Negative LCOE for processes with high FLO_SUB

[Sasha]

Dear all, Antti, 

While investigating levelized costs (the option RPT_OPT(‘NCAP’,’1’) = –1 enabled) we encountered negative values for the solar power plants in periods, when the highest values of feed-in-tariff using FLO_SUB were declared. The respective Cost_Flox values for all renewables with declared feed-in-tariffs are also negative, but SPP are only ones for which cost_flox exceeded all other components in the LCOE formula numerator. As I understand, cost_flox and cost_flo both comprise the FC component - "fuel-specific operating expenditure".

Hence is my question: How to interpret these negative values, if they are correct, and if false, how to correct the situation? Is it right to declare the feed-in-tariff with FLO_SUB at all?

Thank you in advance

[Antti-L]

I am not sure I understand the problem.  Indeed, and FLO_COST/SUB/TAX/DELIV defined for the primary output flow is also taken into account in the levelized cost calculation, in the FC(i,t)+FD(i,t) terms, if such is specified, to get the full costs of the process (excluding by-products when using the −1 option).

I just tested with the option RPT_OPT('NCAP','1') = -1.  I obtained the levelized costs VAR_NcapR('LEVCOST') reported exactly as I also calculated myself in Excel. Then I added a subsidy, exceeding that cost.  I then got a VAR_NcapR('LEVCOST') reported as the corresponding difference, i.e. a negative value, as expected.  Surely that is also correct, would you not agree?

You said yourself that that your "cost_flox exceeded all other components in the LCOE formula numerator".  Doesn't that imply that the LCOE should then go negative? Just like in my test described above?  The value gives the price at which the producer will be in a break-even point. But, you could of course also calculate the LCOE values yourself in Excel.

In addition, should there be a common agreement that something should be changed in the TIMES LCOE reporting, then certainly it will be changed accordingly (provided a new design is made available).

Concerning feed-in tariffs, they indeed work differently from subsidies.  If by chance any Forum user happens to know a good way of modeling FITs, please share.

[Sasha]

I am not sure I understand the problem.  Indeed, and FLO_COST/SUB/TAX/DELIV defined for the primary output flow is also taken into account in the levelized cost calculation, in the FC(i,t)+FD(i,t) terms, if such is specified, to get the full costs of the process (excluding by-products when using the −1 option).

I just tested with the option RPT_OPT('NCAP','1') = -1.  I obtained the levelized costs VAR_NcapR('LEVCOST') reported exactly as I also calculated myself in Excel. Then I added a subsidy, exceeding that cost.  I then got a VAR_NcapR('LEVCOST') reported as the corresponding difference, i.e. a negative value, as expected.  Surely that is also correct, would you not agree?

You said yourself that that your "cost_flox exceeded all other components in the LCOE formula numerator".  Doesn't that imply that the LCOE should then go negative? Just like in my test described above?  The value gives the price at which the producer will be in a break-even point.  But, you could of course also calculate the LCOE values yourself in Excel.

In addition, should there be a common agreement that something should be changed in the TIMES LCOE reporting, then certainly it will be changed accordingly (provided a new design is made available).

Concerning feed-in tariffs, they indeed work differently from subsidies.  If by chance any Forum user happens to know a good way of modeling FITs, please share.

Thank you for your prompt response!