Cost of electricity by source

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From Wikipedia, the free encyclopedia
For the price of electricity, see electricity pricing.
Different methods of electricity generation can incur a variety of different costs, which
can be divided into three general categories: 1) wholesale costs, or all costs paid by
utilities associated with acquiring and distributing electricity to consumers, 2) retail
costs paid by consumers, and 3) external costs, or externalities, imposed on society.

Wholesale costs include initial capital, operations & maintenance (O&M),

transmission, and costs of decommissioning. Depending on the local regulatory
environment, some or all wholesale costs may be passed through to consumers.
These are costs per unit of energy, typically represented as dollars/megawatt hour
(wholesale). The calculations also assist governments in making decisions
regarding energy policy.

On average the levelized cost of electricity from utility scale solar power and onshore
wind power is less than from coal and gas-fired power stations,[1]: TS-25 but this varies a
lot depending on location.[2]: 6–65

Cost metrics[edit]
Costs

Levelized cost: With increasingly widespread implementation of renewable energy sources,

costs have declined, most notably for energy generated by solar panels.[3][4]
Levelized cost of energy (LCOE) is a measure of the average net present cost of electricity
generation for a generating plant over its lifetime.

Past costs of producing renewable energy declined significantly,[5] with 62% of total renewable
power generation added in 2020 having lower costs than the cheapest new fossil fuel option. [6]

"Learning curves": Trend of costs and deployment over time, with steeper lines showing greater
cost reductions as deployment progresses.[7] With increased deployment, renewables benefit
from learning curves and economies of scale.[8]

Levelized cost of electricity[edit]

Main article: Levelized cost of electricity
The levelized cost of electricity (LCOE) is a metric that attempts to compare the
costs of different methods of electricity generation consistently. Though LCOE is
often presented as the minimum constant price at which electricity must be sold
to break even over the lifetime of the project, such a cost analysis requires
assumptions about the value of various non-financial costs (environmental impacts,
local availability, others), and is therefore controversial. Roughly calculated, LCOE is
the net present value of all costs over the lifetime of the asset divided by an
appropriately discounted total of the energy output from the asset over that lifetime. [9]

Levelized cost of storage[edit]

The levelized cost of storage (LCOS) is analogous to LCOE, but applied to energy
storage technologies such as batteries.[10] Regardless of technology, however,
storage is but a secondary source of electricity dependent on a primary source of
generation. Thus, a true cost accounting demands that the costs of both primary and
secondary sources be included when the cost of storage is compared to the cost of
generating electricity in real time to meet demand.[citation needed]

A cost factor unique to storage are losses that occur due to inherent inefficiencies of
storing electricity, as well as increased CO2 emissions if any component of the
primary source is less than 100% carbon-free.[11] In the U.S., a comprehensive 2015
study found that net system CO2 emissions resulting from storage operation are
nontrivial when compared to the emissions from electricity generation [in real time to
meet demand], ranging from 104 to 407 kg/MWh of delivered energy depending on
location, storage operation mode, and assumptions regarding carbon intensity.[11]

Levelized avoided cost of electricity[edit]

The metric levelized avoided cost of energy (LACE) addresses some of the
shortcomings of LCOE by considering the economic value that the source provides
to the grid. The economic value takes into account the dispatchability of a resource,
as well as the existing energy mix in a region.[12]

In 2014, the US Energy Information Administration recommended[13] that levelized

costs of non-dispatchable sources such as wind or solar be compared to the
"levelized avoided cost of energy" (LACE) rather than to the LCOE of dispatchable
sources such as fossil fuels or geothermal. LACE is the avoided costs from other
sources divided by the annual yearly output of the non-dispatchable source.[example
needed]
The EIA hypothesized that fluctuating power sources might not avoid capital and
maintenance costs of backup dispatchable sources. The ratio of LACE to LCOE is
referred to as the value-cost ratio. When LACE (value) is greater than LCOE (cost),
then value-cost ratio is greater than 1, and the project is considered economically
feasible.[14]

Value-adjusted levelized cost of electricity[edit]

The value-adjusted levelized cost of electricity (VALCOE) is a metric devised by
the International Energy Agency which includes both the cost of the electricity and
the value to the electricity system.[15] For example, the same amount of electricity is
more valuable at a time of peak demand. However VALCOE does not take into
account future changes to the electricity system, for example the addition of much
more solar power could reduce midday value but today's VALCOE does not take that
into account.[16][unreliable source?]

