This document is a confidential report from Lazard analyzing the levelized cost of energy for various electricity generation technologies. It finds that some alternative energy technologies like utility-scale solar PV and onshore wind are now cost-competitive with conventional generation technologies without subsidies. However, federal tax subsidies still provide an important cost reduction for many alternative technologies. The costs of different technologies vary significantly depending on location and circumstances. The report provides a detailed breakdown of the assumptions and cost components considered in Lazard's analysis.
The document provides an analysis of the levelized cost of energy for various electricity generation technologies, including both conventional and alternative technologies. It compares costs on a $/MWh basis, examines the cost of carbon abatement for different technologies, and illustrates how costs have declined over time and vary geographically. The analysis considers factors such as capital costs, operating costs, fuel costs, and technology-specific constraints. It is intended to inform comparisons of the generation costs of different technologies on an unsubsidized basis, though it notes additional considerations are relevant to overall technology evaluations.
The document provides an analysis of the levelized cost of energy for various electricity generation technologies, including both conventional and alternative technologies. It compares costs on a $/MWh basis, examines the cost of carbon abatement for different technologies, and illustrates how costs have declined over time and vary geographically. The analysis considers factors such as capital costs, operating costs, fuel costs, and technology-specific constraints. It is intended to inform comparisons of the generation costs of different technologies on an unsubsidized basis, though it notes additional considerations are relevant to overall technology evaluations.
Lazard finds the cost of wind power dropped 50%Starwatch20
As Wind Power Engineering recently reported (http://www.windpowerengineering.com/construction/projects/lazard-finds-cost-wind-power-dropped-50-last-4-yr/) Lazard released an analytical report that found that, over the last four years, the levelized cost of energy for wind power has continued to decline. Even more interesting, PV is a competitive source of peak energy as compared with conventional generation in many parts of the world, without any subsidies.
This report shows the levelized cost of energy analysis across several different technologies.
Interesting enough, the report concludes that while the past several years have been marked by radical rationalization and retrenchment for many participants in the Alternative Energy sector, there have been successes in many important areas.
It seems that alternative energy is far from dead.
Lazard is one of the world's preeminent financial advisory and asset management firms and operates from 40 cities across 26 countries in North America, Europe, Asia, Australia, Central and South America. Led by Lazard CEO Kenneth Jacobs, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals.
The document is a 15-page report from Lazard analyzing the levelized cost of energy (LCOE) for various renewable and conventional electricity generation technologies on an unsubsidized basis. It finds that selected renewable technologies can be cost-competitive with conventional technologies under certain circumstances due to declining costs. The LCOE estimates are sensitive to factors such as federal tax subsidies, fuel prices, carbon pricing, and cost of capital.
The document discusses the solar photovoltaic (PV) industry and projections for cost reductions and growth. It finds that:
1) The levelized cost of electricity from solar PV is becoming competitive with electricity from the grid and other sources as costs continue to decline for PV technologies like cadmium telluride and copper indium gallium selenide.
2) By the next 6 years, the costs of different PV technologies are projected to converge, with thin film technologies like cadmium telluride maintaining an advantage over crystalline silicon at the module level.
3) Periodic oversupply of solar modules is inevitable as capacity growth outpaces demand, which will put downward pressure on prices.
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...JackRipper27
The document discusses the cost/benefit analysis of a battery energy storage system (BESS) for a photovoltaic power station. It outlines the steps of the analysis, including BESS sizing based on system capabilities and intended applications, optimal placement based on power losses and voltage limits, and calculating costs and revenues generated from applications like energy time-shifting. The analysis considers capital costs, operating costs, and revenue from applications like load following, renewable energy time-shifting, and capacity firming of renewable sources. The document provides details on methodology and estimates for costs and benefits of various BESS applications.
Unit 9: Comparing the Costs of Renewable and Conventional Energy SourcesBig History Project
You can’t get too far in a discussion about the nation’s electric power sector without running into the question of costs.
Register to explore the whole course here: https://school.bighistoryproject.com/bhplive?WT.mc_id=Slideshare12202017
Utilizing solar+storage to obviate natural gas peaker plants Clean Coalition
This document discusses how energy storage can replace natural gas peaker plants and new transmission lines by providing reliable local capacity through distributed energy resources like solar and storage. It summarizes a study that found solar+storage could meet local capacity needs in the Moorpark area more cost effectively than a proposed natural gas plant, even when accounting for long term fuel and maintenance costs. The study also found solar+storage could meet transmission reliability needs more cost effectively than a proposed new transmission line from Moorpark to Pardee. The document argues energy storage is key to transitioning to a more distributed, renewable and resilient grid architecture.
This document analyzes the cost structure of wind power compared to other energy sources. It finds that while onshore wind has very competitive capital costs, offshore wind costs are significantly higher. It also discusses external costs and benefits associated with different energy sources as well as other factors like government subsidies that impact costs. The conclusion is that the best energy source depends on the priorities of different stakeholders and there are tradeoffs to consider between financial and external costs.
This document summarizes key information about Arizona's electricity sources and energy policies. It discusses:
- Arizona generates 50% of its electricity from coal, 28% from natural gas, and 22% from nuclear. Solar accounts for less than 0.1% of generation.
- Arizona's Renewable Energy Standard mandates that 15% of electricity come from renewable sources like solar, wind, and biomass by 2025. The energy efficiency standard requires 22% savings by 2020.
- Reasons Arizona does not have more solar include utility monopolies, centralized generation systems, and politics influenced by fossil fuel interests. A study found the value of distributed solar is 7.9 to 14.11 cents/kWh
The document discusses two difficulties for energy storage: 1) The energy storage market has not been as robust as predicted due to falling natural gas prices undermining storage applications that compete with gas generation like peak shaving and integrating renewables. 2) Operating bulk energy storage can increase emissions as it replaces clean with dirty electricity and has transmission losses. The author models a bulk storage device in various locations and finds net CO2 emissions are significant while NOx and SO2 emissions vary widely but can be large. Falling gas prices have made energy storage uneconomic for applications that compete with gas generation.
Task Force Pace Phone Confer Q&A 7 29 09Chris Smith
The document summarizes questions asked of PACE Consulting regarding their modeling of Austin Energy's generation resource planning. PACE uses two models - an ERCOT hourly dispatch model and a screening tool model using AE data. The risk analysis model performs stochastic analysis through multiple iterations to examine uncertainties like fuel and energy demand costs. PACE compares scenarios for replacing the Fayette Power Plant and explains the costs included are generation market costs, not total customer rates. They were not provided Roger Duncan's $250M cost estimate for maintaining 2007 CO2 levels through natural gas. PACE has only examined CO2 emissions so far but will analyze other pollutants in risk analysis. Energy efficiency is modeled based on an AE-provided supply curve up to
John Lushetsky, Program Manager of the Solar Energy Technologies Program at the DOE Office of Energy Efficiency and Renewable Energy, presented on April 19, 2010 at the GW Solar Institute Second Annual Symposium. more information at http://solar.gwu.edu/Symposium.html
This document analyzes the use of offshore attenuators to convert wave energy into electrical energy. It describes the design of attenuators, which use the motion of ocean waves to power hydraulic pumps and electrical generators. The document evaluates the benefits and drawbacks of attenuators, including their economic viability, environmental impacts, and ability to meet energy demands. While attenuators show potential, the analysis finds they are currently only profitable in certain geographic regions and their widespread adoption would require reductions in costs and device improvements.
