Cost of electricity

"Why, sir, there is every probability that you will soon be able to tax it." — Michael Faraday on the practical value of electricity

We are living in a period of extraordinarily cheap energy—but exactly how much does energy cost?  Fortunately, Open Energy Information—OpenEI—collected data on the costs for different forms of electricity production.  The problem is that different technologies incur different costs.  A coal plant requires a turbine to be built and maintained, but also require fuel.  Solar panels simply need to be constructed, but then collect energy from the sun without additional fuel inputs.  To take these differences into, we'll use a metric called the levelized cost of electricity—LCOE.  The LCOE is the present value of all the costs involved in operating the electrical plant.

Using the OpenEI data and U.S. energy data, we can compare the relative costs of the energy produced in 2011, for example.

Source	LCOE (USD/MWh)	% Production	Cost (b USD)
Hydropower	20	8.0	18.5
Coal, unscrubbed	40	15.3	70.3
Coal, scrubbed	50	30.6	175.9
Natural gas	50	19.7	113.4
Geothermal	60	0.4	2.9
Nuclear	60	21.1	145.3
Wind	60	3.0	20.6
Solar, Photo-voltaic	200	0.4	12.3
Solar, thermal	280	0.02	0.5

What inferences can be drawn from this?  First, we are likely to use primarily coal  and natural gas power for a long time—they are among the cheapest on the list.  However, because they are so low, they are more likely to increase than to decrease.  This could be driven by increasing fuel prices, but this is likely decades away.  Solar power—particularly, photo-voltaic solar power—could still decrease substantially in cost per megawatt-hour.  It is much easier to go from 200 dollars per MWh to 100 dollars per MWh than it is to go from 20 dollars per MWh to 10 dollars per MWh.  The technology to make cheap solar energy available may soon be widely available.