Capture rate[edit]
The capture rate is the volume-weighted average market price (or capture price) that
a source receives divided by the time-weighted average price for electricity over a
period.[17][18][19][20] For example, a dammed hydro plant might only generate when prices
are high and so have a capture rate of 200%, whereas a source that is not
dispatchable, such as a wind farm without batteries, would typically have a capture
rate under 100%.[20] Typically the more of a single type of renewable that is built in a
pricing area (such as Great Britain) the lower the capture rate will become for that
type, for example if many wind farms generate a lot at the same time the price at that
time will go down.[17] There can be curtailment if grid connectivity is lacking across the
pricing area – for example from wind power in Scotland to consumers in England –
resulting in the capture rate not reflecting the true cost.[17]

Cost factors[edit]
While calculating costs, several internal cost factors have to be considered.[21] Note
the use of "costs," which is not the actual selling price, since this can be affected by
a variety of factors such as subsidies and taxes:

 Capital costs tend to be low for gas and oil power stations; moderate for
onshore wind turbines and solar PV (photovoltaics); higher for coal plants
and higher still for waste-to-energy, wave and tidal, solar thermal, offshore
wind and nuclear.
 Fuel costs – high for fossil fuel and biomass sources, low for nuclear, and
zero for many renewables. Fuel costs can vary somewhat unpredictably
over the life of the generating equipment, due to political and other factors.
To evaluate the total cost of production of electricity, the streams of costs are
converted to a net present value using the time value of money. These costs are all
brought together using discounted cash flow.[22][23]

Capital costs[edit]
For power generation capacity capital costs are often expressed as overnight
cost per kilowatt. Estimated costs are:

Cost per kW

Type US EIA[24] US NREL[25] $/MWh[25] CF[25]

Coal power $4,074 $3,075–5,542

$6,495–
Coal with 90% carbon capture
6,625

Natural gas $922–2,630

$1,062–
Combined-cycle
1,201
 Cost per kW

Type US EIA[24] US NREL[25] $/MWh[25] CF[25]

Combined-cycle with 90% carbon $2,736–

capture 2,845

Internal combustion engine $2,018

Turbine, aeroderivative $1,294

Turbine, industrial $785

$6,695–
Nuclear $7,442–7,989 $81–82 94%
7,547

18–
Wind power $1,718 $1,462 $27–75
48%

$4,833– 29–
Wind, offshore $3,285–5,908 $67–146
6,041 52%

$1,731– 11–
Distributed generation (wind) $2,275–5,803 $32–219
2,079 52%

49–
Solar thermal/concentrated $7,895 $6,505 $76–97
63%

12–
Solar photovoltaic $1,327 $1,333–2,743 $31–146
30%

20–
Solar PV with storage $1,748 $2,044 $53–81
31%

Battery storage $1,316 $988–4,774 8–42%

$6,639–
Fuel cells
7,224

Pumped-storage hydroelectricity $1,999–5,505

31–
Hydropower, conventional $3,083 $2,574–16,283 $60–366
66%

Biomass $4,524 $4,416 $144 64%

 Cost per kW

Type US EIA[24] US NREL[25] $/MWh[25] CF[25]

80–
Geothermal power $3,076 $6,753–46,223 $55–396
90%

Real life costs can diverge significantly from those estimates. Olkiluoto block 3,
which achieved first criticality in late 2021 had an overnight cost to the construction
consortium (the utility paid a fixed price agreed to when the deal was signed of only
3.2 billion euros) of €8.5 billion and a net electricity capacity of 1.6 GW or €5310 per
kW of capacity.[26] Meanwhile Darlington Nuclear Generating Station in Canada had
an overnight cost of CA$5.117 billion for a net electric capacity of 3512 MW
or CA$1,457 per kW of capacity.[27] The oft cited figure of CA$14.319 billion – which
works out to CA$4,077 per kW of capacity – includes interest (a particularly high cost
in this case as the utility had to borrow at market rates and had to absorb the cost of
delays in construction) and is thus not an "overnight cost". Furthermore, there is the
issue of comparability of different sources of power, as capacity factors can be as
low as 10–20% for some wind and solar applications reaching into the 50% range
for offshore wind and finally above 90% for the most reliable nuclear power plants.
[28]
The average capacity factor of all commercial nuclear power plants in the world in
2020 was 80.3% (83.1% the prior year) but this includes outdated Generation II
nuclear power plants and countries like France which run their nuclear power
plants load following which reduces the capacity factor.[29] Peaking power plants have
particularly low capacity factors but make up for it by selling electricity at the highest
possible price when supply does not meet demand otherwise.[30]

The first German Offshore Wind Park Alpha Ventus Offshore Wind Farm with
a nameplate capacity of 60 MW cost €250 million (after an initial estimate of €190
million).[31] In 2012, it produced 268 GWh of electricity, achieving a capacity factor of
just over 50%.[32] If the overnight cost is calculated for the nameplate capacity, it
works out to €4167 per kW whereas if one takes into account the capacity factor, the
figure needs to be roughly doubled.

Geothermal power is unique among renewables in that it usually has a low above-
ground impact and is capable of baseload power generation as well as combined
heat and power. However, depending on the plant and conditions
underground naturally occurring radioactive materials such as radon may be
released into the air.[33] This partially offsets relatively high costs per capacity which
were cited as US$200 million for the 45 MW first phase of Þeistareykir Geothermal
Power Station and a total of US$330 million for the 90 MW combined two first
phases. This gives a cost per kW of capacity of US$4,444 if only the first phase is
considered and US$3,667 if the cost estimates for both phases together hold.[34] The
source also calls this power plant uniquely cost effective for geothermal power and
the unique geology of Iceland makes the country one of the largest producers of
geothermal power worldwide and by far the largest per capita or relative to all energy
consumed.
Block 5 of Irsching Power Station in Southern Germany uses natural gas as fuel in
a combined cycle converting 1750 megawatts of thermal energy to 847 net MW of
usable electricity. It cost €450 million to build.[35] This works out to some €531 per kW
of capacity. However, due to the uneconomical prospect of operating it as a peaking
power plant, the owners, soon after opening the plant in 2010, wanted to shut down
the plant.[36]

