The changing costs of technology and the optimal investment timing in the power sector
Type: Briefing paper
Publication date: June 2017
This briefing paper looks at how the costs of technology change as we gain experience from using them. As a result, investing earlier in promising technologies will make long-term decarbonisation easier and more cost-effective.
- The value of a power technology depends on the system it is operating within and on the services it can provide such as capacity, flexibility, carbon mitigation, etc.
- The right policies can bring down the cost of individual technologies and contribute significantly to a reduction in the overall system cost.
- Existing metrics for assessing the value of power generation technology, such as the levelised cost of electricity (LCOE), are insufficient for the 21st-century power system.
- New metrics must take account of whole system integration and the dynamics of this system.
- Starting investment in promising technologies earlier will make long-term decarbonisation easier and more cost-effective.