Research on the Value-adjusted Levelized Cost of Electricity and Its Application

With the large-scale integration of renewable energy into the power grid, its intermittent and fluctuating nature presents challenges to the safe and stable operation of the power system, and the resulting cost changes become the key to affecting the economics of renewable energy. The value-adjusted levelized cost of electricity (VALCOE) adds energy, capacity and flexibility to the evaluation of the life-cycle cost of power generation technologies, providing a powerful tool for comprehensively evaluating the impact of various power generation technologies on the economics of power systems. At present, there is no mature method for defining the base capacity value and flexibility value multiplier involved in applying VALCOE to the economic evaluation of renewable energy in China. Therefore, this paper determines the base capacity value by calculating the annual capital repayment amount of the existing lowest-cost peaking power plant according to the actual situation in China and provides an appropriate flexibility value multiplier that fully considers the adjustability of domestic generator sets. VALCOE assessment reveals that the economy of coal-fired thermal power units in major areas of China in 2040 is still far superior to that of newly built renewable energy units. In the process of carbon neutralization, countries should consider their own national conditions and different state-owned resources, measure the safety and economy of large-scale replacement of traditional energy sources, and gradually integrate renewable energy into the power grid.