The LCOE of floating wind power increases with the distance from shore.[37]

The Lieberose Photovoltaic Park – one of the largest in Germany – had a nameplate
capacity at opening of 52.79 megawatt and cost some €160 million to build[38]
[39]
or €3031 per kW. With a yearly output of some 52 GWh (equivalent to just over
5.9 MW) it has a capacity factor just over 11%. The €160 million figure was again
cited when the solar park was sold in 2010.[40]

The world's largest solar farm to date (2022) in Rajasthan, India – Bhadla Solar
Park – has a total nameplate capacity of 2255 MW and cost a total of 98.5
billion Indian rupees to build.[41] This works out to roughly 43681 rupees per kW.

As can be seen by these numbers, costs vary wildly even for the same source of
electricity from place to place or time to time and depending on whether interest is
included in total cost. Furthermore, capacity factors and the intermittency of certain
power sources further complicate calculations. Another issue that is often omitted in
discussions is the lifespan of various power plants – some of the oldest hydropower
plants have existed for over a century, and nuclear power plants going on five or six
decades of continuous operation are no rarity. However, many wind turbines of the
first generation have already been torn down as they can no longer compete with
more modern wind turbines and/or no longer fit into the current regulatory
environment.[citation needed] Some of them were not even twenty-five years old. Solar
panels exhibit a certain aging, which limits their useful lifetime, but real world data
does not yet exist for the expected lifetime of the latest models.

Operations and maintenance (O&M) costs[edit]

O&M costs include marginal costs of fuel, maintenance, operation, waste storage,
and decommissioning for an electricity generation facility. Fuel costs tend to be
highest for oil fired generation, followed in order by coal, gas, biomass and uranium.
Due to the high energy density of uranium (or MOX fuel in plants that use this
alternative to uranium) and the comparatively low price on the world uranium
market (especially when measured in units of currency per unit of energy content),
fuel costs only make up a fraction of the operating costs of nuclear power plants. In
general, the cost balance between capital and running costs tilts in favor of lower
operating expenses for renewables and nuclear and in the other direction for fossil
fuels.

As sovereign debt in high income countries is usually to be had at lower interest

rates than private loans, nuclear and renewable power become significantly cheaper
– also compared to fossil alternatives – the bigger the involvement of state
investment or state guarantees. In the Global South, where interest rates tend to be
higher, the shorter construction period of small scale projects (particularly wind and
solar) partially compensates for their increased capital cost. In terms of import
substitution, solar can be particularly attractive in replacing bunker oil or diesel
generators for rural electrification as it needs no imported hydrocarbons and as it
allows hydrocarbon resources (where available) to be exported instead.[42][43]

Short-term fluctuations in fuel prices can have significant effects on the cost of
energy generation in natural gas and oil fired power plants and to a lesser extent for
coal fired power plants. As renewable energies need no fuel, their costs are
independent of world markets for fuels once built. Coal-fired power plants are often
supplied with locally or at least domestically available coal – this is especially true
for lignite whose low grade and high moisture content make transporting it over long
distances uneconomical – and are thus less subject to the influence of world
markets. If there is a carbon tax or other forms of CO2-pricing, this can have a
significant impact on the economic viability of fossil fueled power plants. Due to the
ease of stockpiling uranium and the rarity of refueling (most Pressurized Water
Reactors will change about a quarter to a third of their fuel loading every one and a
half to two years[44][45]), short term fluctuations in world uranium prices are a risk
absorbed by fuel suppliers, not power plant operators. However, long-term trends in
uranium price can have an effect of a few tenths of a cent to a cent or two per
kilowatt-hour on the final price of nuclear energy.[46]

The biggest factor in the operating costs of both nuclear and renewable are local
wages – in most cases those need to be paid regardless of whether the plant is
operating at full capacity or putting out only a fraction of its nameplate capacity and
thus those plants are usually run to as high a fraction of their capacity as the market
(negative prices) and weather (avoiding overheating rivers with cooling water,
availability of sun or wind...) allow.[47][48] However, in France the nuclear power plants
which provide some 70% of electricity demand are run load following to stabilize the
grid. As a lot of home heating in France is supplied via electric means (heat
pumps and resistive heating), there is a notable seasonality to nuclear energy
generation in France with planned outages usually scheduled for the lower demand
summer period, which also coincides with school holidays in France. In Germany
some two decades old and older wind turbines were shut down after no longer
receiving renewable energy subsidies due to a reported market-rate electricity price
of some €0.03 per kWh not covering marginal costs or only covering them as long as
no major maintenance was needed.[49] By contrast after being fully depreciated,
Germany's (then remaining) nuclear power plants were described in media reports
throughout the 2010s and into the early 2020s as highly profitable for their operators
even without direct government subsidy.[50][51][52]

Market matching costs[edit]

