estimates for the Constant, Mid, and Low technology cost scenarios for all technologies, see 2019 ATB Cost and Performance Summary.
In general, differences among the technology cost cases reflect different levels of adoption of innovations. Reductions in technology costs reflect the cost reduction opportunities that are listed below.
- Development of exploration and reservoir characterization tools that reduce well-field costs through risk reduction by locating and characterizing low- and moderate-temperature hydrothermal systems prior to drilling
- High-temperature tools and electronics for geothermal subsurface operations
- Development of reservoir engineering techniques and technologies that enable EGS
- More efficient drilling practices and advanced drilling systems such as using flames or lasers to drill through rock; drilling steering technology; and other technologies to reduce drilling costs.
Hydropower
Renewable energy technical potential, as defined by Lopez et al. (2012) , represents the achievable energy generation of a particular technology given system performance, topographic limitations, and environmental and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand that there are multiple types of potential-resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").
Note: Pumped-storage hydropower is considered a storage technology in the ATB and will be addressed in future years. It and other storage technologies are represented in Standard Scenarios Model Results from the ReEDS model, and battery storage technologies are shown in the associated portion of the ATB.
Representative Technology
Hydropower technologies have produced electricity in the United States for over a century. Many of these infrastructure investments have potential to continue providing electricity in the future through upgrades of existing facilities (DOE, 2016) . At individual facilities, investments can be made to improve the efficiency of existing generating units through overhauls, generator rewinds, or turbine replacements. Such investments are known collectively as "upgrades," and they are reflected as increases to plant capacity. As plants reach a license renewal period, upgrades to existing facilities to increase capacity or energy output are typically considered. While the smallest projects in the United States can be as small as 10-100 kW, the bulk of upgrade potential is from large, multi-megawatt facilities.
Resource Potential
The estimated total upgrade potential of 6.9 GW/24 terawattt-hours (TWh) (at about 1,800 facilities) is based on generalizable information drawn from a series of case studies or owner-specific assessments (DOE, 2016) . Information available to inform the representation of improvements to the existing fleet includes:
- A systematic, full-fleet assessment of expansion potential at Reclamation projects performed under the Reclamation Hydropower Modernization Initiative (see U.S. Bureau of Reclamation, "Hydropower Resource Assessment at Existing Reclamation Facilities")
- Case study reports from the U.S. Army Corps of Engineers (Corps) performed under its Hydropower Modernization Initiative (MWH, Watson, & Harza, 2009)
- Case study reports combining assessments of upgrade and unit and plant optimization potential from the U.S. Department of Energy/Oak Ridge National Laboratory Hydropower Advancement Project.
Base Year and Future Year Projections Overview
Upgrades are often among the lowest-cost new capacity resource, with the modeled costs for individual projects ranging from $800/kW to nearly $20,000/kW. This differential results from significant economies of scale from project size, wherein larger capacity plants are less expensive to upgrade on a dollar-per-kilowatt basis than smaller projects are. The average cost of the upgrade resource is approximately $1,500/kW.
CAPEX for each existing facility is based on direct estimates
The capacity factor is based on actual 10-year average energy production reported in EIA 923 forms. Some hydropower facilities lack flexibility and only produce electricity when river flows are adequate. Others with storage capabilities are operated to meet a balance between electric system, reservoir management, and environmental needs using their dispatch capability.
No future cost and performance projections for hydropower upgrades are assumed.
Upgrade cost and performance are not illustrated in this documentation of the ATB for the sake of simplicity.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
Upgrade potential becomes available in the ReEDS model at the relicensing date, end of plant life (50 years), or both.
Representative Technology
Non-powered dams (NPD) are classified by energy potential in terms of head. Low head facilities have design heads below 20 m and typically exhibit the following characteristics (DOE, 2016) :
- 1 MW to 10 MW
- New/rehabilitated intake structure
- Little, if any, new penstock
- Axial-flow or Kaplan turbines (2-4 units)
- New powerhouse (indoor)
- New/rehabilitated tailrace
- Minimal new transmission (< 5 miles, if required)
- Capacity factor of 35% to 60%.
