Frugal Geothermal – The Cost of Generating Electricity By Source


Cost To Generate Electricity By Source - Coal, Natural Gas, Nuclear, Geothermal, Biomass, Wind, Solar, & Hydroelectric

The cost (LCOE in USD) to produce a Megawatt hour (MWh) of electricity from different generating technologies. Each dot represents the average cost, and the highlighted bars show the minimum and maximum costs due to regional variation across the US. Several categories have multiple bars that represent different technologies in each field. From bottom to top: Coal is broken into conventional coal, IGCC & IGCC with CCS; Natural Gas is broken into Conventional Combined Cycle, Advanced Combined Cycle, Advanced CC with CCS, Conventional Combustion Turbine, Advanced Combustion Turbine; Wind is broken into onshore and offshore, and Solar is broken into Solar PV and Solar Thermal. Data source: EIA Annual Energy Outlook – 2014. Can be accessed at – Table 2

The above plot displays the cost (in USD) to produce a Megawatt hour (MWh) of electricity from each generating technology.  Each dot represents the average cost, and the highlighted bars show the minimum and maximum costs due to regional variation across the US.  Some categories have multiple bars because the data set contains generation costs for different technologies within that category.  For example, Coal is broken into Conventional Coal, Integrated Coal Gasification Combined Cycle (IGCC), and IGCC with CCS.

The scope of electricity generation cost is astounding!  On average it costs 5 times more to generate electricity from solar thermal power than geothermal power.  It costs 2.5 times more to generate electricity from an offshore wind farm than an onshore one 0  though there is an enormous variation in the cost of operating an offshore wind farm.

I suspect natural gas was the first source that jumped into your mind when thinking about cost-effective electricity generation. It is remarkable how profitable geothermal electricity is! (to be fair there is limited capacity in producing geothermal electricity at this low cost).  It is also interesting that conventional coal generation (bottom bar) is cheaper than IGCC (mid bar), reminding us that IGCC exists for environmental not economic reasons.

When comparing sources it is important to note that the top three sources (Hydroelectric, Solar, & Wind) are non-dispatchable (ie. the output cannot be changed to follow demand), whereas the rest of the sources are more valuable because they are flexible in responding to demand  (dispatchable).

Specifically, the data we see plotted above is the levelized cost of electricity (LCOE) – a static that estimates the cost of building and operating a generating plant for a period of time (here it is 30 years).  LCOE includes capital costs, fuel costs, operations & maintenance, financing costs, etc.  It is certainly not sufficient in comparing different generation technologies (you can read about why here & here), but it does provide us with some insights.  The data originates from EIA’s Annual Energy Outlook – 2014.  When compared to an additional measure (the levelized avoided cost of electricity – LACE), LCOE can be helpful in determining the economically viability of a new electricity generation project.  For more information visit .



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