Many scholars, such as Paul Joskow, have described limits to the "levelized cost of
electricity" metric for comparing new generating sources. In particular, LCOE ignores
time effects associated with matching production to demand. This happens at two
levels:

 Dispatchability, the ability of a generating system to come online, go

offline, or ramp up or down, quickly as demand swings.
 The extent to which the availability profile matches or conflicts with the
market demand profile.
Ramp rates (how fast the power can be increased or decreased) may be quicker for
more modern nuclear and the economics of nuclear power plants differ.[53]
[54]
Nevertheless, capital intensive technologies such as wind, solar, and nuclear are
economically disadvantaged unless generating at maximum availability since the
LCOE is nearly all sunk-cost capital investment. Grids with very large amounts
of intermittent power sources, such as wind and solar, may incur extra costs
associated with needing to have storage or backup generation available.[55] At the
same time, intermittent sources can be even more competitive if they are available to
produce when demand and prices are highest, such as solar during summertime
mid-day peaks seen in hot countries where air conditioning is a major consumer.[56]

Another limitation of the LCOE metric is the influence of energy

efficiency and conservation (EEC).[57][better source needed] In the 2010s EEC caused the
electricity demand of many countries, such as the US,[58] to remain flat or decline.[59]
[60]
For solar systems installed at the point of end use, it may be more economical to
invest in EEC first, then solar, or both at the same time.[61] This results in a smaller
required solar system than what would be needed without the EEC measures.
However, designing a solar system on the basis of LCOE would cause the smaller
system LCOE to increase, as the energy generation drops faster than the system
cost.[clarification needed] The whole of system life cycle cost should be considered, not just the
LCOE of the energy source.[57] LCOE is not as relevant to end-users than other
financial considerations such as income, cashflow, mortgage, leases, rent, and
electricity bills.[57] Comparing solar investments in relation to these can make it easier
for end-users to make a decision, or using cost-benefit calculations "and/or an
asset's capacity value or contribution to peak on a system or circuit level".[57]

External costs of energy sources[edit]

See also: Environmental impact of the energy industry and Economics of nuclear
power plants
Typically pricing of electricity from various energy sources may not include
all external costs – that is, the costs indirectly borne by society as a whole as a
consequence of using that energy source.[62] These may include enabling costs,
environmental impacts, energy storage, recycling costs, or beyond-insurance
accident effects.

Solar panel performance is usually guaranteed for 25 years and sometimes 30.
[63]
According to a 2021 Harvard Business Review study costs of recycling solar
panels will reach $20–30 per panel in 2035, which would increase the LCOE fourfold
for PV solar power but only if panels are replaced after 15 years rather than the
expected 30 years. If panels are replaced early this presents a significant policy
challenge because if the recycling is made legal duty of the manufacturers (as it
already is in the EU) it will dramatically reduce profit margins on this already
competitive market.[64] A 2021 IEA study of repairing old panels to reuse rather than
recycle them concluded that the financial viability depends on country specific factors
such as grid tariffs, but that reuse is only likely for utility solar, as rooftop owners will
want to make best use of space with more efficient new panels.[65]

An EU funded research study known as ExternE, or Externalities of Energy,

undertaken over the period of 1995 to 2005 found that the cost of producing
electricity from coal or oil would double over its present value, and the cost of
electricity production from gas would increase by 30% if external costs such as
damage to the environment and to human health, from the particulate
matter, nitrogen oxides, chromium VI, river water alkalinity, mercury
poisoning and arsenic emissions produced by these sources, were taken into
account. It was estimated in the study that these external, downstream, fossil fuel
costs amount up to 1–2% of the EU's entire Gross Domestic Product (GDP), and this
was before the external cost of global warming from these sources was even
included.[66][67] Coal has the highest external cost in the EU, and global warming is the
largest part of that cost.[62] Sustainable energy avoids or greatly reduces future costs
to society, such as respiratory illnesses.[68][69] In 2022 the EU created a green
taxonomy to indicate which energy investments reduce such external costs.

A means to address a part of the external costs of fossil fuel generation is carbon
pricing — the method most favored by economists for reducing global-warming
emissions.[70] Carbon pricing charges those who emit carbon dioxide for their
emissions. That charge, called a "carbon price", is the amount that must be paid for
the right to emit one tonne of carbon dioxide into the atmosphere. Carbon pricing
usually takes the form of a carbon tax or a requirement to purchase permits to emit
(also called "allowances").

Depending on the assumptions of possible accidents and their probabilities external

costs for nuclear power vary significantly and can reach between 0.2 and 200
ct/kWh.[71] Furthermore, nuclear power is working under an insurance framework that
limits or structures accident liabilities in accordance with the Paris convention on
nuclear third-party liability, the Brussels supplementary convention, and the Vienna
convention on civil liability for nuclear damage[72] and in the U.S. the Price-Anderson
Act. It is often argued that this potential shortfall in liability represents an external
cost not included in the cost of nuclear electricity; but the cost is small, amounting to
about 0.1% of the levelized cost of electricity, according to a 2008 study.[73]

These beyond-insurance costs for worst-case scenarios are not unique to nuclear
power, as hydroelectric power plants are similarly not fully insured against
catastrophic events like a large dam failure. As private insurers base dam insurance
premiums on limited scenarios, major disaster insurance in this sector is likewise
provided by the state.[74][better source needed]

Because externalities are diffuse in their effect, external costs cannot be measured
directly, but must be estimated.

