Stochastic models applied to the simulation of levelized costs of baseload power generation plants accounting for environmental externalities

Abstract

This paper uses Monte Carlo simulation, a stochastic method, to calculate the levelized costs of three electric power generation technologies: coal thermoelectric, combined cycle, and nuclear power plants. We found that hat the expected Generated Levelized Total Cost (cost of MegaWatt generated by hour), accounting for environmental externalities (CO2 emissions), is higher in coal thermoelectric plants ($80.40 dollars/MWh), followed by the combined cycle ($66.54 dollars/MWh) while nuclear power plants have the lowest cost ($ 62.0 dollars/MWh). The probability that the Total Levelized Cost of Generation with Externalities (CTNGE in Spanish) is in the range of $ 60 to $ 80 dollars/MWh is 44.2% for the coal-fired power plant, 99.1% for the combined cycle, and 60.6% for the nuclear power plant. Current results suggest that, as stochastic models incorporate historical and future information of the main input variables, constitute a tool that provides greater robustness than deterministic models.