4.2.6 Comparative Cost Uncertainty Previous sections of this report have compared the costs of the SPS and alternative technologies through an analysis of possible capital and fuel cost ranges. These ranges of capital and fuel cost uncertainty have resulted in substantial overlap in total generating costs for all of the energy technologies. The degree of overlap in these cost comparisons is large because the comparisons were made from independent data bases and have not taken into account the correlation between state-of-the-world variables (e.g., the cost of labor) and these independent estimates. In addition, the cost estimates for capital and fuel cost were developed deterministically, by including upper and lower bounds as a means of dealing with uncertainty. In this section of the report, the question of uncertainty in technology cost comparisons is discussed in a probabilistic framework. This approach to cost comparison is primarily a method using historical data, and information used in other sections of the report was prepared to indicate the results of such an approach to uncertainty. The methodology was applied to a comparison between coal and the SPS but is equally relevant to comparisons between any technologies. To illustrate the focus of the probabilistic cost comparison between coal and nuclear, consider the relationship between the cost of energy from coal technology vs. that of the SPS. Figure 4.20 illustrates the relationships for a fixed set of cost parameters and input assumptions. The typical levelized cost of electricity from coal is generally shown to increase in real terms because of increased coal costs. On the other hand, the cost of electricity from the SPS would not be expected to increase so rapidly, because it does not stem from a depleting resource base. Conceptually, the levelized cost of these two technologies should intersect somewhere in the future. There is no way of telling in what year the intersection will occur. Much Fig. 4.20 Comparison of Coal and SPS Energy Costs with Fixed Parameters and Inputs
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