Solar peco my generation customer report rooftopJason Shragher
This document summarizes a report on the potential for rooftop solar panels at a property located at 27 Redwood Dr, Richboro, PA. It estimates that installing a 10.5kW solar system would cost $26,900-$32,900 upfront but qualify for incentives reducing the cost to $23,300. The system would offset 25% of the property's electricity usage and have a payback period of 35 years based on electricity savings and assumed annual rate increases of 2%. It also estimates the environmental impacts of offsetting over 12,000 pounds of carbon dioxide emissions annually.
The document discusses the investment case for solar energy. It notes that solar has impressive growth potential with forecasts of $3.4 trillion in solar spending through 2040 and representing 35% of new electricity generation. Solar costs have also plunged dramatically in recent years due to technology advances and economies of scale, making it competitive with traditional energy sources in many areas. Going forward, continued cost declines driven by innovation and manufacturing scale combined with the growth of solar-plus-storage solutions providing reliable 24/7 energy will help solar become a major global electricity source and the long-term sustainable solution for power generation.
The document discusses solar power prospects. It notes that while solar power production is growing rapidly, it still accounts for less than 1% of U.S. electricity output. Solar is among the fastest growing renewable energy technologies but remains more expensive than conventional sources. The document explores when solar power may reach grid parity and be able to compete with other energy sources without subsidies.
The document discusses the development of smart grids and micro-grids as electrical networks expand across time zones and climate zones. Renewable energy sources like solar and wind have introduced instability that requires electrical grids to function differently, termed "smart grids." Micro-grids are defined as handling under 50MW of power within a community and are interconnected with the smart grid. The document proposes several micro-grid projects including bidirectional control centers between battery storage and solar farms, battery storage for night lighting powered by solar panels, increasing solar panel efficiency, and using excess heat from solar panels for HVAC. It analyzes the economics of battery storage compared to combustion turbines for meeting peak energy demands.
What is a solar energy paradise: In technical terms, a paradise in solar energy is the region with a combination of … HIGH SOLAR IRRADIATION and HIGH ELECTRICITY PRICES. But in “financial terms”, a solar energy paradise needs another keystone …
LOW “WACC” (Weighted Average Cost of Capital), which means the combination of
Relative low “Cost of Debt”, Moderate to Low “Return of Equity”and Adequate Credit/Equity Ratio. Let's see if the island of Curaçao meets these requirements
This white paper discusses how hybrid energy systems combining wind, solar, diesel generators and batteries can help reduce operating costs for telecom sites in remote, rural, or developing areas without stable utility power. Such hybrid systems mitigate dependence on costly and potentially unstable diesel fuel by taking advantage of on-site renewable resources. Careful evaluation of wind and solar conditions at a site is important for estimating energy production from renewable sources and designing an effective hybrid system.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Best practices for project execution and deliveryCLIVE MINCHIN
A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.
Lazard finds the cost of wind power dropped 50%Starwatch20
As Wind Power Engineering recently reported (http://www.windpowerengineering.com/construction/projects/lazard-finds-cost-wind-power-dropped-50-last-4-yr/) Lazard released an analytical report that found that, over the last four years, the levelized cost of energy for wind power has continued to decline. Even more interesting, PV is a competitive source of peak energy as compared with conventional generation in many parts of the world, without any subsidies.
This report shows the levelized cost of energy analysis across several different technologies.
Interesting enough, the report concludes that while the past several years have been marked by radical rationalization and retrenchment for many participants in the Alternative Energy sector, there have been successes in many important areas.
It seems that alternative energy is far from dead.
Lazard is one of the world's preeminent financial advisory and asset management firms and operates from 40 cities across 26 countries in North America, Europe, Asia, Australia, Central and South America. Led by Lazard CEO Kenneth Jacobs, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals.
The document is a 15-page report from Lazard analyzing the levelized cost of energy (LCOE) for various renewable and conventional electricity generation technologies on an unsubsidized basis. It finds that selected renewable technologies can be cost-competitive with conventional technologies under certain circumstances due to declining costs. The LCOE estimates are sensitive to factors such as federal tax subsidies, fuel prices, carbon pricing, and cost of capital.
The document discusses the solar photovoltaic (PV) industry and projections for cost reductions and growth. It finds that:
1) The levelized cost of electricity from solar PV is becoming competitive with electricity from the grid and other sources as costs continue to decline for PV technologies like cadmium telluride and copper indium gallium selenide.
2) By the next 6 years, the costs of different PV technologies are projected to converge, with thin film technologies like cadmium telluride maintaining an advantage over crystalline silicon at the module level.
3) Periodic oversupply of solar modules is inevitable as capacity growth outpaces demand, which will put downward pressure on prices.
Battery Energy Storage System (BESS) A Cost_Benefit Analysis for a PV power s...JackRipper27
The document discusses the cost/benefit analysis of a battery energy storage system (BESS) for a photovoltaic power station. It outlines the steps of the analysis, including BESS sizing based on system capabilities and intended applications, optimal placement based on power losses and voltage limits, and calculating costs and revenues generated from applications like energy time-shifting. The analysis considers capital costs, operating costs, and revenue from applications like load following, renewable energy time-shifting, and capacity firming of renewable sources. The document provides details on methodology and estimates for costs and benefits of various BESS applications.
Unit 9: Comparing the Costs of Renewable and Conventional Energy SourcesBig History Project
You can’t get too far in a discussion about the nation’s electric power sector without running into the question of costs.
Register to explore the whole course here: https://school.bighistoryproject.com/bhplive?WT.mc_id=Slideshare12202017
Utilizing solar+storage to obviate natural gas peaker plants Clean Coalition
This document discusses how energy storage can replace natural gas peaker plants and new transmission lines by providing reliable local capacity through distributed energy resources like solar and storage. It summarizes a study that found solar+storage could meet local capacity needs in the Moorpark area more cost effectively than a proposed natural gas plant, even when accounting for long term fuel and maintenance costs. The study also found solar+storage could meet transmission reliability needs more cost effectively than a proposed new transmission line from Moorpark to Pardee. The document argues energy storage is key to transitioning to a more distributed, renewable and resilient grid architecture.
This document analyzes the cost structure of wind power compared to other energy sources. It finds that while onshore wind has very competitive capital costs, offshore wind costs are significantly higher. It also discusses external costs and benefits associated with different energy sources as well as other factors like government subsidies that impact costs. The conclusion is that the best energy source depends on the priorities of different stakeholders and there are tradeoffs to consider between financial and external costs.