International trade[edit]
Different countries charge generating companies differently for the negative
externalities (such as pollution) that they create. To avoid unfair competition from
imports of dirty electricity a tariff may be applied. For example, the UK and the EU
may include electricity in their Carbon Border Adjustment Mechanisms.
[75]
Alternatively the emissions trading systems (ETS) of the importing and exporting
countries may be linked,[76] or the generators in one country may be subject to the
ETS of another country (for example Northern İreland generators are in the EU
ETS).[77]

Additional cost factors[edit]

Calculations often do not include wider system costs associated with each type of
plant, such as long-distance transmission connections to grids, or balancing and
reserve costs. Calculations do not necessarily include externalities such as health
damage by coal plants, nor the effect of greenhouse emissions on the climate
change, ocean acidification and eutrophication, ocean current shifts.
Decommissioning costs of power plants are usually not included (nuclear power
plants in the United States is an exception, because the cost of decommissioning is
included in the price of electricity per the Nuclear Waste Policy Act), is therefore
not full cost accounting. These types of items can be explicitly added as necessary
depending on the purpose of the calculation.

Other non-financial factors may include:

 Comparisons of life-cycle greenhouse gas emissions show coal, for

instance, to be radically higher in terms of GHGs than any alternative.
 Surface power density measures power per unit surface area using given
technology, and can vary by several orders of magnitude between high-
and low-density sources. Surface power density is a significant limiting
factor in countries with high population density.
 Impacts on wildlife include an estimated 888,000 bats killed annually by
collision with U.S. wind turbines.[78] Millions of birds are estimated to be
killed or electrocuted each year by collision with high-voltage power lines
and pylons,[79] and millions more by fossil fuel power plants.[80]
 Other environmental concerns with electricity generation include acid
rain, ocean acidification and effect of coal extraction on watersheds.
 Various human health concerns with electricity generation,
including asthma and smog, now dominate decisions in developed nations
that incur health care costs publicly.[clarification needed] A 2021 study estimated the
health costs of coal power at hundreds of billions of dollars for the rest of
the decade.[81]
Global studies[edit]
Graphs are unavailable due to technical issues. There is more info on Phabricator and on Med
 Levelized cost of energy based on
different studies. Source: IRENA 2020 for renewables, Lazard for the price of
electricity from nuclear and coal, IAEA for nuclear capacity and Global Energy
Monitor for coal capacity.

Global levelized cost of generation (US$ per MWh)

IPCC 2014[82] NEA 2020[85]

(at BNEF
(at IRENA 2020[83] Lazard 2023[84] 7% discount 2021[86]
5% discount rate)
rate)

PV (utility,
110 68 24–96 56 39
fixed-axis)
PV (utility,
- - - - 47
tracking)
PV
150 164 117–282 126 -
(residential)
Solar
150 182 - 121 -
(thermal)
Wind,
59 53 24–75 50 41
onshore
Wind,
120 115 72–140 88 79
offshore
Nuclear new
65 - 141–221* (31) 69 (32) -
(existing)
Hydro 22 47 - 68 -
Geothermal 60 73 61-102 99 -
Coal (CC) 61 - 68–166 88 (110) -
Gas 71 - 115–221 71 -
 CC (Peak)
*LCOE estimates for nuclear power from Lazard are "based on the then-estimated
costs of the Vogtle Plant and US-focused".[84]

Bank of America (2023)[edit]

In 2023, Bank of America conducted a LCOE study in which it postulated that
existing LCOE estimates for renewables do not account for fossil fuel or battery
backup and therefore levelized full system cost of electricity (LFSCOE) would be
a more reasonable metric to compare sources in terms of providing 24/7 consumer
electricity.[87]

LFSCOE
LFSCOE
LCOE (Texas, (Germany, EU)
US)

Nuclear 82 122 106

Wind 40 291 504
Solar 36 413 1548
Biomass 95 117 104
Coal 76 90 78
Gas 38 40 35
BNEF (2021)[edit]
In March 2021, Bloomberg New Energy Finance found that "renewables are the
cheapest power option for 71% of global GDP and 85% of global power generation.
It is now cheaper to build a new solar or wind farm to meet rising electricity demand
or replace a retiring generator, than it is to build a new fossil fuel-fired power plant. ...
On a cost basis, wind and solar is the best economic choice in markets where firm
generation resources exist and demand is growing."[86]: 24 They further reported "the
levelized cost of energy from lithium-ion battery storage systems is competitive with
many peak-demand generators."[86]: 23 BNEF does not disclose the detailed
methodology and LCOE calculation assumptions, however, apart from declaring it is
"derived from selected public sources".[86]: 98 Costs of gas peakers are substantial, and
include both the cost of fuel and external costs of its combustion. Costs of its
combustion include emission of greenhouse gases carbon monoxide and dioxide, as
well as nitrogen oxides (NOx), which damage the human respiratory system and
contribute to acid rain.[88]

IEA & OECD NEA (2020)[edit]

