Question

To ask the Secretary of State for Energy and Climate Change, when calculating grants and tax incentives whether her Department assesses the levelised cost of hydro plant over the expected actual lifespan or the shorter lifespan allowed in the levelised cost calculation when allocating grants and tax incentives.

In comparing the costs of different electricity technologies in the future, DECC typically use the levelised costs of electricity generation. Levelised costs include capital and operating costs over the lifetime of a plant, as well as DECC estimates of projected fuel and carbon costs.

The most recent levelised cost estimates are available in the DECC Electricity Generation Costs report, available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/269888/131217_Electricity_Generation_costs_report_December_2013_Final.pdf

For hydro plants, DECC assumes a plant lifetime of 41 years for levelised cost purposes. This is taken from the below Arup report (section 6.8.4):

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66176/Renewables_Obligation_consultation_-_review_of_generation_costs_and_deployment_potential.pdf.