An economic competitiveness analysis of power generation plants

Abstract: Due to the fast growth of renewable energy resources, the analysis and comparison of costs associated with different forms of electricity generating sources are crucial for decision policy makers and investors. To this end, the Levelized Cost of Electricity (LCOE) is a widely tool employed to assess the economic viability of a power plant, however the issue with this tool is that it does not considers all the complexities involved. Thus, the Levelized Avoided Cost of Electricity (LACE) has been introduced to cover the elements ignored by LCOE, which are becoming critical to business decision. Despite the development of LACE, various studies continue using LCOE to evaluate the economic competitiveness of various power plants, especially in South Africa. To this end, this paper used both LCOE and LACE tools assess and compare the economic viability of 10 technologies which are: coal, gas, nuclear, biomass, geothermal, hydroelectric, wind offshore, wind onshore, solar photovoltaic, concentrated solar power. The results indicate that of all technologies, geothermal ranks at the first place as the most economic competitive alternative, followed by coal technology. Furthermore, the results illustrate that the worse technologies in terms of economic viability are solar photovoltaic, concentrated solar power, and wind. As far as the authors are aware this study is the first example in the context of the South African energy sector