In December 2020, IEA and OECD NEA published a joint Projected Costs of
Generating Electricity study which looks at a very broad range of electricity
generating technologies based on 243 power plants in 24 countries. The primary
finding was that "low-carbon generation is overall becoming increasingly cost
competitive" and "new nuclear power will remain the dispatchable low-carbon
technology with the lowest expected costs in 2025". The report calculated LCOE with
assumed 7% discount rate and adjusted for systemic costs of generation.[85] The
report also contains a modeling utility that produces LCOE estimates based on user-
selected parameters such as discount rate, carbon price, heat price, coal price and
gas price.[89] The report's main conclusions:[90]

 LCOE of specific energy sources significantly differs between countries

due to their geographic, political and regulatory situation;
 low-carbon energy sources cannot be considered in separation, as they
operate in "complex interactions" with each other to ensure reliable supply
at all times; IEA analysis captures these interactions in value-adjusted
LCOE or VALCOE;
 cost of renewable energy sources significantly decreased and are
competitive (in LCOE terms) with dispatchable fossil fuel generation;
 cost of extension of operations of existing nuclear power plants (LTO,
long-term operations) has the lowest LCOE of low-carbon energy sources;
Lazard (2020)[edit]
In October 2020, the financial firm Lazard compared renewable and conventional
sources of energy, including comparison between existing and new generation (see
table). Lazard study assumes "60% debt at 8% interest rate and 40% equity at 12%
cost" for its LCOE calculation but did not disclose their methodology or project
portfolio used to calculate prices.[91] In the 2023 study Lazard explained their LCOE
estimates for nuclear power are "based on the then-estimated costs of the Vogtle
Plant and US-focused".[84]

IPCC (2014)[edit]
IPCC Fifth Assessment Report contains LCOE calculations[82] for broad range of
energy sources in the following four scenarios:

 10% WACC, high full load hours (FLH), no carbon tax

 5% WACC, high FLH, no carbon tax — scenario presented in the above
table
 10% WACC, low FLH, no carbon tax
 10% WACC, high FLH, $100/tCO2eq carbon tax
Regional studies[edit]
Australia[edit]
BNEF[92] estimated the following costs for electricity generation in Australia:[93]

Australia LCoE 2020

Wind Wind plus Solar plus Storage Gas

Source Solar Gas CC
onshore storage storage (4hr) peaker

Mean
47 58 81 87 118 156 228
$US/MWh

Europe[edit]
It can be seen from the following table that the cost of renewable energy, particularly
photovoltaics, is falling very rapidly. As of 2017, the cost of electricity generation
from photovoltaics, for example, has fallen by almost 75% within 7 years.[94]

Electricity production costs of new power plants in €/MWh

Stud Various Stud Stud

Energy Publicati Publicati individual Study Study
y y y
Source on 2009[95] on 2011[96] 2012[9 data (as of 2018 [10
2021[10
2013[9 2015[9 0] 1]
7]
2012) 8] 9]

70–90;[102] 7
36–
Nuclear 50 [a]
60–100 – 0–100;[103] 1 – – –
84
05[104]

103.8
38– 29– 45.9–
Lignite 46–65 [b]
45–100 [c]
– – –
53 84 79.8
153.4

110.3
Hard 63– 40– 62.7–
49–68[b] 45–100[c] – – –
Coal 80 116 98.6
200.4

Natural
75– 53– 77.8– 77.9–
Gas 57–67[b] 40–75 – 93[104]
98 168 99.6 130.6
(CCGT)

22–
Hydro – – – – – – –
108

Wind, 65– 60.35–111; 45– 29– 39.9– 39.4–

93 50–130
onshore 81 [105]
118[104] 107 114 82.3 82.9

Wind, 112– 119– 67– 74.9– 72.3–

– 120–180 142–150[104]
offshore 183 194 169 137.9 121.3

101.4
135– 72.2–
Biogas – – – 126 [104]
– –
215 172.6
147.4

Small-
scale PV 137– 98– 72.3– 58.1–
– – – –
(German 203 142 115.4 80.4
y)

Large- 107– 100;[106] 18 79– 35– 37.1– 31.2–

32 –
Scale PV 167 4[104] 116 180 84.6 57
In the United Kingdom, a feed-in tariff of £92.50/MWh at 2012 prices (currently the
equivalent of €131/MWh)[107] plus inflation compensation was set in 2013 for the new
nuclear power plant to be built at Hinkley Point C, with a term of 35 years. At that
time, this was below the feed-in tariff for large photovoltaic and offshore wind plants
and above onshore wind plants.[108][109][110]

In Germany, the bidding processes that have been carried out since 2017 have led
to significant cost reductions. In one bid for offshore wind farms, at least one bidder
dispensed entirely with public subsidies and was prepared to finance the project
through the market alone. The highest subsidy price that was still awarded was 6.00
ct/kWh.[111] In a bid for onshore wind farm projects, an average payment of 5.71
ct/kWh was achieved, and 4.29 ct/kWh in a second bidding round.

