UT Energy Institute reveals the true cost of generating electricity

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Photo Credit: Melanie Westfall | Daily Texan Staff

Wind and natural gas are the lowest-cost technologies for generating electricity across the majority of the United States, according to research recently published by UT’s Energy Institute.

The researchers calculated the cost of generating electricity for each U.S. county using coal, natural gas, solar, nuclear and wind. According to Joshua Rhodes, a postdoctoral research fellow at the Energy Institute and the lead author of the study, while wind and natural gas are the dominant forms of generating electricity, in some areas of the country other technologies are cheaper. For example, nuclear power is cheapest in areas with poor natural gas infrastructure and less wind.

“We very quickly realized that one size does not fit all,” Rhodes said. “I think this study will help people realize the fact that locality matters when looking at options for generating electricity. The same answer doesn’t apply everywhere.”

In their calculations, the researchers included capital costs, operations and maintenance costs, fuel prices and resource availability. Rhodes said most studies of this type stop there, but his research also included the cost of environmental effects such as carbon emissions. Rhodes said when these costs were included, coal was not cheapest in any county.

“We wanted to look at the full cost, not the full price,” Rhodes said. “With things like carbon and particulate matter, we pay those costs, but they don’t show up in the electric bill. They show up in people going to the hospital for asthma attacks. As climate change happens, we’re just putting it on a credit card, and eventually the bill will come.”

The study is part of the Full Cost of Electricity project coordinated by UT’s Energy Institute. Researchers have published 12 papers as part of this project, covering topics from the installation of solar technology to the history of the electric grid.

“Our goal for the project was to produce information as objectively as possible about how to compare and contrast energy options,” Energy Institute assistant director Carey King said. “The purpose is largely educational, but in the sense of helping policymakers, businesses and academics discuss these issues in an easier manner.”

The researchers also developed two calculators, the map-based and the side-by-side, that can be accessed from the Energy Institute’s website. The map-based calculator uses capital and fuel costs to determine the cheapest technology for each county, while the side-by-side calculator allows users to compare two specific counties. Both calculators let users edit price information to generate new results.

“We realized that when people say a technology costs a certain amount, they come to the table with numbers that not everyone agrees with,” Rhodes said. “If you think the cost of natural gas should be X instead of Y, you can put that in there. We wanted to give people a common framework to work from. We want to be known more for the method than the numbers.”

Fred Beach, the Energy Institute’s assistant director for policy studies, said three variables have the biggest impact on the lowest-cost technologies.

“(These) are the cost of natural gas, the price of construction for wind and solar and the price on carbon and other pollutants,” Beach said. “As I look forward 20 years, I think those are the numbers that tell how things will go in this country."

Beach said one of the Energy Institute’s next studies will analyze the energy infrastructure of the U.S., from pipelines and transmission lines to roads and refineries, as well as the types of infrastructure that should be built in the future.

“If you think the future needs to be different than the present, then we need new infrastructure,” Beach said. “For example, electric vehicles need more electric power infrastructure. If you squeeze on one area, it bulges out somewhere else. There’s a cost associated, and not just economic — people don’t like it when transmission lines are going through their backyards.”