High head facilities have design heads above 20 m and typically exhibit the following characteristics (DOE, 2016) :
- 5 MW to 30 MW
- New/rehabilitated intake structure
- New penstock (typically < 500 feet of steel penstock, if required)
- Francis turbines (1-3 units)
- New powerhouse (indoor)
- New/rehabilitated tailrace
- Minimal new transmission line (up to 15 MW, if required)
- Capacity factor of 35% to 60%.
Resource Potential
Up to 12 GW of technical potential exists to add power to U.S. NPD. However, based on financial decisions in recent development activity, the economic potential of NPD may be approximately 5.6 GW at more than 54,000 dams in the contiguous United States. Most of this potential (5 GW or 90% of resource capacity) is associated with less than 700 dams. These resource considerations are discussed below:
According to the National
Inventory of Dams, more than 80,000 dams exist that do not produce
power. This data set was filtered to remove dams with erroneous flow
and geographic data and dams whose data could not be resolved to a
satisfactory level of detail
A new methodology for sizing potential hydropower facilities that was developed for the new-stream reach development resource (Kao et al., 2014) was applied to non-powered dams. This resource potential was estimated to be 5.6 GW at more than 54,000 dams. In the development of the Hydropower Vision, the NPD resource available to the ReEDS model was adjusted based on recent development activity and limited to only those projects with power potential of 500 kW or more. As the ATB uses the Hydropower Vision supply curves, this results in a final resource potential of 5 GW/29 TWh from 671 dams.
For each facility, a design capacity, average monthly flow rate over a 30-year period, and a design flow rate exceedance level of 30% are assumed. The exceedance level represents the fraction of time that the design flow is exceeded. This parameter can be varied and results in different capacity and energy generation for a given site. The value of 30% was chosen based on industry rules of thumb. The capacity factor for a given facility is determined by these design criteria.
Design capacity and flow rate dictate capacity and energy generation potential. All facilities are assumed sized for 30% exceedance of flow rate based on long-term, average monthly flow rates.
Base Year and Future Year Projections Overview
Site-specific CAPEX, O&M, and capacity factor estimates are made
for each site in the available resource potential. CAPEX and O&M
estimates are made based on statistical analysis of historical plant
data from 1980 to 2015
Projections developed for the Hydropower Vision study (DOE, 2016) using technological learning assumptions and bottom-up analysis of process and/or technology improvements provide a range of future cost outcomes. Three different projections were developed for scenario modeling as bounding levels:
- Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2017 to 2050; consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: incremental technology learning, consistent with Reference in Hydropower Vision (DOE, 2016); CAPEX reductions for new stream-reach development (NSD) only
- Low cost: gains that are achievable when pushing to the limits of potential new technologies, such as modularity (in both civil structures and power train design), advanced manufacturing techniques, and materials, consistent with Advanced Technology in Hydropower Vision (DOE, 2016); both CAPEX and O&M cost reductions implemented.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
The ReEDS model includes a sensitivity scenario that restricts the resource potential to sites greater than 500 kW, consistent with the Hydropower Vision, which results in 5 GW/29 TWh at 671 dams.
Representative Technology
Greenfield or new stream-reach development (NSD) sites are defined as new hydropower developments along previously undeveloped waterways and typically exhibit the following characteristics (DOE, 2016) :
- 1 MW to 100 MW
- New diversion/intake structure
- New penstock
- Steel with length being head/terrain dependent
- Various turbine selections
- Impulse/Francis are common for recently completed projects
- New powerhouse (indoor)
- New tailrace
- New transmission line (up to 15 miles for new projects)
- 30% to 80% capacity factor.
Resource Potential
The resource potential is estimated to be 53.2 GW/301 TWh at nearly 230,000 individual sites (Kao et al., 2014) after accounting for locations statutorily excluded from hydropower development such as national parks, wild and scenic rivers, and wilderness areas.