In 2019, there were bids for new offshore wind farms in the United Kingdom, with
costs as low as 3.96 pence per kWh (4.47 ct).[112]

In the same year, there were bids in Portugal for photovoltaic plants, where the price
for the cheapest project is 1.476 ct/kWh.[113]

Britain[d][edit]
As of 2022, gas is the largest source of electricity at 40%:[114] its cost varies and being
high carbon it causes climate change.[115] So to reduce the share of gas the
government annually auctions contracts for difference to build low-carbon generation
capacity, mainly offshore wind.[116] Before 2022 these generators had always received
payments from electricity suppliers, but that year they started making payments. [117] In
other words renewables became subsidy free,[118] partly due to the fall in cost of
offshore wind.[119] Instead of gas still dark weeks can be supplied by Norwegian
hydropower[120] or by nuclear. As many of Britain's existing nuclear reactors are due to
retire soon the government hopes that cost effective small modular reactors can be
developed.[114]

France[edit]
This section needs to be updated. Please help update this article to
reflect recent events or newly available information. (March 2022)
The International Energy Agency and EDF have estimated the following costs. For
nuclear power, they include the costs due to new safety investments to upgrade the
French nuclear plant after the Fukushima Daiichi nuclear disaster; the cost for those
investments is estimated at €4/MWh. Concerning solar power, the estimate of
€293/MWh is for a large plant capable of producing in the range of 50–100
GWh/year located in a favorable location (such as in Southern Europe). For a small
household plant that can produce around 3 MWh/year, the cost is between 400 and
€700/MWh, depending on location. Solar power was by far the most expensive
renewable source of electricity among the technologies studied, although increasing
efficiency and longer lifespan of photovoltaic panels together with reduced
production costs have made this source of energy more competitive since 2011. By
2017, the cost of photovoltaic solar power had decreased to less than €50/MWh.
 French LCOE in €/MWh (2017)

Technology Cost in 2017

Hydro power

Nuclear (with state-covered insurance costs) 50

Nuclear EPR 100[121]

Natural gas turbines without CO2 capture

Onshore wind 60[121]

Solar farms 43.24[122]

Germany[edit]
The Fraunhofer Institute for Solar Energy Systems publishes studies comparing the
cost of different styles of energy production. The values for PV installations are
based on the average cost between Northern and Southern Germany. The reports
differentiate between the two and gives more details.[123]

Levelized cost of electricity of energy technologies (€/MWh)[124]

2012 2013 2018 2021

PV rooftop (small) 170 120 93.85 84.1

PV rooftop (large) - - - 72.1

PV ground (utility) 137 97.5 52.4 44.1

Wind, onshore 73 76 61.1 61.15

Wind, offshore 147.5 156.5 106.4 96.8

Biogas - 120 124.4 128.55

Solid Biomass - - - 112.75

Lignite - 45.5 62.85 128.6

Hard Coal - 71.5 80.65 155.35

CCGT - 86.5 88.7 104,25

 Gas Turbine - - 164.85 202.1

The LCOE for PV battery systems refers to the total amount of energy produced by
the PV system minus storage losses. The storage losses are calculated based on
the capacity of the battery storage, the assumed number of cycles and the efficiency
of the battery. The results include differences in PV costs, battery costs (500 to 1200
EUR/kWh), and varying solar irradiation. For larger rooftop PV systems with battery
storage, the battery costs between 600 and 1000 EUR/kWh. For ground-mounted
PV with battery storage systems, investment costs for battery storage of 500 to 700
EUR/kWh were assumed. The prices for smaller systems are in part lower, as these
are standardized products, whereas larger battery systems tend to be individualized
projects that additionally incur costs for project development, project management,
and infrastructure. The range of investment costs is smaller for the larger sizes, as
there is more competitive pressure.

Levelized cost of electricity of PV with battery storage

(€/MWh)

2021

PV rooftop (small, battery 1:1) 140.5

PV rooftop (large, battery 2:1) 104.9

PV ground (utility, battery 3:2) 75.8

Middle East[edit]
The capital investment costs, fixed and variable costs, and the average capacity
factor of utility-scale wind and photovoltaic electricity supplies from 2000 to 2018
have been obtained using overall variable renewable electricity production of the
countries in the Middle East and 81 examined projects.

Average capacity factor and LCOE of wind and PV electricity resources in the Middle
East[125]

Capacity factor LCOE ($/MWh)

