An uncertainty factor of 5.0 was applied to the 1978-dollar costs of the SPS system. This value is equivalent to a factor of 4.6 applied to the year-2000 base construction cost and was estimated from various cost ranges recently documented in the SPS 1 iterature.^5,46 During 1976 and 1977, several independent study teams gave cost estimates that ranged from a low $1400 per kilowatt to a high of $6000 per kilowatt. A recent ECON report [47] points out the sensitivity of the probability distribution of a cost to a change only in the solar cell assumptions of the Rockwell International design.® By a change in assumptions, the spread of a total cost distribution for the first theoretical unit was increased from a high/low ratio of 2 to one of 4. In an article on SPS costs,Glaser discusses the SPS price tag and cost distributions. He states that the cost of producing the second 5-GW SPS may range from $8 to $35 billion, with a median cost of $14 billion. Little information is available from which a possible range of costs for the terrestrial photovoltaic system can be derived. A reasonable assumption, however, is that this cost range should lie somewhere between the range of the combined cycle or LMFBR and that of the SPS. Since most of the uncertainty results from technical unknowns related to solar cell technology, and in light of ECON's results^? concerning the possible impact of cell costs on SPS, a factor of 4.0 was assigned. A combined factor, used to derive the high, year-2000 bounds of capital costs, was thus taken to be the product of the high multiplicative factor and the uncertainty factor for the appropriate technology option. The resultant combined factor was then multiplied by the 1978 base costs to arrive at the upper bound estimate. An examination of the ratio of high to low year-2000 capital cost estimates resulting from these assumptions shows a reasonable consistency with the level of current knowledge and state of development apparent for each technology. This ratio varies from a value of 2.11 for conventional coal systems to come on line in the year 2000, to 4.58 for the SPS in the same period. Table 4.11 summarizes the year-2000 capital cost ranges used in the analysis. 4.2.3 Fuel Price Projections Background and Methodology. Projections of any type extending far into the future involve many uncertainties that are amplified when that forecast attempts to define energy supply, demand, and costs. Energy sector uncertainties arise in three principal areas: (1) Future energy policy decisions, reflecting actions and reactions between producers and consumers, are not predictable. (2) The ultimately recoverable reserves of energy resources cannot be precisely defined and, similarly, the rate of improvement in production or efficiency for developing technologies such as photovoltaic cells cannot be rigorously determined. (3) The price elasticity of energy substitution in the total economy is not fully known, and therefore assumptions must be made about the adaptability of GNP to varying components of gross energy supply.
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