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American Economic Review: Vol. 101 No. 3 (May 2011)

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Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies

Article Citation

Joskow, Paul L. 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies." American Economic Review, 101(3): 238-41.

DOI: 10.1257/aer.101.3.238

Abstract

Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected "levelized cost" per MWh supplied. I demonstrate that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear, gas combined cycle, and coal. It overvalues intermittent generating technologies compared to dispatchable base load generating technologies. It also likely overvalues wind generating technologies compared to solar generating technologies. Integrating differences in production profiles, the associated variations in wholesale market prices of electricity, and life-cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them.

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Authors

Joskow, Paul L. (Alfred P. Sloan Foundation, New York, NY)

JEL Classifications

D24: Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
L94: Electric Utilities
Q41: Energy: Demand and Supply
Q42: Alternative Energy Sources


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