Hence, we further analyze the levelized costs of electricity generation technologies, developing a framework to capture some of those external costs. The framework accounts for the environmental damage costs of fossil fuels, particularly climate change damage costs. Damage costs of local air pollution are not included due to a lack of data. Since obtaining actual values of damage costs of emissions from different fossil fuel technologies is highly complex, we employed a sensitivity analysis by considering various values of damage costs ranging from US$0/tCO2 to US$100/tCO2.
Fig. 7 plots the levelized costs of various technologies against the climate change damage costs. The figure demonstrates that the minimum values of levelized costs of solar energy technologieswould be higher than the maximum values of the levelized costs of fossil fuel technologies even if the climate change damage costs of 100/tCO2 are imputed to fossil fuel technologies. In other word, even if we assign a climate change damage cost of US$100/tCO2 to fossil fuel technologies, solar energy technologies would still presently be economically unattractive as compared to fossil fuel technologies.