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At What Cost? A comparative evaluation of the social costs of selected electricity generation alternatives in Ontario

by Icyk, Bryan

Abstract (Summary)
This thesis examines the private and external costs of electricity generated in Ontario by natural gas, wind, refurbished nuclear and new nuclear power. The purpose of the assessment is to determine a capacity expansion plan that meets the forecasted electricity supply gap in Ontario at the lowest social costs (i. e. the lowest aggregated private and external costs). A levelized unit electricity cost (LUEC) analysis is employed to evaluate private costs under both public and merchant perspectives. Computable external costs are monetized by adapting estimates from the literature that were previously developed using a primarily bottom-up damage cost method.

The findings reveal that social cost estimates for nuclear refurbishment are the lowest of the generation alternatives studied regardless of the evaluation perspective. Therefore, if the capacity expansion decision were based solely on these estimates, nuclear refurbishment should be utilized until its capacity constraints are reached. The generation alternative with the second lowest social costs depends on the perspective from which private costs are evaluated: from a public perspective, the remainder of the supply gap should be filled by new nuclear generation and from a merchant perspective, which is assumed to be more reflective of the current Ontario electricity market, natural gas-fired generation should be used.

Due to inherent uncertainty and limitations associated with the estimation of social costs, the estimates obtained in this thesis are considered to be context and data specific. A sensitivity analysis, which is employed to attempt to mitigate some of the uncertainty, shows that changes to key variables alter the capacity expansion plan. This reinforces the observation that methods and assumptions significantly affect social cost estimates.

Despite the limitations of this kind of evaluation, it is argued that a social cost assessment that is consistent, transparent and comprehensive can be a useful tool to assess the trade-offs of electricity generation alternatives if used along with existing evaluation criteria. Such an assessment can increase the likelihood that actual social costs are minimized, which can steer electricity generation in Ontario towards a system that is more efficient and sustainable.

Bibliographical Information:

Advisor:

School:University of Waterloo

School Location:Canada - Ontario

Source Type:Master's Thesis

Keywords:environmental studies social costs externalities levelized unit electricity cost luec analysis generation sustainable development

ISBN:

Date of Publication:01/01/2006

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