About 8,500 stream reaches were evaluated to assess resource potential (i.e., capacity) and energy generation potential (i.e., capacity factor). For each stream reach, a design capacity, average monthly flow rate over a 30-year period, and design flow rate exceedance level of 30% are assumed. The exceedance level represents the fraction of time that the design flow is exceeded. This parameter can be varied and results in different capacity and energy generation for a given site. The value of 30% was chosen based on industry rules of thumb. The capacity factor for a given facility is determined by these design criteria. Plant sizes range from kilowatt-scale to multi-megawatt scale (Kao et al., 2014) .
The resource assessment approach is designed to minimize the footprint of a hydropower facility by restricting inundation area to the Federal Emergency Management Agency (FEMA) 100-year floodplain.
New hydropower facilities are assumed to apply run-of-river operation strategies. Run-of-river operation means the flow rate into a reservoir is equal to the flow rate out of the facility. These facilities do not have dispatch capability.
Design capacity and flow rate dictate capacity and energy generation potential. All facilities are assumed sized for 30% exceedance of flow rate based on long-term, average monthly flow rates.
Base Year and Future Year Projections Overview
Site-specific CAPEX, O&M, and capacity factor estimates are made
for each site in the available resource potential. CAPEX and O&M
estimates are made based on statistical analysis of historical plant
data from 1980 to 2015
Projections developed for the Hydropower Vision study (DOE, 2016) using technological learning assumptions and bottom-up analysis of process and/or technology improvements provide a range of future cost outcomes. Three different projections were developed for scenario modeling as bounding levels:
- Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2017 to 2050; consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: incremental technology learning, consistent with Reference in Hydropower Vision (DOE, 2016); CAPEX reductions for NSD only
- Low Technology Cost Scenario: gains that are achievable
when pushing to the limits of potential new technologies, such as
modularity (in both civil structures and power train design), advanced
manufacturing techniques, and materials, consistent with Advanced
Technology in Hydropower Vision
(DOE, 2016) ; both CAPEX and O&M cost reductions implemented.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
The ReEDS model includes a sensitivity scenario that restricts the resource potential to sites greater than 1 MW, which results in 30.1 GW/176 TWh on nearly 8,000 reaches.
Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections
Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. These expenditures include the hydropower generation plant, the balance of system (e.g., site preparation, installation, and electrical infrastructure), and financial costs (e.g., development costs, onsite electrical equipment, and interest during construction) and are detailed in CAPEX Definition. In the ATB, CAPEX reflects typical plants and does not include differences in regional costs associated with labor, materials, taxes, or system requirements. The related Standard Scenarios product uses regional CAPEX adjustments. The range of CAPEX demonstrates variation with resource in the contiguous United States.
The following figure shows the Base Year estimate and future year projections for CAPEX costs. Mid and Low technology cost scenarios are shown. Historical data from actual and proposed non-powered dam (NPD) and new stream-reach development (NSD) plants installed in the United States from 1981 to 2014 are shown for comparison to the ATB Base Year. The estimate for a given year represents CAPEX of a new plant that reaches commercial operation in that year.
Recent Trends
Actual and proposed NPD and NSD CAPEX from 1981 to 2014
The higher-cost ATB sites generally reflect small-capacity, low head sites that are not comparable to the historical data sample's generally larger-capacity and higher head facilities. These characteristics lead to higher ATB Base Year CAPEX estimates than past data suggest. For example, the NSD projects that became commercially operational in this period are dominated by a few high head projects in the mountains of the Pacific Northwest or Alaska.
The Base Year estimates of CAPEX for NPDs in the ATB range from $3,800/kW to $6,000/kW. These estimates reflect facilities with 3 feet of head to more than 60 feet of head and from 0.5 MW to more than 30 MW of capacity. In general, the higher-cost sites reflect much smaller-capacity (< 10 MW), lower head (< 30 ft.) sites that have fewer analogues in the historical data, but these characteristics result in higher CAPEX.
The Base Year estimates of CAPEX for NSD range from $5,500/kW to $7,900/kW. The estimates reflect potential sites with 3 feet of head to more than 60 feet head and from 1 MW to more than 30 MW of capacity. In general, NSD potential represents smaller-capacity facilities with lower head than most historical data represent. These characteristics lead to higher CAPEX estimates than past data suggest, as many of the larger, higher head sites in the United States have been previously developed.
