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.
Additional highlights from LCOE 13.0:
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.
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).
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.
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.