EIA in the U.S. sets geothermal construction cost at $2.9m/ MW

Source: Average construction cost for generators installed in 2013 (source: EIA)

Alexander Richter 9 Jun 2016

In a news piece released earlier this week, the U.S. Energy Information Administration has announced the publication of construction cost information for electric power generators in the U.S. The data provides a cost overview for construction cost for various electric generators, incl. natural gas, solar PV, wind, biomass, hydro, geothermal and petroleum liquids.

For geothermal the price was estimated at $2,851 per kW, which is about $2,851,000/ MW  ($2.85m/ MW). It is cheaper than solar PV, Biomass, but mor expensive than natural gas, wind, hydro and petroleum liquids.

Many factors influence the economic competitiveness of electricity generation technologies; however, two fundamental factors are the cost of constructing generators and the cost of operating them. The U.S. Energy Information Administration (EIA) recently began collecting construction costs for new electric generators at utility-scale power plants. The publication released today covers generators installed in 2013 and includes average costs by technology type or region. EIA expects to publish 2014 construction cost information in August 2016 and 2015 information in October 2016.

Industry reports and other EIA publications have included various estimates of electricity generation technology capital costs, but this is the first time EIA has collected and reported actual construction costs, which include capital and financing costs, for all new generators. Government grants, tax benefits, or other incentives are excluded from these costs. Because the data are business-sensitive and protected, the analysis presents averaged costs for select groupings and excludes certain generation technologies to avoid disclosure of individual company data. The reported costs reflect a snapshot of market prices for generation technologies at the time the projects were developed and built.

Construction costs alone do not tell the full story of the relative economics of each electricity generation technology. For fuel-consuming electricity generation technologies, fuel costs often make up a substantial portion of the plant’s total costs. For nonfuel-consuming technologies such as wind and solar plants, the initial construction cost constitutes most of the plant’s total costs. In addition, federal, state, and local programs may provide incentives to lower the cost of certain technologies. Finally, different types of plants often run at different utilization rates, which affects the relative economics of generation technologies. As costs, market conditions, and government policies have drastically changed over the years, so has the pattern of capacity additions.

Source: EIA (U.S.)