At Environmental Defense Fund (EDF), we understand that market forces can drive either a healthy environment or harmful pollution. I recently wrote about how generating electricity often creates pollution, which comes with environmental and health costs that are usually not paid for by the polluters. That's why EDF works to identify and correct market failures, like the failure to understand as well as account for all of the costs pollution imposes on society.

The Energy Institute at the University of Texas at Austin (UT) just released a useful tool in that pursuit: a study that aims to capture the full cost of new electric power generation including environmental and public health costs on a county-by-county basis in the United States. The study evolves traditional ways of estimating new generation costs by 1) incorporating pollution costs, and 2) breaking data down to the county level.

The results show economics are leading the U.S. to a cleaner energy economy, in which there is no role for newcoal plants. Let's break it down.

Enhancing the levelized cost method

The Levelized Cost Of Electricity (LCOE) method is commonly used to compute the costs of different power sources including fossil fuels and renewables on a comparable basis. The LCOE, expressed on a dollar per kilowatt-hour (kWh) basis, is the estimated amount of money it takes for a particular electricity generation technology to produce a kWh of electricity over its expected lifetime.

In its conventional form, the LCOE method does not take into account environmental and public health costs costs external to electricity generation but caused by it. It also does not show the variation in costs of building and operating identical power plants across different geographies. The study provides an improved method that addresses these limitations. The study also factors in siting challenges like water availability and access to fuel that prevent certain plant types from being built in a given county.

The UT study presents results in a map format, which facilitates cost comparisons by fuel source, technology, and location. The study team release...