Energy Review: Financial Models
Why have we undertaken the modelling?
The purpose of this modelling is to provide estimates of the relative cost of the generation technologies under different scenarios and assumptions to inform policy analysis.
What technologies have been modelled?
- Gas plant:
- Combined Cycle Gas Turbine (CCGT). The analysis is based on H Frame technology which is now considered “state-of-the-art” in the UK context and is commercially available and deployed at Baglan Bay power station in Wales.
- CCGT with Carbon Capture and Storage (CCS). CCS is an emerging technology and CCGT with CCS has not yet been deployed on a large scale. The key developmental elements of CCS relate to the CO2 separation technologies (i.e. pre-combustion, post-combustion and oxyfuel) and the storage location and formation for storage (e.g. for enhanced oil or gas recovery, depleted gas fields and saline aquifers).
- Coal plant:
- Pulverised Fuel (Advanced Super Critical) with Flue Gas Desulphurisation (PF (ASC) with FGD). This is considered the base case coal technology which is being deployed around the world.
- PF (ASC) with FGD and CCS.
- Integrated Gasification Combined Cycle (IGCC). This technology is currently being commercialised.
IGCC with CCS.
- Retrofit coal plant based on PF (ASC) with FGD with CCS.
- The analysis focuses on the Light Water Reactor (LWR) design types, including Pressurised Water Reactors and Boiling Water Reactors which are based on evolutionary third generation nuclear technologies used worldwide.
- Onshore wind. Modelling here is based on an 80MW wind farm.
- Offshore wind. Modelling here is based on a 100MW wind farm.
What is the basis for the modelling?
The modelling is based on levelised costs and is not intended to predict specific private sector investment decisions or to ‘rank’ different technologies.
The analysis is based on a range of assumptions and data. For each technology, assumptions have been compiled on the basis of recent studies. All of the assumptions and the resulting levelised costs are based on “first of a kind” costs (i.e. the costs incurred from building a standalone plant, ignoring cost reductions that may be achievable through economies of scale or technology learning).
We have also modelled sensitivities on the key assumptions and data (up to 30 sensitivities, including ranges in the discount rate, capital cost, operations and maintenance costs, fuel prices, carbon prices, load factors, interest rate margin for construction finance).
What are the models?
The financial models have been produced using Excel and are shown below as a series of workbooks:
- URN 06/1723
- URN 06/1724
- URN 06/1725
- URN 06/1726
- URN 06/1727
- URN 06/1728
- URN 06/1729
- URN 06/1730
- URN 06/1731
- URN 06/1732