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My last post on Tuesday reported on the Soho Forum climate change debate that had taken place the previous day. Debater Andrew Dessler, arguing in favor of rapid reductions in human greenhouse gas emissions by the method of vastly increasing electricity production from wind and solar generators, had heavily relied on the assertion that wind and solar are now the cheapest ways to generate electricity. An important slide in his presentation showed comparative costs of generation from various sources, with wind and solar clearly shown as least expensive. At the bottom of the slide, the acronym “LCOE” was legible.
LCOE stands for Levelized Cost of Electricity. I first encountered this term a couple of years ago, and thought that I should get on top of it to understand its significance. It took me about a half hour to figure out that this metric was completely inapplicable and invalid for purposes of comparing the costs of using dispatchable versus non-dispatchable generators as the predominant sources to power an electrical grid that works. The reasons are not complicated, but do take some minutes of thought if the matter has not previously been explained to you. In Tuesday’s post, I asked as to Dessler’s reliance on this LCOE metric:
[I]s he aware of this [inapplicability of LCOE] and therefore intentionally trying to deceive the audience? Or, alternatively, is he innumerate, and does not understand how this works quantitatively?
Some commenters on the post were quite harsh in their judgments of Dessler. They argued for the inference of intentional deception, on the basis that no one claiming expertise in this field could really be so obtuse as to think LCOE was a valid metric for the purpose for which Dessler was using it.
So today I thought to look at how others go about comparing the costs of generation of electricity from wind and solar versus dispatchable sources like fossil fuels or nuclear. I can’t say that I was surprised to learn that LCOE is everywhere as the metric of choice for the comparison. Moreover, it is almost impossible to find any discussion of why LCOE is completely misleading when comparing the cost of a grid powered predominantly by dispatchable sources to the cost of a grid powered predominantly by intermittent wind and solar sources backed up by storage.