This document summarizes key information about Arizona's electricity sources and energy policies. It discusses:
- Arizona generates 50% of its electricity from coal, 28% from natural gas, and 22% from nuclear. Solar accounts for less than 0.1% of generation.
- Arizona's Renewable Energy Standard mandates that 15% of electricity come from renewable sources like solar, wind, and biomass by 2025. The energy efficiency standard requires 22% savings by 2020.
- Reasons Arizona does not have more solar include utility monopolies, centralized generation systems, and politics influenced by fossil fuel interests. A study found the value of distributed solar is 7.9 to 14.11 cents/kWh
The document discusses two difficulties for energy storage: 1) The energy storage market has not been as robust as predicted due to falling natural gas prices undermining storage applications that compete with gas generation like peak shaving and integrating renewables. 2) Operating bulk energy storage can increase emissions as it replaces clean with dirty electricity and has transmission losses. The author models a bulk storage device in various locations and finds net CO2 emissions are significant while NOx and SO2 emissions vary widely but can be large. Falling gas prices have made energy storage uneconomic for applications that compete with gas generation.
Task Force Pace Phone Confer Q&A 7 29 09Chris Smith
The document summarizes questions asked of PACE Consulting regarding their modeling of Austin Energy's generation resource planning. PACE uses two models - an ERCOT hourly dispatch model and a screening tool model using AE data. The risk analysis model performs stochastic analysis through multiple iterations to examine uncertainties like fuel and energy demand costs. PACE compares scenarios for replacing the Fayette Power Plant and explains the costs included are generation market costs, not total customer rates. They were not provided Roger Duncan's $250M cost estimate for maintaining 2007 CO2 levels through natural gas. PACE has only examined CO2 emissions so far but will analyze other pollutants in risk analysis. Energy efficiency is modeled based on an AE-provided supply curve up to
John Lushetsky, Program Manager of the Solar Energy Technologies Program at the DOE Office of Energy Efficiency and Renewable Energy, presented on April 19, 2010 at the GW Solar Institute Second Annual Symposium. more information at http://solar.gwu.edu/Symposium.html
This document analyzes the use of offshore attenuators to convert wave energy into electrical energy. It describes the design of attenuators, which use the motion of ocean waves to power hydraulic pumps and electrical generators. The document evaluates the benefits and drawbacks of attenuators, including their economic viability, environmental impacts, and ability to meet energy demands. While attenuators show potential, the analysis finds they are currently only profitable in certain geographic regions and their widespread adoption would require reductions in costs and device improvements.
Solar peco my generation customer report rooftopJason Shragher
This document summarizes a report on the potential for rooftop solar panels at a property located at 27 Redwood Dr, Richboro, PA. It estimates that installing a 10.5kW solar system would cost $26,900-$32,900 upfront but qualify for incentives reducing the cost to $23,300. The system would offset 25% of the property's electricity usage and have a payback period of 35 years based on electricity savings and assumed annual rate increases of 2%. It also estimates the environmental impacts of offsetting over 12,000 pounds of carbon dioxide emissions annually.
The document discusses the investment case for solar energy. It notes that solar has impressive growth potential with forecasts of $3.4 trillion in solar spending through 2040 and representing 35% of new electricity generation. Solar costs have also plunged dramatically in recent years due to technology advances and economies of scale, making it competitive with traditional energy sources in many areas. Going forward, continued cost declines driven by innovation and manufacturing scale combined with the growth of solar-plus-storage solutions providing reliable 24/7 energy will help solar become a major global electricity source and the long-term sustainable solution for power generation.
The document discusses solar power prospects. It notes that while solar power production is growing rapidly, it still accounts for less than 1% of U.S. electricity output. Solar is among the fastest growing renewable energy technologies but remains more expensive than conventional sources. The document explores when solar power may reach grid parity and be able to compete with other energy sources without subsidies.
The document discusses the development of smart grids and micro-grids as electrical networks expand across time zones and climate zones. Renewable energy sources like solar and wind have introduced instability that requires electrical grids to function differently, termed "smart grids." Micro-grids are defined as handling under 50MW of power within a community and are interconnected with the smart grid. The document proposes several micro-grid projects including bidirectional control centers between battery storage and solar farms, battery storage for night lighting powered by solar panels, increasing solar panel efficiency, and using excess heat from solar panels for HVAC. It analyzes the economics of battery storage compared to combustion turbines for meeting peak energy demands.
What is a solar energy paradise: In technical terms, a paradise in solar energy is the region with a combination of … HIGH SOLAR IRRADIATION and HIGH ELECTRICITY PRICES. But in “financial terms”, a solar energy paradise needs another keystone …
LOW “WACC” (Weighted Average Cost of Capital), which means the combination of
Relative low “Cost of Debt”, Moderate to Low “Return of Equity”and Adequate Credit/Equity Ratio. Let's see if the island of Curaçao meets these requirements
This white paper discusses how hybrid energy systems combining wind, solar, diesel generators and batteries can help reduce operating costs for telecom sites in remote, rural, or developing areas without stable utility power. Such hybrid systems mitigate dependence on costly and potentially unstable diesel fuel by taking advantage of on-site renewable resources. Careful evaluation of wind and solar conditions at a site is important for estimating energy production from renewable sources and designing an effective hybrid system.
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Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Best practices for project execution and deliveryCLIVE MINCHIN
A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.
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1. CONFIDENTIAL
LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Source: http://gallery.mailchimp.com/ce17780900c3d223633ecfa59/files/Lazard_Levelized_Cost_of_Energy_v7.0.1.pdf
AUGUST 2013
2. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Introduction
Lazard’s Levelized Cost of Energy Analysis (“LCOE”) addresses the following topics:
Comparative “levelized cost of energy” for various technologies on a $/MWh basis, including sensitivities, as relevant, for U.S. federal tax
subsidies, fuel costs, geography and cost of capital, among other factors
Illustration of how the cost of utility-scale solar-produced energy compares against generation rates in large metropolitan areas of the United
States
Illustration of utility-scale solar versus peaking generation technologies globally
Illustration of how the costs of utility-scale and rooftop solar and wind vary across the United States, based on average available resources
Comparison of assumed capital costs on a $/kW basis for various generation technologies
Decomposition of the levelized cost of energy for various generation technologies by capital cost, fixed operations and maintenance expense,
variable operations and maintenance expense, and fuel cost, as relevant
Considerations regarding the usage characteristics and applicability of various generation resources, taking into account factors such as
location requirements/constraints, dispatch capability, land and water requirements and other contingencies
Summary assumptions for the various generation technologies examined
Summary of Lazard’s approach to comparing the levelized cost of energy for various conventional and Alternative Energy generation
technologies
Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of this
current analysis. These additional factors, among others, could include: capacity value vs. energy value; network upgrade or congestion costs;
integration costs; costs of adding emissions controls (e.g., selective catalytic reductions systems, etc.) to existing fossil power plants; and
transmission costs. The analysis also does not address the potential stranded cost aspects of distributed generation solutions in respect of existing
electric utility systems, nor does it account for the social costs or other externalities of the rate consequences for those who cannot afford
distributed generation solutions
While prior versions of this study have presented the LCOE inclusive of the U.S. Federal Investment Tax Credit and Production Tax Credit,
Versions 6.0 and 7.0 present the LCOE on an unsubsidized basis, except as noted on the page titled “Levelized Cost of Energy—Sensitivity to U.S.
