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Economic and dam related articles

Levelized Cost of Energy 2017

by Staff
Lazard Investment Newsletter, November 2, 2017

Graphic: Unsubsidized levelized cost of energy comparison as of 2017 Lazard’s latest annual Levelized Cost of Energy Analysis (LCOE 11.0) shows a continued decline in the cost of generating electricity from alternative energy technologies, especially utility-scale solar and wind.

Source: Lazard estimates.
Note: Here and throughout this presentation, unless otherwise indicated, analysis assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Reflects global, illustrative costs of capital, which may be significantly higher than OECD country costs of capital. See “Unsubsidized Levelized Cost of Energy—Cost of Capital Comparison” page for additional details on cost of capital. Analysis does not reflect potential impact of recent draft rule to regulate carbon emissions under Section 111(d). See Appendix for fuel costs for each technology.

Source: World Bank, IHS Waterborne LNG and Lazard estimates. (1) Low end assumes crystalline utility-scale solar with a fixed-tilt design. High end assumes rooftop C&I solar. Solar projects assume illustrative capacity factors of 26% – 30% for Australia, 26% – 30% for Brazil, 22% – 23% for India, 27% – 29% for South Africa, 16% – 18% for Japan and 13% – 16% for Northern Europe. Equity IRRs of 12% are assumed for Australia, Japan and Northern Europe and 18% for Brazil, India and South Africa; assumes cost of debt of 8% for Australia, Japan and Northern Europe, 14.5% for Brazil, 13% for India and 11.5% for South Africa.
(2) Assumes natural gas prices of $4.00 for Australia, $8.00 for Brazil, $7.00 for India, $7.00 for South Africa, $7.00 for Japan and $6.00 for Northern Europe (all in U.S.$ per MMBtu). Assumes a capacity factor of 10%.
(3) Diesel assumes high end capacity factor of 10% representing intermittent utilization and low end capacity factor of 95% representing baseload utilization, O&M cost of $30 per kW/year, heat rate of 9,500 – 10,000 Btu/kWh and total capital costs of $500 to $800 per kW of capacity. Assumes diesel prices of $3.60 for Australia, $2.90 for Brazil, $3.00 for India, $3.20 for South Africa, $3.50 for Japan and $4.80 for Northern Europe (all in U.S.$ per gallon).


Staff
Levelized Cost of Energy 2017
Lazard Investment Newsletter, November 2, 2017

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