Full cost of electricity 'FCOE' and energy returns 'eROI'
Abstract
Selected Abbreviations CCUS-Carbon capture utilization and storage eROI-Energy return in energy invested VRE-Variable renewable energy, such as wind and solar HELE-High efficiency, low emission IEA-International Energy Agency in Paris FCOE-Full cost of electricity LCOE-Levelized cost of electricity PES-Primary energy supply or PE for primary energy PV-Photovoltaic USC-Ultra-super-critical VRE-Variable renewable energy ~-Approximately Abstract Understanding electricity generation's true cost is paramount to choosing and prioritizing our future energy systems. This paper introduces the full cost of electricity (FCOE) and discusses energy returns (eROI). The authors conclude with suggestions for energy policy considering the new challenges that come with global efforts to "decarbonize". In 2021, debate started to occur regarding energy security (or rather electricity security) which was driven by an increase in electricity demand, shortage of energy raw material supply, insufficient electricity generation from wind and solar, and geopolitical challenges, which in turn resulted in high prices and volatility in major economies. This was witnessed around the world, for instance in China, India, the US, and of course Europe. Reliable electricity supply is crucial for social and economic stability and growth which in turn leads to eradication of poverty. We explain and quantify the gap between installed energy capacity and actual electricity generation when it comes to variable renewable energy. The main challenge for wind and solar are its intermittency and low energy density, and as a result practically every wind mill or solar panel requires either a backup or storage which adds to system costs. LCOE is inadequate to compare intermittent forms of energy generation with dispatchable ones and when making decisions at a country or society level. We introduce and describe the methodology for determining the full cost of electricity (FCOE) or the full cost to society. FCOE explains why wind and solar are not cheaper than conventional fuels and in fact become more expensive the higher their penetration in the energy system. The IEA confirms "…the system value of variable renewables such as wind and solar decreases as their share in the power supply increases". This is illustrated by the high cost of the "green" energy transition. We conclude with suggestions for a revised energy policy. Energy policy and investors should not favor wind, solar, biomass, geothermal, hydro, nuclear, gas, or coal but should support all energy systems in a manner which avoids energy shortage and energy poverty. All energy always requires taking resources from our planet and processing them, thus negatively impacting the environment. It must be humanity's goal to minimize these negative impacts in a meaningful way through investments-not divestments-by increasing, not decreasing, energy and material efficiencies. Therefore, the authors suggest energy policy makers to refocus on the three objectives, energy security, energy affordability, and environmental protection. This translates into two pathways for the future of energy: (1) invest in education and base research to pave the path towards a New Energy Revolution where energy systems can sustainably wean off fossil fuels. (2) In parallel, energy policy must support investment in conventional energy systems to improve their efficiencies and reduce the environmental burden of generating the energy required for our lives. Additional research is required to better understand eROI, true cost of energy, material input, and effects of current energy transition pathways on global energy security. A c c e p t e d M a n u s c r i p t Full cost of electricity 'FCOE' and energy returns 'eROI' 2
... For example, the price of electricity for an average household in Germany (with an annual consumption of 2.5 MWh to 5 MWh) was 0.202 EUR/kWh in 2007, and 0.412 EUR/kWh in 2023 [4], with the share of renewable energy having risen steadily over the years. According to [5], the share of RES in Germany was 20 % in 2007 and 55 % in 2021. In the study on Switzerland's transition to renewable energy sources [6], it is shown that if energy production with photovoltaics (PV) systems exceeds 60 %, the need for surplus energy storage, interstate energy exchange and a simultaneous increase in the capacity of the transmission grid increases many times over. ...
This study analyzes the possibilities of phasing out fossil and nuclear energy sources for Slovenia by 2050. Alternative carbon-free sources include renewable energy sources (RES) i.e. electricity, synthetic fuels and hydrogen from water electrolysis. The model is based on the use of currently mature low-carbon technologies and is adapted to Slovenia’s natural conditions. Photovoltaic panels (PV) and hydropower plants are used for the majority of renewable electricity generation. To bridge the winter period with minimal PV production, storage with a pumped storage power plant is planned. One of the assumptions of the national climate strategy has been incorporated into the model, which envisages zero growth in final energy consumption by 2050. The result of the paper is an assessment of what some of the basic characteristics of the Slovenian energy system would look like after the phase-out of fossil and nuclear energy sources. The estimated storage capacity required is 5.1 MWh/capita. Abandoning fossil fuels with the currently mature RES technologies is not realistically feasible for technical and economic reasons.
... Additional research is required to better understand eROI, true cost of energy, material input, and effects of current energy transition pathways on global energy security. (Schernikau, Smith, and Falcon, 2022) Guo, Li, Liu, Shi, and Yu dealt with the subject of "Power shortage and firm performance: ...
As countries develop, the role of electricity is expanding; hence estimating the economic costs of electricity shortage provide capable implications for dispatchers, decision-makers, and governments. This paper aims to apply Chen and Vella's method for estimating the marginal cost of electrical energy shortages using input-output analysis. The Input-Output framework is applied to consider the average economic result of short-term electricity shortages in Iran's sectors. The results show that the marginal cost of the unsupplied electricity was between IRR 7.5 and IRR 3702 per kWh. It also depends entirely on the percentage of the shortage of each non-electricity sector, the level of their final demand, and the electricity industry's dependence. In this case, the first three targets to reduce electricity supply are, "Electricity final demand," "Mining of coal and lignite," and "Veterinary activities," respectively, by 7.43 IRR/kWh, 12.97 IRR/kWh, and 16.33 IRR/kWh.
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