Base Year Estimates
For illustration in the ATB, all potential NPD and NSD sites were first binned by both head and capacity. Analysis of these bins provided groupings that represent the most realistic conditions for future hydropower deployment. The design values of these four reference NPD and four reference NSD plants are shown below. The full range of resource and design characteristics is summarized in the ATB data spreadsheet.
Representative Hydropower Plants
| Resource Characteristics Ranges | Weighted Average Values | Calculated Plant Values | |||||
| Plants | Head (feet) | Capacity (MW) | Head (feet) | Capacity (MW) | Capacity Factor | ICC (2014$/kW) | O&M (2014$/kW) |
| NPD 1 | 3-30 | 0.5-10 | 15.4 | 4.8 | 0.62 | 5,969.33 | 111.73 |
| NPD 2 | 3-30 | 10+ | 15.9 | 82.2 | 0.64 | 5,433.24 | 30.74 |
| NPD 3 | 30+ | 0.5-10 | 89.6 | 4.2 | 0.60 | 3,997.79 | 118.67 |
| NPD 4 | 30+ | 10+ | 81.3 | 44.7 | 0.60 | 3,769.22 | 40.54 |
| NSD 1 | 3-30 | 1-10 | 15.7 | 3.7 | 0.66 | 7,034.81 | 125.01 |
| NSD 2 | 3-30 | 10+ | 19.6 | 44.1 | 0.66 | 6,280.15 | 40.76 |
| NSD 3 | 30+ | 1-10 | 46.8 | 4.3 | 0.62 | 6,151.05 | 117.61 |
| NSD 4 | 30+ | 10+ | 45.3 | 94.0 | 0.66 | 5,537.34 | 28.93 |
The reference plants shown above were developed using the average characteristics (weighted by capacity) of the resource plants within each set of ranges. For example, NPD 1 is constructed from the capacity-weighted average values of NPD sites with 3-30 feet of head and 0.5-10 MW of capacity.
The weighted-average values were used as input to the cost formulas
CAPEX for each plant is based on statistical analysis of historical
plant data from 1980 to 2015 as a function of key design parameters,
plant capacity, and hydraulic head
and
Where P is capacity in megawatts, and H is head in feet. The first term represents the initial capital costs, while the second represents licensing.
Future Projections
Projections developed for the Hydropower Vision study (DOE, 2016) using technological learning assumptions and bottom-up analysis of process and/or technology improvements provide a range of future cost outcomes. Three different CAPEX projections were developed for scenario modeling as bounding levels:
- Constant Technology Cost Scenario:
- NPD and NSD CAPEX unchanged from the Base Year; consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: consistent with the Reference case in Hydropower Vision:
- NSD CAPEX reduced 5% in 2035 and 8.6% in 2050
- NPD CAPEX unchanged from the Base Year
- Low Technology Cost Scenario: consistent with the Advanced Technology case in Hydropower Vision:
- Low head NPD/All NSD CAPEX reduced 30% in 2035 and 35.3% in 2050. Low Head NPD is NPD-1 and NPD-2
- High head NPD CAPEX reduced 25% in 2035 and 32.7% in 2050; High Head NPD is NPD-3 and NPD-4
A detailed description of the methodology for developing future year projections is found in Projections Methodology.
Technology innovations that could impact future O&M costs are summarized in LCOE Projections.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
The ReEDS model uses resource/cost supply curves representing estimates at each individual facility (~700 NPD and ~8,000 NSD).
The ReEDS model represents cost and performance for NPD and NSD potential in 5 bins for each of 134 geographic regions, which results in CAPEX ranges of $2,750/kW-$9,000/kW for NPD resource and $5,200/kW-$15,600/kW for NSD.
CAPEX Definition
Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.
