Filter Content by Section

Annual Technology Baseline 2018

National Renewable Energy Laboratory


Recommended Citation:
NREL (National Renewable Energy Laboratory). 2018. 2018 Annual Technology Baseline. Golden, CO: National Renewable Energy Laboratory. http://atb.nrel.gov/.


Please consult Guidelines for Using ATB Data:
https://atb.nrel.gov/electricity/user-guidance.html

Biopower

In a biopower plant:

  1. Heat is created: Biomass (sometimes co-fired with coal) is pulverized, mixed with hot air, and burned in suspension.
  2. Water turns to steam: The heat turns purified water into steam, which is piped to the turbine.
  3. Steam turns the turbine: The pressure of the steam pushes the turbine blade, turns the shaft in the generator, and creates power.
  4. Steam is turned back into water: Cool water is drawn into a condenser where the steam turns back into water that can be reused in the plant.
Joseph C. McNeil Generating Station in Burlington, Vermont (a biomass gasifier that operates on wood chips)
Joseph C. McNeil Generating Station in Burlington, Vermont
(a biomass gasifier that operates on wood chips)
Photo by David Parsons, NREL 06905
NIPSCO generating station
NIPSCO generating station
Photo by Kevin Craig, NREL 08928

Renewable energy technical potential, as defined by Lopez et al. 2012, represents the achievable energy generation of a particular technology given system performance, topographic limitations, and environmental and land-use constraints.Technical resource potential for biopower is based on estimated biomass quantities from the Billion Ton Update study (DOE (2011)).

CAPital EXpenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

Because biopower plants are well-known and perform close to their optimal performance, EIA expects capital expenditures (CAPEX) will incrementally improve over time and slightly more quickly than inflation.

The exception is new biomass cofiring, which is expected to have costs that decline a bit more than existing cofiring project technologies.

Current estimates and future projections calculated from EIA (2017) and modified.
R&D Only Financial Assumptions (constant background rates, no tax or tariff changes)

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a givenyear.

Overnight capital costs are modified from EIA (2014). Capital costs include overnight capital cost plus defined transmission cost, and it removes a material price index. The overnight capital costs for cofired units are not the cost of upgrading a plant but the total cost of the plant after the upgrade.

Fuel costs are taken from the Billion Ton Update study (DOE (2011)).

Overnight Capital Cost ($/kW) Construction Financing Factor (ConFinFactor) CAPEX ($/kW)
Dedicated:Dedicated biopower plant $3,737 1.041 $3,889
CofireOld:Pulverized coal with sulfur dioxide (SO2) scrubbers and biomass co-firing $3,856 1.041 $4,013
CofireNew:Advanced supercritical coal with SO2 and NOx controls and biomass co-firing $3,856 1.041 $4,013

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)
See the Financial Definitions tab in the ATB data spreadsheet.

Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).

In the ATB, CAPEX represents each type of biopower plant with a unique value. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by EIA 2016a expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

R&D Only Financial Assumptions (constant background rates, no tax or tariff changes)

Operation and Maintenance (O&M) Costs

Operations and maintenance (O&M) costs represent the annual expenditures required to operate and maintain a plant over its lifetime, including:

  • Insurance, taxes, land lease payments, and other fixed costs
  • Present value and annualized large component replacement costs over technical life
  • Scheduled and unscheduled maintenance of power plants, transformers, and other components over the technical lifetime of the plant.

Market data for comparison are limited and generally inconsistent in the range of costs covered and the length of the historical record.

Joseph C. McNeil Generating Station in Burlington, Vermont (a biomass gasifier that operates on wood chips)
Joseph C. McNeil Generating Station in Burlington, Vermont (a biomass gasifier that operates on wood chips)
Photo by Warren Gretz, NREL 06382

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

The capacity factor represents the assumed annual energy production divided by the total possible annual energy production, assuming the plant operates at rated capacity for every hour of theyear. For biopower plants, the capacity factors are typically lower than their availability factors. Biopower plant availability factors have a wide range depending on system design, fuel type and availability, and maintenance schedules.

