The generation cost of each power source was estimated : Solar power generation cost reduced

The generation cost of each power source was estimated : Solar power generation cost reduced

On 12th July, the Agency for Natural Resources and Energy (ANRE) of the Ministry of Economy, Trade and Industry (METI) indicated the estimated cost for electricity generation of each power source in 2030. Compared with the previous estimation in 2015, the cost for solar power, which is expected to take large share in generation, has clearly reduced. The cost for nuclear power, taking into account the latest cost information for additional safety measures, etc., increased slightly. In addition, apart from the individual cost of each power source, ANRE announced the provisional analysis results on “the system integration costs” such as system stabilization cost.
When the cost for the one such as the system constraints is allocated to individual power sources, the cost of LNG(liquefied natural gas) fired power will be reduced, while the cost for nuclear power, solar power and wind power, which have no demand load followability, tend to increase.

ANRE provisionally summarized what has been discussed so far at The Working Group on the Verification of Power Generation Cost of the Advisory Committee for Natural Resources and Energy (Chairperson: Kenji Yamaji, Executive Director/Head of Research Division, the Research Institute of Innovative Technology for the Earth) on the same day of 12th July. The working group will be held again after the energy mix in 2030 is finalized and make a formal decision on the verification of power generation cost

The purpose of the verification is to clarify the characteristics of the cost for each power source.
It was conducted for the first time in six years to create the reference for making the energy policy toward 2030, such as which power source to be focused in the policy. The cost per 1kWh is calculated mechanically when a new facility is constructed on a clear land and operated without consideration of the site restrictions. The business operators’ actual decision for construction of the facility is based on a comprehensive consideration of the conditions at each site as well as these power generation costs.

Therefore, there were many voices concerning that only the numbers would walk along at the working group. The numbers will vary depending on the assumption of the estimates such as the prospect of fuel costs, operation years and utilization rate of facilities.
ANRE stated “you can’t say expensive or cheap by only considering these numbers”. On the other hand, ANRE pointed out that this verification is useful in understanding the trend of the cost of each power source. For example, solar cost has clearly decreased in this estimation, and it may become the main power source for decarbonization. There was no significant increase in the cost of nuclear power.

In addition to the verification of individual power supply cost, ANRE estimated the cost in consideration of the large-scale introduction of naturally fluctuating power supply such as solar and wind power this time.
The costs associated with decreased efficiency of thermal power and utilization of pump-up water storage are defined as “integration cost” in the power system, and estimates have been enhanced compared with the previous report.