For the ATB, and based on (EIA, 2016) and the System Cost Breakdown Structure described by (O'Connor, Zhang, DeNeale, Chalise, & Centurion, 2015), the hydropower plant envelope is defined to include:
- Hydropower generation plant
- Civil works, such as site preparation, dams and reservoirs, water conveyances, and powerhouse structures
- Equipment, such as the powertrain and ancillary plant electrical and mechanical systems
- Balance of system (BOS)
- Installation and O&M infrastructure
- Electrical infrastructure, such as transformers, switchgear, and electrical system connecting turbines to each other and to the control center
- Project indirect costs, including costs related to environmental mitigation and regulatory compliance, engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
- Financial costs
- Owners' costs, such as development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, and property taxes during construction
- Electrical interconnection and onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (< 1 mile), and necessary upgrades at a transmission substation; distance-based spur line cost (GCC) not included in the ATB
- Interest during construction estimated based on three-year duration accumulated 10%/10%/80% at half-year intervals and an 8% interest rate (ConFinFactor).
CAPEX can be determined for a plant in a specific geographic location as follows:
Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).
In the ATB, CAPEX is shown for four representative non-powered dam plants and four representative new stream-reach development plants. CAPEX estimates for all identified hydropower potential (~700 NPD and ~8,000 NSD) results in a CAPEX range that is much broader than that shown in the ATB. It is unlikely that all the resource potential will be developed due to the very high costs for some sites. Regional cost effects and distance-based spur line costs are not estimated.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., and neither does the ReEDS model.
CAPEX in the ATB does not include geographically determined spur line (GCC) from plant to transmission grid, and neither does the ReEDS model.
Operation and Maintenance (O&M) Costs
Operations and maintenance (O&M) costs represent average annual fixed expenditures (and depend on rated capacity) required to operate and maintain a hydropower plant over its lifetime, including:
- Insurance, taxes, land lease payments, and other fixed costs
- Present value and annualized large component overhaul or replacement costs over technical life (e.g., rewind stator, patch cavitation damage, and replace bearings)
- Scheduled and unscheduled maintenance of hydropower plant components, including turbines, generators, etc. over the technical lifetime of the plant.
The following figure shows the Base Year estimate and future year projections for fixed O&M (FOM) costs. Mid and Low technology cost scenarios are shown. The estimate for a given year represents annual average FOM costs expected over the technical lifetime of a new plant that reaches commercial operation in that year.
Base Year Estimates
A statistical analysis of long-term plant operation costs from Federal Energy Regulatory Commission Form-1 resulted in a relationship between annual, FOM costs, and plant capacity. Values were updated to 2017$.
Future Year Projections
Projections developed for the Hydropower Vision study (DOE, 2016) using technological learning assumptions and bottom-up analysis of process and/or technology improvements provide a range of future cost outcomes. Three different O&M projections were developed for scenario modeling as bounding levels:
- Constant Technology Cost Scenario: FOM costs unchanged from the Base Year to 2050; consistent with all ATB technologies
- Mid Technology Cost Scenario: FOM costs for both NPD and NSD plants are unchanged from 2017 to 2050; consistent with the Reference case in Hydropower Vision
- Low Technology Cost Scenario: FOM costs for both NPD and NSD plants are reduced by 50% in 2035 and 54% in 2050, consistent with the Advanced Technology case in Hydropower Vision.
A detailed description of the methodology for developing future year projections is found in Projections Methodology.
Technology innovations that could impact future O&M costs are summarized in LCOE Projections.
Capacity Factor: Expected Annual Average Energy Production Over Lifetime
The capacity factor represents the expected annual average energy production divided by the annual energy production, assuming the plant operates at rated capacity for every hour of the year. It is intended to represent a long-term average over the lifetime of the plant. It does not represent interannual variation in energy production. Future year estimates represent the estimated annual average capacity factor over the technical lifetime of a new plant installed in a given year.
The capacity factor is influenced by site hydrology, design factors (e.g., exceedance level), and operation characteristics (e.g., dispatch or run-of-river). Capacity factors for all potential NPD sites and NSDs are estimated based on design criteria, long-term monthly flow rate records, and run-of-river operation.
