Question

To ask the Secretary of State for Energy and Climate Change, what estimate his Department has made of the Cost of New Entry, represented as £/MHh for (a) 800MW OCGT, (b) 800MW CCGT, (c) gas plant sub-20MW and (d) oil plant sub-20MW.

DECC’s publishes estimates for the levelised costs of electricity generation for different technologies. The most recent £/MWh estimates are available in the DECC Electricity Generation Costs (December 2013) report, available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/269888/131217_Electricity_Generation_costs_report_December_2013_Final.pdf

Table 1 below is taken from this report, and shows the central levelised cost estimate for representative CCGT and OCGT plants commissioning in 2016. Estimates are not published for sub 20-MW gas plants or oil plants.

Table 1: Levelised cost estimates for CCGT and OCGT technologies, technology specific hurdle rates

* CCGT: Combined Cycle Gas Turbine, OCGT: Open Cycle Gas Turbine

It should be noted that updated cost input assumptions for the range of CCGT and OCGT costs are provided in a Coal and Gas Assumptions report by Parsons Brinkerhoff commissioned by DECC (March 2014). This is available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315717/coal_and_gas_assumptions.PDF

The levelised cost of a particular generation technology is the ratio of the total costs of a generic plant to the total amount of electricity expected to be generated over the plant’s lifetime (per megawatt hour). Levelised cost estimates are highly sensitive to the assumptions used for capital costs, fuel and EU ETS allowance prices, operating costs, load factor, discount rate and other drivers and this means that there is significant uncertainty around these estimates.