Federal Tax Subsidies”
1
Note: This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice.
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
3. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Unsubsidized Levelized Cost of Energy Comparison
Certain Alternative Energy generation technologies are cost-competitive with conventional generation technologies under some
scenarios, before factoring in environmental and other externalities (e.g., RECs, transmission and back-up generation/system
reliability costs) as well as construction and fuel cost dynamics affecting conventional generation technologies
ALTERNATIVE
ENERGY(a)
CONVENTIONAL
Solar PV—Crystalline Rooftop ‡
Solar PV—Crystalline Utility Scale (b)
Solar PV—Thin-film Utility Scale (d)
Solar Thermal (e)
Fuel Cell ‡
Microturbine ‡
Geothermal
Biomass Direct
Wind
Energy Efficiency (g) $0
Battery Storage (h)
Diesel Generator (i) ‡
Gas Peaking
(j)
IGCC
(l)
Nuclear
(n)
Coal
Gas Combined Cycle
$0
Source:
Note:
‡
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
$149
$68 (c)
$64 (c)
$104
$99
$125
$109
$102
$89
$87
$45
$204
$91
$89
$95
$164
$206
$135
$142
$116
$155(f)
$50
$216
$329
$332
$297
$95
$86 $115(m)
$65
$61
$50
$179
$154
$141(k)
$122
$230
$145
$127(o)
$87
$100
$150
$200
$250
$300
$350
Levelized Cost ($/MWh)
Lazard estimates.
Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and natural gas price of $4.50 per MMBtu.
As many have argued, current solar pricing trends may be masking material differences between the inherent economics of certain types of thin-film technologies and crystalline silicon.
Denotes distributed generation technology.
Analysis excludes integration costs for intermittent technologies. A variety of studies suggest integration costs ranging from $2.00 to $10.00 per MWh.
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW system in high insolation jurisdiction (e.g., Southwest U.S.). Not directly comparable for baseload.
Diamonds represent estimated implied levelized cost of energy in 2015, assuming $1.50 per watt for a crystalline single-axis tracking system and $1.50 per watt for a thin-film single-axis tracking system.
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW fixed-tilt installation in high insolation jurisdiction (e.g., Southwest U.S.).
Low end represents solar tower without storage. High end represents solar tower with storage capability.
Represents estimated midpoint of levelized cost of energy for offshore wind, assuming a range of $3.10 – $5.00 per watt.
Estimates per National Action Plan for Energy Efficiency; actual cost for various initiatives varies widely. Estimates involving demand response may fail to account for opportunity cost of foregone consumption.
Indicative range based on current and future stationary storage technologies; assumes capital costs of $400 – $750/KWh for 6 hours of storage capacity, $60/MWh cost to charge, one full cycle per day (full charge and discharge), efficiency
of 66% – 75% and fixed O&M costs of $5 to $20 per KWh installed per year.
Low end represents continuous operation. High end represents intermittent operation. Assumes diesel price of $4.00 per gallon.
High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
Represents estimate of current U.S. new IGCC construction with carbon capture and compression. Does not include cost of transportation and storage.
Does not reflect decommissioning costs or potential economic impact of federal loan guarantees or other subsidies.
Represents estimate of current U.S. new nuclear construction.
Based on advanced supercritical pulverized coal. High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
Incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
2
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
4. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy—Sensitivity to U.S. Federal Tax Subsidies
U.S. federal tax subsidies remain an important component of the economics of Alternative Energy generation technologies
(and government incentives are, generally, currently important in all regions); future cost reductions in technologies such as
solar PV have the potential to enable these technologies to approach “grid parity” without tax subsidies and may currently
reach “grid parity” under certain conditions (albeit such observation does not take into account issues such as dispatch
characteristics, the cost of incremental transmission and back-up generation/system reliability costs or other factors)
$149
Solar PV—Crystalline Rooftop$
$204
$117
$68(b)
Solar PV—Crystalline Utility Scale(a)
$54(b)
$64(b)
Solar PV—Thin-film Utility Scale(c)
$91
$72
$51(b)
$160
$104
$82
$89
$71
$99
$78
$125
Solar Thermal(d)
$164
$109
$144
$109
Fuel Cell$
$206
$102
$203
$102
Microturbine(e)
$135
$97
$129
$89
Geothermal$
$142
$74
$140
$87
Biomass Direct$
$116
$67
$100
$45
Wind$
$23
$0
$155(f)
$95
$154(f)
$85
$50
$100
$150
$200
$250
$300
$350
Levelized Cost ($/MWh)
Unsubsidized
Subsidized (g)
Source: Lazard estimates.
(a)
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW system in high insolation jurisdiction (e.g., Southwest U.S.). Not directly comparable for baseload.
(b)
Diamonds represent estimated implied levelized cost of energy in 2015, assuming $1.50 per watt for a crystalline single-axis tracking system and $1.50 per watt for a thin-film single-axis tracking system.
(c)
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW fixed-tilt installation in high insolation jurisdiction (e.g., Southwest U.S.).
(d)
Low end represents solar tower without storage. High end represents solar tower with storage capability.
(e)
Reflects 10% Investment Tax Credit. Capital structure adjusted for lower Investment Tax Credit; assumes 50% debt at 8.0% interest rate, 20% tax equity at 12.0% cost and 30% common equity at 12.0% cost.
(f)
Represents estimated midpoint of levelized cost of energy for offshore wind, assuming a range of $3.10 – $5.00 per watt.
(g)
Except where noted, reflects Investment Tax Credit. Assumes 30% debt at 8.0% interest rate, 50% tax equity at 12.0% cost and 20% common equity at 12.0% cost.
3
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
5. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices
Variations in fuel prices can materially affect the levelized cost of energy for conventional generation technologies, but direct
comparisons against “competing” Alternative Energy generation technologies must take into account issues such as dispatch
characteristics (e.g., baseload and/or dispatchable intermediate load vs. peaking or intermittent technologies)
Solar PV—Crystalline Rooftop
$149
Solar PV—Crystalline Utility Scale
$68
$91
Solar PV—Thin-film Utility Scale
$64
$89
$104
$99
Solar Thermal
$125
Fuel Cell
ALTERNATIVE
ENERGY
$204
$164
$100
Microturbine
$212
$87
Geothermal
$141
$89
Biomass Direct
$142
$83
Wind
$45
Energy Efficiency
$125
$95
$0
$155
$50
Battery Storage
Diesel Generator
$216
(a)
$225
Gas Peaking
$165
IGCC
CONVENTIONAL
$90
Nuclear
Coal
$0
$50
$242
$124
$59
$52
$404
$160
$84
Gas Combined Cycle
$329
$152
$96
$100
$150
$200
$250
$300
$350
$400
$450
Levelized Cost ($/MWh)
Source: Lazard estimates.