The following figure shows a range of capacity factors based on variation in the resource for hydropower plants in the contiguous United States. Historical data from run-of-river hydropower plants operating in the United States from 2003 through 2012 are shown for comparison with the Base Year estimates. The range of the Base Year estimates illustrates the effect of resource variation. Future projections for the Constant, Mid, and Low technology cost scenarios are unchanged from the Base Year. Technology improvements are focused on CAPEX and O&M cost elements.
Recent Trends
Actual energy production from about 200 run-of-river plants operating in the United States from 2003 to 2012 (EIA, 2016) is shown in box-and-whiskers format for comparison with current estimates and future projections. This sample includes some very old plants that may have lower availability and efficiency. It also includes plants that have been relicensed and may no longer be optimally designed for current operating regime (e.g., a peaking unit now operating as run-of-river). This contributes to the broad range, particularly on the low end.
Interannual variation of hydropower plant output for run-of-river plants may be significant due to hydrological changes such as drought. This impact may be exacerbated by climate change over the long term.
Current and future estimates for new hydropower plants are within the range of observed plant performance. These potential hydropower plants would be designed for specific site conditions, which would indicate operation toward the high end of the range.
Base Year Estimates
For illustration in the ATB, all potential NPD and NSD sites are represented with four reference plants, each as described below.
Representative Hydropower Plants
| Resource Characteristics Ranges | Weighted Average Values | Calculated Plant Values | |||||
| Plants | Head (feet) | Capacity (MW) | Head (feet) | Capacity (MW) | Capacity Factor | ICC (2014$/kW) | O&M (2014$/kW) |
| NPD 1 | 3-30 | 0.5-10 | 15.4 | 4.8 | 0.62 | 5,969.33 | 111.73 |
| NPD 2 | 3-30 | 10 + | 15.9 | 82.2 | 0.64 | 5,433.24 | 30.74 |
| NPD 3 | 30 + | 0.5-10 | 89.6 | 4.2 | 0.60 | 3,997.79 | 118.67 |
| NPD 4 | 30 + | 10 + | 81.3 | 44.7 | 0.60 | 3,769.22 | 40.54 |
| NSD 1 | 3-30 | 1-10 | 15.7 | 3.7 | 0.66 | 7,034.81 | 125.01 |
| NSD 2 | 3-30 | 10 + | 19.6 | 44.1 | 0.66 | 6,280.15 | 40.76 |
| NSD 3 | 30 + | 1-10 | 46.8 | 4.3 | 0.62 | 6,151.05 | 117.61 |
| NSD 4 | 30 + | 10 + | 45.3 | 94.0 | 0.66 | 5,537.34 | 28.93 |
Future Year Projections
The capacity factor remains unchanged from the Base Year through 2050. Technology improvements are focused on CAPEX and O&M costs.
Standard Scenarios Model Results
ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.
The ReEDS model uses resource/cost supply curves representing estimates at each individual facility (~700 NPD and ~8,000 NSD).
The ReEDS model represents cost and performance for NPD and NSD potential in 5 bins for each of 134 geographic regions, which results in capacity factor ranges of 38%-80% for the NPD resources and 53%-81% for NSD.
Existing hydropower facilities in the ReEDS model provide dispatch capability such that their annual energy production is determined by the electric system needs by dispatching generators to accommodate diurnal and seasonal load variations and output from variable generation sources (e.g., wind and solar PV).
Plant Cost and Performance Projections Methodology
Projections developed for the Hydropower Vision study (DOE, 2016) using technological learning assumptions and bottom-up analysis of process and/or technology improvements provide a range of future cost outcomes. Three different projections were developed for scenario modeling as bounding levels:
- Constant Technology Cost Scenario: no change in CAPEX or OPEX from 2017 to 2050; consistent across all renewable energy technologies in the ATB
- Mid Technology Cost Scenario: incremental learning, consistent with Reference in the Hydropower Vision study (DOE, 2016); CAPEX reductions for NSD only
- Low Technology Cost Scenario: gains that are achievable when pushing to the limits of potential new technologies, such as modularity (in both civil structures and power train design), advanced manufacturing techniques, and materials, consistent with Advanced Technology in Hydropower Vision (DOE, 2016); both CAPEX and O&M cost reductions implemented.
