Levelized Cost of Energy
The cost of owning and operating a gas-fired steam generator includes the initial capital expense, ongoing operations and maintenance and, of course, fuel purchase. Over the lifetime of the generator, fuel costs account for more than 90% of the cost of ownership on an NPV basis.
A solar steam generator has zero fuel costs, similar O&M costs but higher initial capital costs. This raises a practical problem of how to compare the cost of the steam produced by the two systems.
Fortunately, the US Department of Energy's National Renewable Engineering Laboratory (NREL) has published a standard methodology that computes the Levelized Cost of Energy (LCOE) to facilitate such comparisons. In summary, the method is to calculate the NPV of the total cost of ownership of the unit and divide by the NPV of the energy produced:
In most locations where heavy oil is produced, a GlassPoint steam generator delivers a Levelized Cost of Energy of around $3.00 per MMBtu. Because the cost is primarily composed of capital purchase, the cost of energy is fixed for the lifetime of the system. This contrasts with the cost of natural gas which varies with time and regulatory changes.
