What is the Cost of Carbon-Neutral Baseload 24/7 Power Sources? Federal Energy Experts Release a Comparative Paper for UtilitiesNews - Press Release | November 8, 2023
WASHINGTON (Nov. 8, 2023) – Utilities want to know what electric power generating facility they should invest in to serve their customers with baseload, dispatchable power and carbon-free, carbon-neutral and renewable resources, and what it will cost to power their communities. To answer the question, Kutak Rock LLP worked with others to develop a paper, “What is the cost of power: A comparative analysis of the costs to finance, design, construct and operate carbon free baseload power.” The paper evaluates carbon-free energy purchase options and compares the finance, design and construction costs for baseload power, which is power that is available 24 hours per day and 7 days per week.
Generally, photovoltaic (PV) and wind resources are the least expensive carbon-neutral electric power sources but they are not baseload power sources. They provide what is called intermittent (variable) power. To compare the proverbial “apples to apples,” the authors added battery storage to the PV and wind power sources and compared the costs to small modular reactors (SMR) (assuming it is the Nth build SMR versus the first of kind SMR, or an iteration of an SMR that reached maturation) and to a natural gas combined cycle with carbon capture and storage.
Using the Levelized Cost of Electricity (LCOE) model as a tool to compare varying energy production technologies helps utility operators select a preferred power-generating facility to serve customers. LCOE considers baseload, dispatchable power and carbon-free, carbon-neutral and renewable resources. Throughout the paper, the authors identify key inputs serving as drivers of the LCOE calculation, including incentives, capital costs, recapitalization, and fixed and variable operations and maintenance costs based on fuel consumption, production and capacity.
Based on their analysis and the LCOE model, the authors conclude that SMRs are the most cost-effective option over a 60-year period. Renewable energy with batteries closely follows SMRs.
The paper is co-authored by Seth Kirshenberg, John Tuebner and Brian Oakley. Kirshenberg is a partner and co-leader of the energy practice at Kutak Rock LLP where he has completed billions of dollars in renewable energy and energy efficiency projects. Tuebner is a senior associate with the Clean Energy and Infrastructure Advisory group at Jones Lang LaSalle. Oakley is a Director with Summit Consulting, LLC and has over 30 years of experience in providing financial advisory services to public and private energy and infrastructure clients.
Kutak Rock’s Energy Group is a full-service advisor to renewable energy developers, operators, investors, lenders, utilities and off-takers on utility-scale renewable energy projects.
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