A range of literature projections is shown for comparison. The Mid and Low cost cases use a mix of inputs based on EIA technological learning assumptions, input from a technical team of Oak Ridge National Laboratory researchers, and the experience of expert hydropower consultants. Estimated 2035 cost levels are intended to provide order-of-magnitude cost reductions deemed to be at least conceptually possible, and they are meant to stimulate a broader discussion with the hydropower industry and its stakeholders that will be necessary to the future of cost reduction in the industry. Cost projections were derived independently for NPD and NSD technologies.
For context, ATB cost projections are compared to the literature, which represents 7 independent published studies and 11 cost projection scenarios within these studies. Cost reduction literature for hydropower is limited with several studies projecting no change through 2050. It is unclear whether (1) this represents a deliberate estimate of no future change in cost or (2) no estimate has been made.
Hydropower investment costs are very site specific and vary with type of technology. Literature was reviewed to attempt to isolate perceived CAPEX reduction for resources of similar characteristics over time (e.g., estimated cost to develop the same site in 2015, 2030, and 2050 based on different technology, installation, and other technical aspects). Some studies reflect increasing CAPEX over time. These studies were excluded from the ATB based on the interpretation that rising costs reflect a transition to less attractive sites as the better sites are used earlier.
Literature estimates generally reflect hydropower facilities of sizes similar to those represented in U.S. resource potential (i.e., they exclude estimates for very large facilities). Due to limited sample size, all projections are analyzed together without distinction between types of technology. Note that although declines are shown on a percentage basis, the reduction is likely to vary with initial capital cost. Large reductions for moderately expensive sites may not scale to more expensive sites or to less expensive sites. Projections derived for the Hydropower Vision study for different technologies (Low Head NPD, High Head NPD, and NSD) address this simplification somewhat.
Levelized Cost of Energy (LCOE) Projections
Levelized cost of energy (LCOE) is a summary metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies such as hydropower can provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.
The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for hydropower across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform and tax credits. The representative plant characteristics in the ATB that best align with those of recently installed or anticipated near-term hydropower plants are associated with NPD 4. Data for all the resource categories can be found in the ATB Data spreadsheet; for simplicity, not all resource categories are shown in the figures.
R&D Only | R&D + Market
The methodology for representing the CAPEX, O&M, and capacity factor assumptions behind each pathway is discussed in Projections Methodology. In general, the degree of adoption of technology innovation distinguishes the Constant, Mid, and Low technology cost scenarios. These projections represent trends that reduce CAPEX and improve performance. Development of these scenarios involves technology-specific application of the following general definitions:
- Constant Technology: Base Year (or near-term estimates of projects under construction) equivalent through 2050 maintains current relative technology cost differences
- Mid Technology Cost Scenario: Technology advances through continued industry growth, public and private R&D investments, and market conditions relative to current levels that may be characterized as "likely" or "not surprising"
- Low Technology Cost Scenario: Technology advances that may occur with breakthroughs, increased public and private R&D investments, and/or other market conditions that lead to cost and performance levels that may be characterized as the " limit of surprise" but not necessarily the absolute low bound.
To estimate LCOE, assumptions about the cost of capital to finance electricity generation projects are required, and the LCOE calculations are sensitive to these financial assumptions. Two project finance structures are used within the ATB:
- R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA, 2019) and excludes effects of tax reform and tax credits.
- R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2019 (EIA, 2019), as well as effects of tax reform and tax credits. For a detailed discussion of these assumptions, see Project Finance Impact on LCOE.
A constant cost recovery period – over which the initial capital investment is recovered – of 30 years is assumed for all technologies throughout this website, and can be varied in the ATB data spreadsheet.
The equations and variables used to estimate LCOE are defined on the Equations and Variables page. For illustration of the impact of changing financial structures such as WACC, see Project Finance Impact on LCOE. For LCOE estimates for the Constant, Mid, and Low technology cost scenarios for all technologies, see 2019 ATB Cost and Performance Summary.
In general, differences among the technology cost cases reflect different levels of adoption of innovations. Reductions in technology costs reflect the cost reduction opportunities that are listed below.
