Electricity Wars: Whose metric is it anyways?

How to compare different technologies?

My father spent most of his career as a financial manager in various governmental and private organisations and he always told me that after you did the entire financial analysis, the best metric before launching a tender remains common sense, that is to say, buy it only if you can afford it, and always make the purchase based on needs and not wants.

Below is a list of the most commonly used set of metrics that policy makers fall back on when they compare various generating technologies, it also includes a list of how the positives and negatives might influence each metric.

Determining which electricity generating technology benefits the most from each metric can depend on several factors including technology advancements, geographic location, and specific project details.

Whenever somebody is trying to score points by saying that electricity generating technology 1 is definitely more affordable than technology 2, please refer him to my list and tell him to pick a number, because the truth is that no two economist or experts in the energy sector agrees on it and that you will find deep dogmatic arguments in either direction.

1. Levelized Cost of Electricity (LCOE):

   • Formula: LCOE = Total Lifetime Costs / Total Lifetime Electricity Output

2. Full Cost of Electricity (FCOE):

   • Formula: FCOE = LCOE + External Costs + Societal Impacts

3. Energy Return on Investment (EROI):

   • Formula: EROI = Total Energy Output / Total Energy Input

4. Energy Payback Period (EPP):

   • Formula: EPP = Cumulative Energy Input / Annual Energy Output

5. Levelized Cost of Energy Services (LCOS):

   • Formula: LCOS = Total Costs / Total Energy Services Output

6. Energy Intensity:

   • Formula: Energy Intensity = Total Energy Consumption / Economic Output

7. Environmental Impact Quotient (EIQ):

   • Formula: EIQ = Σ (Weight_i × Impact_i)

8. Value Adjusted Levelized Cost of Electricity (VALCOE):

   • Formula: VALCOE = Total Present Value of Benefits / Total Present Value of Electricity Output

9. Relative Cost of Electricity (RCE):

   • Formula: RCE = Cost of Technology A / Cost of Technology B

10. Net Present Value (NPV):

    • Formula: NPV = Σ (Cash Inflow_t / (1+r)^t) - Initial Investment

11. Levelized Avoided Cost of Electricity (LACE):

    • Formula: LACE = Value of Electricity Avoided by the Technology / Total Lifetime Electricity Output

12. Capacity Factor:

    • Formula: Capacity Factor = (Average Power Output / Maximum Capacity) × 100%

13. Capacity Credit:

    • Formula: Capacity Credit = (Reduction in Required Capacity Due to Technology / Total Capacity Without Technology) × 100%

14. Social Cost of Carbon (SCC):

    • Formula: SCC = Total Present Value of Social Costs / Total Lifetime CO₂ Emissions

15. Energy Return on Energy Invested (EROEI):

    • Formula: EROEI = Total Energy Output / Energy Input from All Source

16. Energy Efficiency Ratio (EER):

    • Formula: EER = (Cooling Capacity in BTU/hr) / (Power Input in watts)

17. Energy Security Index (ESI):

    • Formula: ESI = (Energy Independence and Diversity) / Energy Supply Risk

18. Energy Security Index (ESI):

    • Formula: ESI = (Energy Independence and Diversity) / Energy Supply Risk

19. Total System Cost

    • Formula: TSC= Generation Costs+Transmission and Distribution Costs+End-Use Costs+Externalities and Environmental Costs+System Integration Costs

Below are some of the above metrics applied to each technology and how it might influence it.

Economics is a social science and it’s always worth mentioning what Richard Feynman’s really thought of them.