Low-carbon electricity technologies are often evaluated by their Levelized Cost of Energy (LCOE). However, LCOE cannot model the impact of one electricity source on the value of others. In previous work, System LCOE was proposed to estimate the costs of integrating an intermittent source into a grid consisting of multiple dispatchable electricity sources.
Using a new DOSCOE (Dispatch-optimized system cost of electricity) model, we generalize System LCOE. DOSCOE can handle any mixture of dispatchable and non-dispatchable sources. It can analyze systems which contain storage, have legacy infrastructure, or have imposed policies. DOSCOE thus updates System LCOE to be applicable to more realistic electricity grid models. DOSCOE uses a linear program to find the capacity and generation mix which yields minimum LCOE. Running this linear program multiple times yields System LCOE curves.
DOSCOE shows that to cost-effectively remove the last 10-20% of fossil fuels requires a moderate price on carbon and either low-cost nuclear power or carbon capture and sequestration. Alternatively, a hypothetical zero-carbon source needs to have a net present cost less than $2200/kW to displace existing fossil-fuel plants.