EIA Capital Cost Estimates for Utility Scale Electricity Generating Plants - 2016

Wind Energy / Economics

The current and future projected cost and performance characteristics of new electric generating capacity are critical inputs into the development of energy projections and analyses. The construction and operating costs, along with the performance characteristics of new generating plants, play an important role in determining the mix of capacity additions that will serve future demand for electricity.

These parameters also help to determine how new capacity competes against existing capacity, and the response of the electric generators to the imposition of environmental controls on conventional pollutants or any limitations on greenhouse gas emissions. EIA commissioned an external consultant to develop up‐to‐date cost and performance estimates for utility‐scale electric generating plants for AEO2013.1 This information allowed EIA to compare the costs of different power plant technologies on a standardized basis and was a key input enhancement to the National Energy Model System (NEMS). Forthe AEO 2016 development, EIA commissioned the same
consultant group to update the cost and performance estimates for a select set of the technologies evaluated in the original 2012 study. This paper summarizes the results of the findings and discusses how EIA used the updated information to analyze the development of new capacity in the electric power sector.

The focus of the 2016 update was to gather current information on the "overnight" construction costs, operating costs, and performance characteristics for a wide range of generating technologies. The estimates were developed through costing exercises, using a common methodology across technologies. Comparing cost estimates developed on a similar basis using the same methodology is of particular importance to ensure modeling consistency.

Each technology is represented by a generic facility of a specific size and configuration, in a location that does not have unusual constraints or infrastructure requirements. Where possible, costs estimates were based on information on system design, configuration, and construction derived from actual or planned projects known to the consultant, using generic assumptions for labor and materials rates. When this information was not available, the project costs were estimated using a more generic technology representation and costing models that account for the current labor and materials rates necessary to complete the construction of a generic facility as well as consistent assumptions for the contractual relationship between the project owner and the construction contractor.

The specific overnight costs for each type of facility were broken down to include:

ï‚· Civil and structural costs: allowance for site preparation, drainage, the installation of underground utilities, structural steel supply, and construction of buildings on the site,
ï‚· Mechanical equipment supply and installation: major equipment, including but not limited to, boilers, flue gas desulfurization scrubbers, cooling towers, steam turbine generators,condensers, photovoltaic modules, combustion turbines, wind turbines, and other auxiliary equipment,
ï‚· Electrical and instrumentation and control: electrical transformers,switch gear, motor control centers,switch yards, distributed control systems, and other electrical commodities,
ï‚· Project indirect costs: engineering, distributable labor and materials, craft labor overtime and incentives, scaffolding costs, construction management start up and commissioning, and fees for contingency,
ï‚· Owners costs: development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, property taxes during
construction, and the electrical interconnection costs, including a tie‐in to a nearby electrical transmission system.

Non‐fuel operations and maintenance (O&M) costs associated with each of the power plant technologies were evaluated as well. The O&M costs that do not vary significantly with a plant’s electricity generation are classified as fixed, including salaries for facility staff and maintenance that is scheduled on a calendar basis. The costs incurred to generate electricity are classified as variable such as the cost of consumable materials and maintenance that may be scheduled based on the number of
operating hours or start‐stop cycles of the plant. The heat rates were also evaluated for the appropriate technologies. It should be noted that all estimates provided in this report are broad in scope. A more in‐depth cost assessment would require a more detailed level of engineering and design work, tailored to a specific site.

[Note that O&M costs are lumped in as fixed costs with Capital Costs in this report.]