Power plant energy storage cost accounting

When is a power plant profitable?

A power plant is profitable if the market value of its generation exceeds its costs of producing that electricity. An existing plant will generate whenever prices exceed variable costs, and it will have operating profits if prices exceed all operating costs (fuel and variable O&M costs, as well as fixed O&M costs).

What are the capital costs of a power plant?

Capital costs are the costs of power plant development and construction. They are incurred before the plant produces electricity and consist of equipment (including emissions reduction equipment), installation and construction labor, permitting and interconnection costs, and contractor overhead.

Will energy storage save the energy industry?

It’s generation . . . it’s transmission . . . it’s energy storage! The renewable energy industry continues to view energy storage as the superhero that will save it from its greatest problem—intermittent energy production and the resulting grid reliability issues that such intermittent generation engenders.

How much does a power plant cost?

From the data available, for an 8-11 hour duration range, the total plant cost was estimated to be between $2,300 and $2,637/kW following the relationship established.

Which variable costs are relevant to a power plant?

For existing facilities, only the variable costs—fuel and variable O&M costs—are relevant to which power plants will produce at a given time.

How do energy storage contracts work?

For standalone energy storage contracts, these are typically structured with a fixed monthly capacity payment plus some variable cost per megawatt hour (MWh) of throughput. For a combined renewables-plus-storage project, it may be structured with an energy-only price in lieu of a fixed monthly capacity payment.