Year
Wind Photovoltaic Wind Photovoltaic

2000 0.19 0.17 - -

2001 - 0.17 - -

2002 0.21 0.21 - -

 2003 - 0.17 - -

2004 0.23 0.16 - -

2005 0.23 0.19 - -

2006 0.20 0.15 - -

2007 0.17 0.21 - -

2008 0.25 0.19 - -

2009 0.18 0.16 - -

2010 0.26 0.20 107.8 -

2011 0.31 0.17 76.2 -

2012 0.29 0.17 72.7 -

2013 0.28 0.20 72.5 212.7

2014 0.29 0.20 66.3 190.5

2015 0.29 0.19 55.4 147.2

2016 0.34 0.20 52.2 110.7

2017 0.34 0.21 51.5 94.2

2018 0.37 0.23 42.5 85.8

2019 - 0.23 - 50.1

Turkey[edit]
As of March 2021 for projects starting generating electricity in
Turkey from renewable energy in Turkey in July feed-in-tariffs in lira per kWh are:
wind and solar 0.32, hydro 0.4, geothermal 0.54, and various rates for different types
of biomass: for all these there is also a bonus of 0.08 per kWh if local components
are used.[126] Tariffs will apply for 10 years and the local bonus for 5 years.[126] Rates
are determined by the presidency,[127] and the scheme replaces the previous USD-
denominated feed-in-tariffs for renewable energy.[128]
Japan[edit]
This section needs to be updated. Please help update this article to
reflect recent events or newly available information. (July 2016)
A 2010 study by the Japanese government (pre-Fukushima disaster), called the
Energy White Paper,[129] concluded the cost for kilowatt hour was ¥49 for solar, ¥10 to
¥14 for wind, and ¥5 or ¥6 for nuclear power.

Masayoshi Son, an advocate for renewable energy, however, has pointed out that
the government estimates for nuclear power did not include the costs for
reprocessing the fuel or disaster insurance liability. Son estimated that if these costs
were included, the cost of nuclear power was about the same as wind power.[130][131][132]

More recently, the cost of solar in Japan has decreased to between ¥13.1/kWh to
¥21.3/kWh (on average, ¥15.3/kWh, or $0.142/kWh).[133]

The cost of a solar PV module make up the largest part of the total investment costs.
As per the recent analysis of Solar Power Generation Costs in Japan 2021, module
unit prices fell sharply. In 2018, the average price was close to 60,000 yen/kW, but
by 2021 it is estimated at 30,000 yen/kW, so cost is reduced by almost half.

United States[edit]
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that may interest only a particular audience. Please help
by spinning off or relocating any relevant information, and removing
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Energy Information Administration (2020)[edit]
Since 2010, the US Energy Information Administration (EIA) has published
the Annual Energy Outlook (AEO), with yearly LCOE projections for future utility-
scale facilities to be commissioned in about five years' time.

The following data are from the Energy Information Administration's (EIA) Annual
Energy Outlook released in 2020 (AEO2020). They are in dollars per megawatt-hour
(2019 USD/MWh). These figures are estimates for plants going into service in 2025,
exclusive of tax credits, subsidies, or other incentives.[134] The LCOE below is
calculated based on a 30-year recovery period using a real after tax weighted
average cost of capital (WACC) of 6.1%. For carbon intensive technologies 3
percentage points are added to the WACC. (This is approximately equivalent to a fee
of $15 per metric ton of carbon dioxide CO2.) Federal tax credits and various state
and local incentive programs would be expected to reduce some of these LCOE
values. For example, EIA expects the federal investment tax credit program to
reduce the capacity weighted average LCOE of solar PV built in 2025 by an
additional $2.41, to $30.39.

The electricity sources which had the most decrease in estimated costs over the
period 2010 to 2019 were solar photovoltaic (down 88%), onshore wind (down 71%)
and advanced natural gas combined cycle (down 49%).
For utility-scale generation put into service in 2040, the EIA estimated in 2015 that
there would be further reductions in the constant-dollar cost of concentrated solar
power (CSP) (down 18%), solar photovoltaic (down 15%), offshore wind (down
11%), and advanced nuclear (down 7%). The cost of onshore wind was expected to
rise slightly (up 2%) by 2040, while natural gas combined cycle electricity was
expected to increase 9% to 10% over the period.[135]

Historical summary of EIA's LCOE projections (2010–2020)

Estimate in Nat. gas

Wind Solar
$/MWh combined cycle
Coal Nuclear
convent advance
of for 'l d
re convent advance onshor offshor
yea yea PV CSP
f 'l d e e
r r

201 201 256.

[136]
100.4 83.1 79.3 119.0 149.3 191.1 396.1
0 6 6

201 201 312.

[137]
95.1 65.1 62.2 114.0 96.1 243.7 211.0
1 6 2

201 201 242.

[138]
97.7 66.1 63.1 111.4 96.0 N/A 152.4
2 7 0

201 201 261.

[139]
100.1 67.1 65.6 108.4 86.6 221.5 144.3
3 8 5

201 201 243.

[140]
95.6 66.3 64.4 96.1 80.3 204.1 130.0
4 9 1

201 202 239.

[135]
95.1 75.2 72.6 95.2 73.6 196.9 125.3
5 0 7

201 202 235.

[141]
NB 58.1 57.2 102.8 64.5 158.1 84.7
6 2 9

201 202
[142]
NB 58.6 53.8 96.2 55.8 NB 73.7 NB
7 2

201 202
[143]
NB 48.3 48.1 90.1 48.0 124.6 59.1 NB
8 2

201 202
[143]
NB 40.8 40.2 NB 42.8 117.9 48.8 NB
9 3

[144]
202 202 NB 36.61 36.61 NB 34.10 115.04 32.80 NA
 0 5

Nominal
−92
change 2010– NB −56% −54% NB −77% -40% NB
%
2020

Note: Projected LCOE are adjusted for inflation and calculated on constant
dollars based on two years prior to the release year of the estimate.
Estimates given without any subsidies. Transmission cost for non-dispatchable
sources are on average much higher. NB = "Not built" (No capacity additions are
expected.)