The demand for electricity is increasing each year and the electricity network continues to expand. In addition to the increase in the market, the prices of energy is affected by many other direct and indirect factors. When we talk about the priceÂ of energy, we are talking about the price of 1 kWh of electricity produced
The demand for electricity is increasing each year and the electricity network continues to expand. In addition to the increase in the market, the prices of energy is affected by many other direct and indirect factors.
When we talk about the priceÂ of energy, we are talking about the price of 1 kWh of electricity produced byÂ some plants, including plant construction costs and the costs of maintenanceÂ and operation of power plants. The competitive price of energy is made up ofÂ many components, and can be divided into direct and indirect costs.
Under the direct costs weÂ consider capital costs, the so-called CAPEX and operational costs the so-calledÂ OPEX. Capital costs related to plant construction including payment of interestÂ rates, while operating expenses are maintenance, storage of waste (ifÂ applicable), fuel costs, costs of issuing the necessary permits, etc.
Indirect costs are many, andÂ usually are divided into social costs (a result of occupational injuries orÂ health problems due to emissions) and environmental costs. Precisely because ofÂ their unpredictable and difficulty to calculate, but experience shows thatÂ exceed the direct costs, sometimes even several times over.
We conclude that energyÂ prices are not a fixed value for a particular energy source, but it depends onÂ many factors including local political and legal conditions, macroeconomicÂ factors, the available options of financing, and market structure and the powerÂ grid.
Price comparison of costsÂ for different conditions and different sources of energy generates adequateÂ basis for determining long-term energy decisions. However, because of the largeÂ number of factors that influence the price, any estimation should be viewedÂ with caution, and when comparing different sources need to consider the same
In the lower graph, the dataÂ collected by the OECD and BRICS countries, shows the cost of electricity fromÂ different energy sources in 2009. These are only direct costs.
Graph of direct and indirectÂ costs of producing electricity from fossil fuels, wind energy and nuclear energyÂ shows large differences in the three most commonly used sources, but we canÂ conclude that the indirect costs play a key role for fossil fuels, and canÂ greatly determine the price of energy from nuclear sources.
The differences reflect theÂ direct costs of different technologies to be applied, or the cost ofÂ construction required for the exploitation of resources. The biggest differenceÂ in the price of energy is found in sources that further use of fossil fuels,Â increasing fuel prices of 50% can increase the production cost of electricityÂ for more than a third. Because of this, sources such as wind or solar energy,Â which does not use fossil fuels, are becoming increasingly attractive andÂ widely used. The same thing applies when it comes to taxes on emissions, withÂ respect to these two sources are not created.
The next graph shows theÂ chronological oil prices since 1974 to date. As you can easily see that the oilÂ prices do not fall, but are almost constantly growing, we can conclude that theÂ sources used by the oil are difficult to expect a reduction of costs of energyÂ production.
Reducing the cost ofÂ electricity production can be achieved by the development of technology andÂ development of materials, but represent an important factor in policy andÂ legislation, and incentives that are set aside for specific energy sources.
Renewable energy, especiallyÂ wind energy and solar energy have an increasing role in electricity production,Â and the need for them is growing. Their big advantage, when we talk about theÂ costs of energy production, is the fact that their work does not use fossil fuels,Â do not use water, and do not generate greenhouse gases.
A webinar held on 24Â October, organized by Elsevier and Renewable Energy Focus’s, Steve Sawyer,Â Secretary General of GWEC, and Martin Bilhardt CEO of PNE covered exactly thisÂ topic. Emphasis of the webinar was exactly how the development of technology,Â greater efficiency in production and improved materials can significantlyÂ reduce the production cost and increase the market, greater competition andÂ better legislation can further assist in the implementation of renewable energyÂ sources, but also long-term reduction and stabilization of energy prices inÂ general. They emphasized the importance of focusing on national or regionalÂ markets and legislation.
When we talk about marketÂ developments, it is important to note a major shift in South America,Â particularly Brazil, where as many as 9 leading wind farms opened. Progress inÂ Asia, particularly Japan, which after the tragedy in Fukushima developed theÂ exploitation of offshore wind energy. Acceptance of wind energy and solarÂ energy as an increasingly common source of electrical energy, and theÂ transformation of the power system can be seen in Denmark, Spain, Norway, andÂ even China, and this could further affect positive change in the market thatÂ would increase competition and reduce costs in general electricity production,Â concluded Sawyer.