[chris_va]

> but for a utility which is making investment decisions in new generation capacity, it isn't so different.

You are probably familiar with all of this, but that's a tricky one since dispatchability puts those into different equivalence classes. California ISO has negative LMPs right now, which means building additional solar provides little marginal value to the utility. As a result, even if the "traditional" LCOE for solar (just using capital cost, O&M, and capacity factor) is lower than coal, coal would technically still have higher value to the utility.

You'd have to model real-time demand and fratricide to get a average marginal rate (almost impossible to predict for a 20-30 year horizon right now, given rate of innovation), and then compare that against the amortized capital cost and O&M to get an expected ROI for the plant. An LCOE comparison wouldn't really make sense from a decision making standpoint.

That wouldn't be true if they were both closely equivalent (say NGCC vs NGCT, or coal vs nuclear). Then a strict LCOE comparison would be useful.

[rabscuttler]

Fair point about California's negative LMPs, but I think for a lot of regions in the US there is still a lot of room for renewable growth.

But it is fair to compare LCOEs because solar usually gets its value through long-term PPAs; either utility to generator, or even through the rate-base, and the price of that is effectively set by the LCOE. Despite missing out a lot of the other factors that you reasonably bring up, from system costs to locational factors.