Note: Darkened areas in horizontal bars represent low end and high end levelized cost of energy corresponding with ±25% fuel price fluctuations.
(a)
Low end represents continuous operation. High end represents intermittent operation.
4
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
6. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Generation Rates for the 10 Largest U.S. Metropolitan Areas(a)
Setting aside the legislatively-mandated demand for solar and other Alternative Energy resources, solar is becoming a more
economically viable peaking energy product in many areas of the U.S. and, as pricing declines, could become economically
competitive across a broader array of geographies; this observation, however, does not take into account the full cost of
incremental transmission and back-up generation/system reliability costs, as well as the potential stranded cost aspects of
distributed generation solutions in respect of existing electricity systems, nor does it account for the social costs or other
externalities of the rate consequences for those who cannot afford distributed generation solutions
Price ($/MWh)
$225
Gas Peaker(b)
$204
200
175
Solar Rooftop(b)
$177
150
125
$121
$107
100
$86
$86
50
$23
25
$70
$77
$75
75
Metropolitan
Statistical
Area
$137
CCGT(c)
Dallas
Houston
$34
$24
Utility-scale Solar(d)
$91
Utility-scale Solar
2015(e)
$64
$27
0
New
York
Chicago
20
13
10
7
6
6
7%
Population (mm)
Cumulative % of
U.S. population
Los
Angeles
Phila.
12%
16%
18%
21%
23%
D.C.
Miami
Atlanta
Boston
6
6
5
5
25%
27%
29%
31%
Illustrative Generation Charge
U.S. Illustrative
Generation,
Transmission and
Delivery Charge
Source: EEI.
Note: Actual delivered generation prices may be higher, reflecting historical composition of resource portfolio.
(a)
Defined as 10 largest Metropolitan Statistical Areas per the U.S. Census Bureau for a total population of 83 million.
(b)
Represents an average of the high and low levelized cost of energy.
(c)
Assumes 25% capacity factor.
(d)
Represents low end of crystalline utility scale. Excludes investment tax credit.
(e)
Represents estimated implied levelized cost of energy in 2015, assuming $1.50 per watt for a thin-film single-axis tracking system. Excludes investment tax credit.
5
Copyright 2013 Lazard.
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7. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Solar versus Peaking Capacity—Global Markets
Solar PV can be an attractive resource relative to gas and diesel-fired peaking in many parts of the world due to high fuel costs;
without storage, however, solar lacks the dispatch characteristics of conventional peaking technologies
$99
U.S.
$74
Australia
$257
$212
$340
$112
India
$389
$219
$345
$91
South Africa
$391
$177
$339
$122
Japan
$343
$285
$288
$245
$99
U.S.
$373
$161
$288 $297
$74
Australia
$384
$247
$139
Northern Europe
$332
$142
$334 $344
$109
Brazil
DIESEL
GENERATORS
VERSUS SOLAR(a)(c)
$230
$109
Brazil
GAS PEAKER
VERSUS
SOLAR(a)(b)
$161
$179
$142
$209
$309
$112
India
$216
$91
South Africa
$219
$228
$322
$372
$276
$177
$122
Japan
$309
$321
$368
$247
$431 $441
$139
Northern Europe
$0
$50
$100
$285
$150
$200
$250
$300
Solar
$476
$503 $513
$350
Levelized Cost ($/MWh)
6
$379
$212
$400
$450
$500
$548
$550
$600
Diesel Fuel Cost
Gas Peaker/Diesel Generator
Source: World Bank, Waterborne Energy, Department of Energy of South Africa, Sydney and Brisbane Hub Trading Prices and Lazard estimates.
(a)
Low end assumes a solar fixed-tilt thin-film utility scale system with per watt capital costs of $1.75. High end assumes a solar crystalline rooftop utility scale system with per watt
capital costs of $3.25. Solar projects assume capacity factors of 26% – 28% for Australia, 25% – 27% for Brazil, 23% – 25% for India, 27% – 29% for South Africa, 15% – 17% for
Japan and 13% – 15% 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.
(b)
Assumes natural gas prices of $7 for Australia, $14 for Brazil, $15 for India, $15 for South Africa, $18 for Japan and $10 for Northern Europe (all in U.S.$ per MMBtu). Assumes a
capacity factor of 10%.
(c)
Diesel assumes high end capacity factor of 30% representing intermittent utilization and low end capacity factor of 95% representing baseload utilization, O&M cost of $15 per
KW/year, heat rate of 10,000 Btu/KWh and total capital costs of $500 to $800 per KW of capacity. Assumes diesel prices of $4.65 for Australia, $4.30 for Brazil, $3.00 for India,
Copyright 2013 Lazard. $4.30 for South Africa, $6.00 for Japan and $7.00 for Northern Europe (all in U.S.$ per gallon).
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
8. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Wind and Solar Resource—U.S. Regional Sensitivity (Unsubsidized)
The availability of wind and solar resource has a meaningful impact on the levelized cost of energy for various regions of the
United States. This regional analysis varies capacity factors as a proxy for resource availability, while holding other variables
constant. There are a variety of other factors (e.g., transmission, back-up generation/system reliability costs, labor rates,
permitting and other costs) that would also impact regional costs
LCOE v7.0
$99
$161
Northeast
$115
Southeast
$232
$109
SOLAR(a)
Midwest
$104
Texas
$218
$104
Southwest
$206
$195
$91
LCOE v7.0
$45
$176
$95
Northeast
$64
Southeast
$95
$86
$137
WIND(b)
Midwest
$45
Texas
$74
$51
Southwest
$74
$64
$0
$50
$95
$100
$150
$200
$250
Levelized Cost ($/MWh)
Source: Lazard estimates.
Note: Assumes solar capacity factors of 16% – 18% for the Northeast, 17% – 19% for the Southeast, 18% – 20% for the Midwest, 19% – 20% for Texas and 21% – 23% for the Southwest. Assumes wind
capacity factors of 30% – 35% for the Northeast, 20% – 25% for the Southeast, 40% – 52% for the Midwest, 40% – 45% for Texas and 30% – 35% for the Southwest.
(a)
Low end assumes a solar fixed-tilt thin-film utility scale system with per watt capital costs of $1.75. High end assumes a solar crystalline rooftop utility scale system with per watt capital costs of $3.25.
(b)
Assumes an onshore wind generation plant with capital costs of $1.50 – $2.00 per watt.