- Widespread implementation of value engineering and design/construction best practices
- Modular "drop-in" systems that minimize civil works and maximize ease of manufacture reduce both capital investment and O&M expenditures
- Use of alternative materials in place of steel for water diversion (e.g., penstocks)
- Implementation of standardized "smart" automation and remote monitoring systems to optimize scheduling of maintenance
- Research and development on environmentally enhanced turbines to improve performance of the existing hydropower fleet
- Efficient, certain, permitting, licensing, and approval procedures.
The Hydropower Vision study (DOE, 2016) includes road map actions that result in lower-cost technology.
Nuclear
The ATB includes a single nuclear power plant type. The cost and performance of this plant type is adapted from EIA data rather than derived from original analysis.
Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections
Nuclear power plant CAPEX is taken from the AEO2019 Reference Scenario (EIA, 2019a) with the adjustments discussed in the CAPEX definition section. The EIA advanced nuclear option is based on two AP1000 nuclear power plant units built on a brownfield site. The ATB includes only a single CAPEX projection for nuclear plants.
Comparison with Other Sources
CAPEX Definition
Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.
Overnight capital costs are modified from AEO2019 (EIA, 2019a). The EIA projections were adjusted by removing the material price index. The material price index accounts for projected changes in the price index for metals and metals products, and it is independent of the learning-based cost reductions applied in the EIA projections.
| Overnight Capital Cost ($/kW) | Construction Financing Factor (ConFinFactor) | CAPEX ($/kW) | |
| Nuclear: Advanced nuclear power generation | $6,200 | 1.087 | $6,742 |
CAPEX can be determined for a plant in a specific geographic location as follows:
Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).
In the ATB, CAPEX represents each type of nuclear plant with a unique value. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by (EIA, 2016) expand the range of CAPEX (Plant × Region). Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.
Operation and Maintenance (O&M) Costs
Nuclear power plant fixed and variable O&M costs are taken from table 8.2 of the AEO2019, and they are assumed to be constant over time.
Capacity Factor: Expected Annual Average Energy Production Over Lifetime
The capacity factor represents the assumed annual energy production divided by the total possible annual energy production, assuming the plant operates at rated capacity for every hour of the year. For nuclear plants, the capacity factor is typically the same as (or very close to) their availability factor. For the ATB we assign the nuclear capacity factor as the fleet-wide average from 2017.
Levelized Cost of Energy (LCOE) Projections
Levelized cost of energy (LCOE) is a summary metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.
The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for nuclear across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform and tax credits.
R&D Only | R&D + Market
The LCOE of nuclear power plants is directly impacted by the cost of uranium, variations in the heat rate, and O&M costs, but the biggest factor is the capital cost (including financing costs) of the plant. The LCOE can also be impacted by the amount of downtime from refueling or maintenance. For a given year, the LCOE assumes that the fuel prices from that year continue throughout the lifetime of the plant.
Fuel prices are based on the AEO2019 (EIA, 2019a).
To estimate LCOE, assumptions about the cost of capital to finance electricity generation projects are required, and the LCOE calculations are sensitive to these financial assumptions. Two project finance structures are used within the ATB:
- R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA, 2019a) and excludes effects of tax reform and tax credits. A constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies.
- R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2019 (EIA, 2019a) as well as effects of tax reform and tax credits. As in the R&D Only case, a constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies. For a detailed discussion of these assumptions, see Project Finance Impact on LCOE.
The equations and variables used to estimate LCOE are defined on the Equations and Variables page. For illustration of the impact of changing financial structures such as WACC, see Project Finance Impact on LCOE. For LCOE estimates for the Constant, Mid, and Low technology cost scenarios for all technologies, see 2019 ATB Cost and Performance Summary.
References
The following references are specific to this page; for all references in this ATB, see References.Augustine, Chad, Ho, J., & Blair, N. (2019). GeoVision Analysis Supporting Task Force Report: Electric Sector Potential to Penetration (No. NREL/ TP-6A20-71833). Retrieved from National Renewable Energy Laboratory website: https://www.nrel.gov/docs/fy19osti/71833.pdf
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