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Levelized Cost of Energy and Levelized Cost of Storage 2019

Nov 7 2019

LCOE2019 HERO BANNER

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Lazard’s latest annual Levelized Cost of Energy Analysis (LCOE 13.0) shows that as the cost of renewable energy continues to decline, certain technologies (e.g., onshore wind and utility-scale solar), which became cost-competitive with conventional generation several years ago on a new-build basis, continue to maintain competitiveness with the marginal cost of existing conventional generation technologies.

LCOE 2019 Subsidized Analysis

Additional highlights from LCOE 13.0:

LCOE 2019 Declines

While the reductions in costs continue, their rate of decline has slowed, especially for onshore wind.  Costs for utility-scale solar have been falling more rapidly (about 13 percent per year) compared to onshore wind (about 7 percent per year) over the past five years.

LCOE 2019 Comparison

When US government subsidies are included, the cost of building new onshore wind and utility-scale solar (with values averaging $28/MWh and $36/MWh, respectively) is competitive with the marginal cost of coal and nuclear generation (with values averaging $34/MWh and $29/MWh, respectively).

LCOE 2019

Regional differences in resource availability and fuel costs can drive meaningful variance in the LCOE of certain technologies, although some of this variance can be mitigated by adjustments to a project’s capital structure, reflecting the availability, and cost, of debt and equity.

Lazard’s latest annual Levelized Cost of Storage Analysis (LCOS 5.0) shows that storage costs, particularly for lithium-ion technology, have continued to decline faster than for alternate storage technologies.

LCOS 2019 Comparison

Additional highlights from LCOS 5.0:

Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analyzed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain.

Solar PV + storage systems are economically attractive for short-duration wholesale and commercial use cases, though they remain challenged for residential and longer-duration wholesale use cases.

 

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