7
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
9. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Capital Cost Comparison
While capital costs for a number of Alternative Energy generation technologies (e.g., solar PV, solar thermal) are currently in
excess of some conventional generation technologies (e.g., gas), declining costs for many Alternative Energy generation
technologies, coupled with rising long-term construction and uncertain long-term fuel costs for conventional generation
technologies, are working to close formerly wide gaps in electricity costs. This assessment, however, does not take into account
issues such as dispatch characteristics, capacity factors, fuel and other costs needed to compare generation technologies
Solar PV—Crystalline Rooftop
$1,500(b)
$1,500(b)
Solar
$1,750 $2,000
Thermal (d)
$5,600
Fuel Cell
ALTERNATIVE
ENERGY(a)
$3,500
$1,750 $2,000
Scale (c)
Solar PV—Crystalline Utility Scale
Solar PV—Thin-film Utility
$3,000
(a)
$3,800
Microturbine
$5,000
$2,300
$3,800
Geothermal
$4,600
Biomass Direct
$3,000
Wind
Battery Storage
$1,500
(f)
$400
$4,000
$4,050(e)
$2,000
$800
Gas Peaking
CONVENTIONAL
$800
$1,000
(g)
$4,000
Nuclear
Coal
$7,250
$750
$500
Diesel Generator
IGCC
$9,000
$6,821(h)
$7,591(i)
$5,385
(j)
$7,500
$3,000
Gas Combined Cycle
$1,006
$0
$1,000
$1,318
$2,000
$8,199
$8,400
$2,467(k)
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Source: Lazard estimates.
Capital Cost ($/kW)
(a)
High end represents single-axis tracking. Low end represents fixed-tilt installation.
(b)
Diamonds represent estimated capital costs in 2015, assuming $1.50 per watt for a crystalline single-axis tracking system and $1.50 per watt for a thin-film single-axis tracking system.
(c)
High end represents single-axis tracking. Low end represents fixed-tilt installation.
(d)
Low end represents solar tower without storage. High end represents solar tower with storage capability.
(e)
Represents estimated midpoint of capital costs for offshore wind, assuming a range of $3.10 – $5.00 per watt.
(f)
Indicative range based on current and future stationary storage technologies.
(g)
High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
(h)
Represents estimate of current U.S. new IGCC construction with carbon capture and compression. Does not include cost of transportation and storage.
(i)
Represents estimate of current U.S. new nuclear construction.
(j)
Based on advanced supercritical pulverized coal. High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
(k)
Incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
8
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
10. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy—Sensitivity to Cost of Capital
A key issue facing Alternative Energy generation technologies resulting from the potential for intermittently disrupted capital
markets (and the relatively immature state of some aspects of financing Alternative Energy technologies) is the reduced
availability, and increased cost, of capital; availability and cost of capital have a particularly significant impact on Alternative
Energy generation technologies, whose costs reflect essentially the return on, and of, the capital investment required to
build them
LCOE
($/MWh)
$200
+27%
150
+47%
+26%
+29%
+26%
100
+14%
50
After-Tax IRR/WACC
6.2%
6.9%
7.7%
8.4%
9.2%
Cost of Equity
10.0%
11.0%
12.0%
13.0%
14.0%
Cost of Debt
6.0%
7.0%
8.0%
9.0%
10.0%
Solar PV—Crystalline Rooftop
Nuclear
(c)
Solar PV—Crystalline Utility Scale
Coal
(d)
(a)
(b)
Solar PV—Thin-film Utility Scale
Gas—Combined Cycle
Source: Lazard estimates.
Note: Assumes Powder River Basin coal price of $1.99 per MMBtu and natural gas price of $4.50 per MMBtu.
(a)
Assumes a fixed-tilt crystalline utility scale system with capital costs of $1.75 per watt.
(b)
Assumes a fixed-tilt thin-film utility scale system with capital costs of $1.75 – $2.00 per watt.
(c)
Does not reflect decommissioning costs or potential economic impact of federal loan guarantees or other subsidies.
(d)
Based on advanced supercritical pulverized coal.
9
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
11. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy Components—Low End
Certain Alternative Energy generation technologies are already cost-competitive with conventional generation technologies; a
key factor regarding the long-term competitiveness of currently more expensive Alternative Energy technologies is the ability
of technological development and increased production volumes to materially lower the capital costs of certain Alternative
Energy technologies, and their levelized cost of energy, over time (e.g., as has been the case with solar PV and wind
technologies)
Solar PV—Crystalline Rooftop
$143
Solar PV—Crystalline Utility Scale (a)
$82
Solar PV—Thin-film Utility Scale (b)
$81
Solar Thermal (c)
$8 $89
$108
Fuel Cell
ALTERNATIVE
ENERGY
$6 $149
$8 $91
$50
Microturbine
$20 $11
$39
Geothermal
$13 $3 $125
$18
$30
$45
Wind
$33
$109
$45
$59
Biomass Direct
$28
$13 $15 $15
$102
$89
$87
$7$6 $45
Battery Storage (d)
$121
$5
$122
$6 $5
Diesel Generator (e) $8 $2
CONVENTIONAL
(f)
$67
Nuclear (g)
Coal
$4$7 $18
$72
(h)
$42
Gas Combined Cycle
$46
$297
$179
$95
$8 $7 $86
$3$3$17
$26 $1 $4 $30
$0
$216
$288
Gas Peaking
IGCC
$90
$65
$61
$50
$100
$150
$200
$250
$300
$350
Levelized Cost ($/MWh)
Capital Cost
Fixed O&M
Variable O&M
Fuel Cost
Source: Lazard estimates.
Note: Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and
natural gas price of $4.50 per MMBtu.
(a)
Low end represents single-axis tracking.
(b)
Low end represents single-axis tracking.
(c)
Low end represents solar tower without storage capability.
(d)
Low end represents flow battery.
(e)
Low end represents continuous operation.
(f)
Does not incorporate carbon capture and compression.
(g)
Does not reflect decommissioning costs or potential economic impact of federal loan guarantees or other subsidies.
(h)
Based on advanced supercritical pulverized coal. Does not incorporate carbon capture and compression.
10
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
12. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy Components—High End
Certain Alternative Energy generation technologies are already cost-competitive with conventional generation technologies; a
key factor regarding the long-term competitiveness of currently more expensive Alternative Energy technologies is the ability
of technological development and increased production volumes to materially lower the capital costs of certain Alternative
Energy technologies, and their levelized cost of energy, over time (e.g., as has been the case with solar PV and wind
technologies)
Solar PV—Crystalline Rooftop
$192
Solar PV—Crystalline Utility Scale (a)
$97
Solar PV—Thin-film Utility Scale (b)
$92
$7 $99
Solar Thermal (c)
$143
Fuel Cell
$59
$18 $3 $164
$60
Microturbine
ALTERNATIVE
ENERGY
$11 $204
$7 $104
$102
$22
Geothermal
$54
$102
Biomass Direct
$59
Wind
$13 $15
$74
$206
$29
$142
$116
$11 $10 $95
$229
Diesel Generator (e)
$39
$10
$6
$154
(f)
$29
$122
Nuclear (g)
Coal (h)
$4$7 $21
$108
$111
Gas Combined Cycle
$52
$0
$90
$329
$288
Gas Peaking
CONVENTIONAL
$33
$135
$40
Battery Storage (d)
IGCC
$11
$2 $2 $31
$50
$8 $7
$8
$332
$41
$230
$154
$122
$4 $6 $24
$145
$87
$100
$150
$200
$250
$300
$350
Levelized Cost ($/MWh)
Capital Cost
Fixed O&M
Variable O&M
Fuel Cost
Source: Lazard estimates.
