This paper presents average values of levelized costs and levelized avoided costs for generating technologies entering service in 2019, 2022, and 2040 as represented in the National Energy Modeling System (NEMS) for the Annual Energy Outlook 2017 (AEO2017) Reference case.
The average net differences shown in the table above are for plants coming online in 2022. The weighted average net difference is above zero for geothermal, suggesting that the technology is being built in regions where it is economically viable. Indeed, it has the greatest average net difference suggesting it is the most economically viable energy technology.
As the best, least-cost resources are exploited, development will be forced into less favorable areas, potentially resulting in higher development costs, higher costs to access transmission, or access to lower-performing resources. Changes in the value of generation are a function of load growth.
However, renewables such as wind and solar that may show strong daily or seasonal generation patterns may see significant reductions in the value of their generation as these specific generation periods become more saturated with generation and new generation must compete with lower-cost options on the dispatch merit order.
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