Generation Technology Overview
Macro trends in the global power mix.
The Marginal Cost Revolution
Historically, the power grid was built around thermal power plants (coal, gas, nuclear) where the primary driver of the wholesale electricity price was the cost of the fuel burned to generate the marginal megawatt. Wind and solar have zero short-run marginal costs (they require no fuel). As they dominate the grid, they drive wholesale prices toward zero during hours of peak production.
Firm vs Variable
The energy transition requires balancing two distinct asset classes: Variable Renewable Energy (VRE) which provides cheap bulk energy, and Firm capacity (nuclear, geothermal, gas with CCS, long-duration storage) which ensures reliability during 'Dunkelflaute' events (periods of low wind and low sun).
| Asset Class | Cost Structure | System Role |
|---|---|---|
| Solar PV / Wind | High CapEx / Zero Fuel | Bulk Energy Provision |
| Combined Cycle Gas | Low CapEx / High Fuel | Firm Dispatchable Capacity |
| Nuclear | Extreme CapEx / Low Fuel | Clean Firm Baseload |
Interactive: LCOE Baseline
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