Biopower plants are typically baseload plants with steady capacity factors. For the ATB, the biopower capacity factor is taken as the average capacity factor for biomass plants for 2015, as reported by EIA.

Biopower capacity factors are influenced by technology and feedstock supply, expected downtime, and energy losses.

Current estimates and future projections calculated from EIA (2017) and modified.

Levelized Cost of Energy (LCOE) Projections

Levelized cost of energy (LCOE) is a simple metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.

The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for biomass across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs, not in the upfront capital costs (e.g. developer fees, contingencies). An individual technology may receive more favorable financing terms outside of the U.S., due to less technology and project risk, caused by more project development experience (e.g. offshore wind in Europe), or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, technology-specific tariffs, and changing interest rates over time. The R&D + Market LCOE case adds to these the financial assumptions (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform, tax credits, and tariffs. Data for all the resource categories can be found in the ATB data spreadsheet.

R&D Only | R&D + Market

R&D Only
R&D Only Financial Assumptions (constant background rates, no tax or tariff changes)
R&D + Market
R&D Only + Market Financial Assumptions (dynamic background rates, taxes, and tariffs)

The LCOE of biopower plants is directly impacted by the differences in CAPEX (installed capacity costs) as well as by heat rate differences. For a given year, the LCOE assumes that the fuel prices from that year continue throughout the lifetime of the plant.

Regional variations will ultimately impact biomass feedstock costs, but these are not included in the ATB.

The projections do not include any cost of carbon.

Fuel prices are based on the AEO 2017 (EIA 2017).

To estimate LCOE, assumptions about the cost of capital to finance electricity generation projects are required, and the LCOE calculations are sensitive to these financial assumptions. Three project finance structures are used within the ATB:

  • R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2016 values from AEO 2018 and excludes effects of tax reform, tax credits, and tariffs. A constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies.
  • R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO 2018, as well as effects of tax reform, tax credits, and tariffs. As in the R&D Only case, a constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies. For a detailed discussion of these assumptions, see Changes from 2017 ATB to 2018 ATB.
  • ReEDS Financial Assumptions: ReEDS uses the R&D Only + Market Financial Assumptions for the "Mid" technology cost scenario.

These parameters are allowed to vary by year. The equations and variables used to estimate LCOE are defined on the equations and variables page. For illustration of the impact of changing financial structures such as WACC, see Project Finance Impact on LCOE. For LCOE estimates for the Constant, Mid, and Low technology cost scenarios for all technologies, see 2018 ATB Cost and Performance Summary.

References

Annual Energy Outlook 2017 with Projections to 2050. Washington, D.C.: U.S. Department of Energy. January 5, 2017. http://www.eia.gov/outlooks/aeo/pdf/0383(2017).pdf.

DOE (U.S. Department of Energy). 2011. U.S. Billion-Ton Update: Biomass Supply for a Bioenergy and Bioproducts Industry. Perlack, R.D., and B.J. Stokes, eds. Oak Ridge, TN: Oak Ridge National Laboratory. ORNL/TM-2011/224. August 2011. https://www.osti.gov/scitech/biblio/1023318.

EIA (U.S. Energy Information Administration). 2014. Annual Energy Outlook 2014 with Projections to 2040. Washington, D.C.: U.S. Department of Energy. DOE/EIA-0383(2014). April 2014. http://www.eia.gov/forecasts/aeo/pdf/0383(2014).pdf.

EIA (U.S. Energy Information Administration). 2016a. Capital Cost Estimates for Utility Scale Electricity Generating Plants. Washington, D.C.: U.S. Department of Energy. November 2016. https://www.eia.gov/analysis/studies/powerplants/capitalcost/pdf/capcost_assumption.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.

Lopez, Anthony, Billy Roberts, Donna Heimiller, Nate Blair, and Gian Porro. 2012. U.S. Renewable Energy Technical Potentials: A GIS-Based Analysis. National Renewable Energy Laboratory. NREL/TP-6A20-51946. http://www.nrel.gov/docs/fy12osti/51946.pdf.