We think we understand electricity costs. We don’t.
Most of us believe the cost of electricity is a question already answered. We compare technologies, quote numbers per kWh, and rely on a couple of familiar metrics to tell us what is cheap and what is not. But, what if i tell you that those numbers only tell part of the story?
For decades, the conversation has been shaped by simplified measures like the levelized cost of electricity (LCOE). These figures seem easy to communicate and widely accepted, yet they focus narrowly on individual power plants while ignoring the system they operate in… and that matters allot!
Electricity is not a product
Electricity is often treated as a commodity or a product . A unit of energy sold at a price per kWh.
In reality this is not correct as electricity is a service provided on demand 24/7/365.
Therefore, it must be delivered reliably, at the right voltage, frequency, phase, and current every milli-second of every day. That requires a highly complex system made up of generation, reserve capacity, storage, transmission networks, and stability mechanisms.
Once you look at electricity this way, the question to be asked changes quite a bit.
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