Here Is Why Levelized Cost Of Energy Calculations Are Meaningless
October 5, 2012 § 1 Comment
About 6 months ago I bumped into this Republican state legislator from Florida. In the interest of disclosure I have voted for this guy every time his name has been on the ballot.
I asked him why Florida, otherwise known as The Sunshine State, seemed to lag other states when it comes to the deployment of solar energy.
He responded by telling me that when you do a Levelized Cost of Energy Calculation solar doesn’t make much economic sense when compared to natural gas, nuclear or coal.
However, is a Levelized Cost of Energy Calculation the most accurate way to measure things?
Since it doesn’t take into account externalities such as air pollution from coal plants or heaven forbid the fallout from a potential nuclear power plant meltdown, is it really a true full cost accounting measure that enables policy makers to conduct a fair apples to apples comparison?
The reason I bring this up has to do with what a top American government nuclear expert by the name of William Magwood told the U.S. Senate Committee on Environment and Public Works last month about the ongoing cleanup efforts at the Fukushima nuclear power plant in Japan:
It is very difficult to overstate how difficult the work is going to be at that site. There will need to be new technologies and new methodologies created to be able to enable them to clean the site up and some of these technologies don’t exist yet, so there’s a long way to go with that…. There’s a long, long way to go.
If I’m understanding this correctly what he is essentially saying is that before they can clean up the mess they are first going to have to invent and create the technology that will enable them to do so.
Talk about a FUBAR situation. These guys in Japan make those BP guys who wanted to plug up that oil spill in the Gulf a few years ago with a bunch of old tires and golf balls look like a bunch of forward thinking geniuses by comparison.
So for you all of you legislators out there you might want to consider using something other than the misleading, off-balance sheet, Enronesque Levelized Cost of Energy Calculation during your policy debates.