Electricity Cost Calculations Must Guard Against Bias
The forecasting method behind electricity cost calculations is in serious need of standardization, to ensure that prices are calculated accurately and lessons are learned quickly to help emerging industries like solar mature, writes market analyst Paula Mints.
Levelized cost of electricity (LCOE) models aren’t a common topic for coffee conversation. But they help governments, companies, and consultants assess the cost of different options for generating electricity. The different models vary, Mints says, and they’re “susceptible to the modellers’ experience and/or bias for the future direction of the energy technology being modelled.”
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Of course, the bias can play out for or against any generation option, and “LCOE models based on systems that have been in the field for a number of years are the most robust.” But “when the model is used to forecast the future, the bias of the modeller can and sometimes does insinuate itself into the results.”