Estimate Costs to Implement Greenhouse Gas Mitigation Strategies Using Renewable Energy in Buildings
After determining the best greenhouse gas (GHG) reduction strategies using renewable energy, a Federal agency should estimate the cost of implementing them in a building or buildings.
There are several cost factors that need to be considered when developing a renewable energy project. Capital costs, fixed and variable operations and maintenance (O&M) costs and in the case of biomass and waste-to-energy projects, fuel costs all contribute to the total cost of operating a renewable energy system. The levelized system cost takes into account these different costs over the lifecycle of a given system. Another important consideration is the system capacity factor which represents the percentage of the system capacity that be expected over the course of year. The capacity factor takes into account resource fluctuations such as variable winds, cloudy days, etc., as well as downtime for maintenance.
Table 1 below gives average capacity factors and levelized system costs, or levelized cost of energy (LCOE) for different RE technologies.
Table 1. Levelized System Costs
|Technology||Capacity Factor (%)||$/kWh|
|Levelized Capital Cost||Fixed O&M Costs||Var. O&M Costs + Fuel||Total Levelized System cost|
Source: Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011, Energy Information Administration, Nov. 2010, Accessed Sept. 20, 2011
1 The EIA Categorizes solar thermal in three categories: Low-temperature collectors provide low-grade heat (less than 110 degrees Fahrenheit), through either metallic or nonmetallic absorbers, and are used in such applications as swimming pool heating and low-grade water and space heating.
- Medium-temperature collectors provide medium-grade heat (greater than 110 degrees Fahrenheit, usually 140 degrees to 180 degrees Fahrenheit), either through glazed flat-plate collectors using air or liquid as the heat transfer instrument, or concentrator collectors that concentrate the heat of incident insolation to greater than "one sun," and are mainly used for domestic hot water heating. Evacuated-tube collectors are also included in this category.
- High-temperature collectors are parabolic dish or trough collectors designed to operate at a temperature of 180 degrees Fahrenheit or higher, and are primarily used by utilities and independent power producers to generate electricity for the grid.
The LCOE is often cited as a convenient summary measure of the overall competiveness of different generating technologies. Levelized cost represents the present value of the total cost of building and operating a generating plant over an assumed financial life and duty cycle, converted to equal annual payments and expressed in terms of real dollars to remove the impact of inflation.
Levelized cost reflects overnight capital cost, fuel cost, fixed and variable O&M cost, financing costs, and an assumed utilization rate for each plant type. For technologies such as solar and wind generation that have no fuel costs and relatively small O&M costs, levelized cost changes in rough proportion to the estimated overnight capital cost of generation capacity. For technologies with significant fuel cost, both fuel cost and overnight cost estimates significantly affect levelized cost. The availability of various incentives including state or federal tax credits can also impact the calculation of levelized cost.
Note that these costs do not include any incentives. The LCOE can be compared to utility energy costs to determine the additional cost of purchasing renewable energy.
For more information, see the Levelized Cost of Energy Calculator on the National Renewable Energy Laboratory website.
Depending on the specifics of a given site, resource availability and economic incentives, agencies can utilize renewable energy through a couple of financing options to meet their GHG reduction goals. For information on financing options, see Project Funding.
After estimating implementation costs, the next step when planning to use renewable energy in buildings for GHG mitigation is to prioritize emission reduction strategies.
- Step 1
Assess Agency Size Changes
- Step 2
Evaluate Emissions Profile
- Step 3
Evaluate Reduction Strategies
- Step 4
Estimate Implementation Costs
- Step 5
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