Note: Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and
natural gas price of $4.50 per MMBtu.
(a)
High end represents fixed-tilt installation.
(b)
High end represents fixed-tilt installation.
(c)
High end represents solar tower with storage capability.
(d)
High end represents NaS technology.
(e)
High end represents intermittent operation.
(f)
High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
(g)
Does not reflect decommissioning costs or potential economic impact of federal loan guarantees or other subsidies.
(h)
Based on advanced supercritical pulverized coal. High end incorporates 90% carbon capture and compression. Does not include cost of transportation and storage.
11
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
13. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Energy Resources: Matrix of Applications
While the levelized cost of energy for Alternative Energy generation technologies is becoming increasingly competitive with
conventional generation technologies, direct comparisons must take into account issues such as location (e.g., central station
vs. customer-located) and dispatch characteristics (e.g., baseload and/or dispatchable intermediate load vs. peaking or
intermittent technologies). This analysis also does not address the potential stranded cost aspects of distributed generation
solutions in respect of existing electric utility systems, nor does it account for the social costs or other externalities of the rate
consequences for those who cannot afford distributed generation solutions
CARBON
LEVELIZED NEUTRAL/
STATE
COST OF
REC
OF
ENERGY
POTENTIAL TECHNOLOGY
SOLAR PV
$89 – 204
Commercial
SOLAR
THERMAL
$125 – 164
$109 – 206
?(b)
MICROTURBINE
$102 – 135
?(b)
GEOTHERMAL
$89 – 142
BIOMASS
DIRECT
$87 – 116
ONSHORE
WIND
$45 – 95
BATTERY
STORAGE
Universal(a)
Southwest
Mature
Emerging/
Commercial
Emerging/
Commercial
DISPATCH
CENTRAL
STATION
Commercial
FUEL CELL
LOCATION
CUSTOMER
LOCATED
GEOGRAPHY INTERMITTENT
PEAKING
LOADFOLLOWING
BASELOAD
Universal
Varies
Mature
Universal
Mature
Varies
$216 – 329
Emerging
Varies
$297 – 332
Mature
$179 – 230
Mature
IGCC
$95 – 154
(c)
Emerging(d)
NUCLEAR
$86 – 122
Mature/
Emerging
COAL
$65 – 145
(c)
Mature(d)
GAS
COMBINED
CYCLE
12
GAS PEAKING
CONVENTIONAL
Universal
DIESEL
GENERATOR
ALTERNATIVE
ENERGY
$61 – 87
Mature
Universal
Universal
Co-located or
rural
Co-located or
rural
Co-located or
rural
Universal
Source: Lazard estimates.
(a)
Qualification for RPS requirements varies by location.
(b)
LCOE study capacity factor assumes Southwest location.
(c)
Could be considered carbon neutral technology, assuming carbon capture and compression.
(d)
Carbon capture and compression technologies are in emerging stage.
Copyright 2013 Lazard.
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14. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy—Key Assumptions
Solar PV—Crystalline
Solar PV—Thin-film
Units
Net Facility Output
Rooftop
Utility Scale(b)
Utility Scale(c)
MW
10
10
10
$3,500
$2,000
–
$1,750
$2,000
–
$1,750
–
100
$5,600
–
$9,000
2.4
$/kW
Capital Cost During Construction
$/kW
included
included
included
included
Other Owner's Costs
$/kW
included
included
included
included
$800
Total Capital Cost
–
120
Fuel Cell
EPC Cost
(a)
$3,000
Solar Thermal Tower (d)
$3,000
–
$5,000
included
– included
$/kW
$3,000
–
$3,500
$2,000
–
$1,750
$2,000
–
$1,750
$5,600
–
$9,000
$3,800
–
$5,000
Fixed O&M
$/kW-yr
$13.00
–
$20.00
$20.00
–
$13.00
$20.00
–
$13.00
$50.00
–
$80.00
$169
–
$850
Variable O&M
$/MWh
––
––
––
$3.00
Btu/kWh
––
––
––
––
Heat Rate
Capacity Factor
%
Fuel Price
23%
–
20%
27%
–
20%
28%
–
21%
43%
–
$10.75
6,239
52%
–
7,260
95%
$/MMBtu
––
––
––
––
$4.50
Months
3
12
12
24
3
Years
20
20
20
40
20
lb/MMBtu
––
––
––
––
Investment Tax Credit(e)
%
––
––
––
––
––
Production Tax Credit(e)
$/MWh
––
––
––
––
––
Levelized Cost of Energy(e)
$/MWh
Construction Time
Facility Life
CO2 Emissions
$149
–
$204
$91
–
$104
$89
–
$99
$125
–
0
$164
$109
–
–
117
$206
Source: Lazard estimates.
Note: Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and
natural gas price of $4.50 per MMBtu.
(a)
Includes capitalized financing costs during construction for generation types with over 24 months construction time.
(b)
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW system in high insolation jurisdiction (e.g., Southwest U.S.). Not directly comparable for baseload.
(c)
Low end represents single-axis tracking. High end represents fixed-tilt installation. Assumes 10 MW fixed-tilt installation in high insolation jurisdiction (e.g., Southwest U.S.).
(d)
Low end represents solar tower without storage. High end represents solar tower with storage capability.
(e)
While prior versions of this study have presented LCOE inclusive of the U.S. Federal Investment Tax Credit and Production Tax Credit, Versions 6.0 and 7.0 present LCOE on an unsubsidized basis,
except as noted on the page titled “Levelized Cost of Energy—Sensitivity to U.S. Federal Tax Subsidies.”
13
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
M
15. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy—Key Assumptions (cont’d)
Units
Geothermal
Biomass Direct
Wind
Off-Shore Wind
Offshore Wind
Battery Storage(c)
MW
Net Facility Output
Microturbine
1
30
35
100
210
6
EPC Cost
$/kW
Capital Cost During Construction
$/kW
included
Other Owner's Costs
$/kW
included
Total Capital Cost(a)
$/kW
Fixed O&M
$/MWh
$2,300
$/kW-yr
Variable O&M
$2,300
Heat Rate
Btu/kWh
Capacity Factor
– $3,800
– $3,800
$4,021
$579
–
$4,600
–
$3,000
– $4,000
12,000
90%
– $40.00
$15.00
$300
–
$/MMBtu
$4.50
––
Months
3
36
Years
20
lb/MMBtu
80%
$6.00
$400
– $2,000
$750
–
included
$880
$3,100
– $5,000
$400
– $100.00
$10.00
$13.00
– $18.00
––
––
30%
––
43%
–
37%
25%
–
$750
– $22.00
–
––
36
12
12
3
20
20
20
20
20
––
––
––
––
––
––
%
––
––
––
––
––
––
Production Tax Credit(b)
$/MWh
––
––
––
––
––
––
Levelized Cost of Energy(b)
$/MWh
25%
––
Facility Life
CO2 Emissions
Investment Tax Credit
(b)
$102
–
$135
$89
–
$142
$87
–
$2.00
–
$60.00
– $10.00
–
$400
included
$600
––
52%
– $4,120
––
Construction Time
–
$2,500
included
$30.00
85%
$1.00
–
$1,500
14,500
95%
– $1,600
included
$95.00
––
$30.00
$1,200
$503
included
– $7,250
%
Fuel Price
$378
– $3,497
––
– $22.00
10,000 –
$913
$2,622
included
––
$18.00
– $6,337
$116
$45
–
$95
$110
–
$200
$216
–
$329
Source: Lazard estimates.
