The ATB provides a transparent set of technology cost and performance data for electric sector analysis. The update of the 2017 version of ATB to this 2018 version includes:
Several new features related to financial assumptions are included in the 2018 ATB:
A constant cost recovery period-over which the initial capital investment is recovered-of 30 years is assumed for all technologies throughout this website, and it can be varied in the ATB data spreadsheet.
The 2018 ATB is the first edition of the ATB to include technology-specific financial assumptions to capture more granularity of current and future energy markets, as well as to show cost reduction potential through improvements in financing rates attributable to technological risk reduction from R&D. Multiple financing options are currently available in the marketplace, with varying associated costs; these options will likely grow as technologies become more mature. Additionally, many macroeconomic factors may influence financing rates in the future, independent of the method by which a project is financed or the underlying changes in characteristics of a technology; these factors include the underlying inflation rate as well as the cost of the Federal Reserve interest rate. For these reasons, we assume the same inflation rate, tax rate (changing in 2018 to reflect the new federal corporate tax rate in the R&D + Market case), and in many instances, interest rate across technologies.
To create a consistent financial landscape across technologies, we have also binned technologies by their general maturity within the U.S. marketplace, as well as any unique characteristics that they may have in raising funds. We have given some technologies the same financing assumptions despite certain differences in marketplace today that are caused by resource variability, capacity factor, credit quality and ease of funding, as well as market size. However, given the variety of reported financing costs currently available in the marketplace, we feel it is justified, as their reported financing costs overlap quite a bit.
For the reasons described above, land-based wind and distributed and utility PV are viewed as relatively mature technologies and have the same return on equity and debt interest as the financing costs for other mature technologies as outlined in AEO 2018. We still view the possibility for improved financing terms for wind and PV technologies; to capture this, we increase the assumed debt fraction from 60% in 2016 (under the " R&D Only Financial Assumptions") to 65% and 70% in 2030 in the Mid and Low cost scenarios, which is when we assume these technologies will be viewed as fully mature. (The ATB assumes that the debt fraction is reduced to 40% in years in which technologies receive tax credits due to tax credits' impact on financial transactions.)
These debt fractions are consistent with land-based wind and PV values calculated in Bolinger (2014) and Feldman and Bolinger (2016). We assume higher financing rates for concentrating solar power (CSP), offshore wind, and geothermal generation plants. U.S. CSP currently has lower levels of deployment, historically has relied on governmental involvement with financing, and recently has had project start-up challenges.
While offshore wind deployment is mature in Europe, only one plant has been installed in the United States to date. Several projects are currently under development; however, because of previous project cancellations and delays, there is still more project risk in offshore wind than in land-based wind.
Geothermal plants incur higher financing costs that are due to exploration and well field development risk in early project stages. For these reasons, we assume that in 2016 CSP, offshore wind, and geothermal projects have equity rate premiums relative to PV and wind, of 4%, 3%. and 10% above AEO 2018 values respectively, as well as a lower debt fraction of 50% (under the " R&D Only Financial Assumptions"). These values are similar to equity premiums and leverage as calculated by DOE technology program analysts. However, in the Low and Mid costs scenarios for CSP and offshore wind, and in the Low cost scenario for geothermal plants, these technologies become financially mature by 2030 and have financing costs comparable to land-based wind and PV generating assets.
We assume hydropower plants are financed through 100% bond financing, similarly to how they have been financed in the past. For consistency, the interest rate of these bonds is the same as the interest rates for other mature technologies.
Financing assumptions for natural gas, nuclear, and biopower plants are all based on the assumptions from AEO 2018; the weighted-average cost of capital (WACC) for coal plants is three percentage points higher.
The impact of these project finance assumptions is explored here.
The following sections list updates to the 2017 ATB in the 2018 ATB.
Lazard's Levelized Cost of Energy Analysis: Version 11.0. November 2017. New York: Lazard. https://www.lazard.com/perspective/levelized-cost-of-energy-2017.
Barbose, Galen, and Naïm Dargouth. 2017. Tracking the Sun X: The Installed Price of Residential and Non-Residential Photovoltaic Systems in the United States. Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL-2001062. September 2017. http://eta-publications.lbl.gov/sites/default/files/tracking_the_sun_10_report.pdf.
Bolinger, Mark, Joachim Seel, and Kristina Hamachi LaCommare. 2017. Utility-Scale Solar 2016: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States. Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL- 2001055. September 2017. http://eta-publications.lbl.gov/sites/default/files/utility-scale_solar_2016_report.pdf.
Dykes, K., M. Hand, T. Stehly, P. Veers, M. Robinson, E. Lantz. 2017. Enabling the SMART Wind Power Plant of the Future Through Science-Based Innovation (Technical Report), NREL/TP-5000-68123. National Renewable Energy Laboratory (NREL). Golden, CO (US). https://www.nrel.gov/docs/fy17osti/68123.pdf.
EIA (U.S. Energy Information Administration). 2015. Annual Energy Outlook with Projections to 2040. Washington, D.C.: U.S. Department of Energy. DOE/EIA-0383(2015). April 2015. http://www.eia.gov/outlooks/aeo/pdf/0383(2015).pdf.
EIA (U.S. Energy Information Administration). 2018. Annual Energy Outlook 2018 with Projections to 2050. Washington, D.C.: U.S. Department of Energy. February 6, 2018. https://www.eia.gov/outlooks/aeo/pdf/AEO2018.pdf.
Fu, Ran, David Feldman, Robert Margolis, Mike Woodhouse, and Kristen Ardani. 2017. U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-68925. https://www.nrel.gov/docs/fy17osti/68925.pdf.
Moné, Christopher, Maureen Hand, Mark Bolinger, Joseph Rand, Donna Heimiller, and Jonathan Ho. 2017. 2015 Cost of Wind Energy Review. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-66861. http://www.nrel.gov/docs/fy17osti/66861.pdf.
Stehly, Tyler, Donna Heimiller, and George Scott. 2017. 2016 Cost of Wind Energy Review. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-70363. https://www.nrel.gov/docs/fy18osti/70363.pdf.
Wiser, Ryan, Karen Jenni, Joachim Seel, Erin Baker, Maureen Hand, Eric Lantz, and Aaron Smith. 2016. Forecasting Wind Energy Costs and Cost Drivers: The Views of the World's Leading Experts. Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL-1005717. June 2016. https://emp.lbl.gov/publications/forecasting-wind-energy-costs-and.