Note: Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and
natural gas price of $4.50 per MMBtu.
(a)
Includes capitalized financing costs during construction for generation types with over 24 months construction time.
(b)
While prior versions of this study have presented LCOE inclusive of the U.S. Federal Investment Tax Credit and Production Tax Credit, Versions 6.0 and 7.0 present LCOE on an unsubsidized basis,
except as noted on the page titled “Levelized Cost of Energy—Sensitivity to U.S. Federal Tax Subsidies.”
(c)
Assumes capital costs of $400 – $750/KWh for 6 hours of storage capacity, $60/MWh cost to charge, one full cycle per day (full charge and discharge), efficiency of 66% – 75% and fixed O&M costs
of $5 to $20 per KWh installed per year.
14
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
16. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Levelized Cost of Energy—Key Assumptions (cont’d)
Units
MW
Net Facility Output
Diesel Generator (b)
2
580
–
$700
1,100
600
550
103
$580
Gas Combined Cycle
Capital Cost During Construction
$/kW
included
Other Owner's Costs
$/kW
included
$220
–
–
$800
– $1,000
$4,000
– $7,500
$500
$800
–
Coal (e)
$/kW
$/kW
–
216
Nuclear (d)
EPC Cost
Total Capital Cost(a)
$500
IGCC(c)
Gas Peaking
included
$800
$3,257
– $5,990
$3,750
– $5,250
$2,027
– $6,067
$743
– $1,004
$743
– $1,510
$1,035
– $1,449
$487
– $1,602
$107
–
$145
$600
– $1,500
$486
–
$156
–
$170
$5,385
– $8,199
$3,000
– $8,400
$1,006
– $1,318
$60.00
$20.40
– $31.60
$6.20
–
$5.50
$300
included
$731
Fixed O&M
$/kW-yr
$15.00
$5.00
– $25.00
$26.40
– $28.20
Variable O&M
$/MWh
––
$4.70
–
$7.50
$6.80
–
$7.30
––
$3.00
–
$5.90
$3.50
–
$2.00
Btu/kWh
10,000
10,300 –
9,000
8,800
–
10,520
10,450
8,750
–
12,000
6,700
–
6,900
70%
–
40%
Heat Rate
Capacity Factor
%
Fuel Price
95%
–
30%
10%
75%
90%
93%
$1.99
$0.65
$1.99
$/MMBtu
CO2 Emissions
3
25
Years
Facility Life
$4.50
Months
Construction Time
$4.00
20
20
40
40
40
20
117
169
––
211
117
lb/MMBtu
Investment Tax Credit
(f)
0
–
117
57
–
63
69
60
–
$4.50
66
36
%
––
––
––
––
––
––
Production Tax Credit(f)
$/MWh
––
––
––
––
––
––
Levelized Cost of Energy(f)
$/MWh
$297
–
$332
$179
–
$230
$95
–
$154
$86
–
$122
$65
–
$145
$61
–
$87
Source: Lazard estimates.
Note: Assumes 60% debt at 8% interest rate and 40% equity at 12% cost for conventional and Alternative Energy generation technologies. Assumes Powder River Basin coal price of $1.99 per MMBtu and
natural gas price of $4.50 per MMBtu.
(a)
Includes capitalized financing costs during construction for generation types with over 24 months construction time.
(b)
Low end represents continuous operation. High end represents intermittent operation. Assumes diesel price of $4.00 per gallon.
(c)
High end incorporates 90% carbon capture and compression. Does not include cost of storage and transportation.
(d)
Does not reflect decommissioning costs or potential economic impact of federal loan guarantees or other subsidies.
(e)
Based on advanced supercritical pulverized coal. High end incorporates 90% carbon capture and compression. Does not include cost of storage and transportation.
(f)
While prior versions of this study have presented LCOE inclusive of the U.S. Federal Investment Tax Credit and Production Tax Credit, Versions 6.0 and 7.0 present LCOE on an unsubsidized basis,
except as noted on the page titled “Levelized Cost of Energy—Sensitivity to U.S. Federal Tax Subsidies.”
15
Copyright 2013 Lazard.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
17. LAZARD'S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 7.0
Summary Considerations
Lazard has conducted this study comparing the levelized cost of energy for various conventional and Alternative Energy
generation technologies in order to understand which Alternative Energy generation technologies may be cost-competitive with
conventional generation technologies, either now or in the future, and under various operating assumptions, as well as to
understand which technologies are best suited for various applications based on locational requirements, dispatch
characteristics and other factors. We find that Alternative Energy technologies are complementary to conventional generation
technologies, and believe that their use will be increasingly prevalent for a variety of reasons, including RPS requirements,
continually improving economics as underlying technologies improve, production volumes increase and government subsidies
in certain regions.
In this study, Lazard’s approach was to determine the levelized cost of energy, on a $/MWh basis, that would provide an aftertax IRR to equity holders equal to an assumed cost of equity capital. Certain assumptions (e.g., required debt and equity
returns, capital structure, and economic life) were identical for all technologies, in order to isolate the effects of key
differentiated inputs such as investment costs, capacity factors, operating costs, fuel costs (where relevant) and U.S. federal tax
incentives on the levelized cost of energy. These inputs were developed with a leading consulting and engineering firm to the
Power & Energy Industry, augmented with Lazard’s commercial knowledge where relevant.
Lazard has not manipulated capital costs or capital structure for various technologies, as the goal of the study was to compare
the current state of various generation technologies, rather than the benefits of financial engineering. The results contained in
this study would be altered by different assumptions regarding capital structure (e.g., increased use of leverage) or capital costs
(e.g., a willingness to accept lower returns than those assumed herein).
Key sensitivities examined included fuel costs and tax subsidies. Other factors would also have a potentially significant effect
on the results contained herein, but have not been examined in the scope of this current analysis. These additional factors,
among others, could include scale benefits or detriments, the value of Renewable Energy Credits (“RECs”) or carbon
emissions offsets, the impact of transmission costs, second-order system costs to support intermittent generation (e.g., backup
generation, voltage regulation, etc.), the economic life of the various assets examined, the potential stranded cost aspects of
distributed generation solutions and social costs or other externalities of the rate consequences for those who cannot afford
distributed generation solutions.
16
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No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.