lazards-levelized-cost-of-energy-version-150-vf.pdf

L A Z A RD’ S L E V E L IZ E D CO S T O F E NE RG Y A N A LY S IS — V E RS IO N 1 5 .0
O C T O B E R 2 0 2 1

Copyright 2021 Lazard
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. 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.
Introduction
L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S — V E R S I O N 1 5 . 0
Lazard’s Levelized Cost of Energy (“LCOE”) analysis addresses the following topics:
• Comparative LCOE analysis for various generation technologies on a $/MWh basis, including sensitivities for U.S. federal tax subsidies, fuel prices,
carbon pricing and costs of capital
• Illustration of how the LCOE of onshore wind and utility-scale solar compare to the marginal cost of selected conventional generation technologies
• Historical LCOE comparison of various utility-scale generation technologies
• Illustration of the historical LCOE declines for wind and utility-scale solar technologies
• Illustration of how the LCOE of utility-scale solar and wind compare to those of gas peaking and combined cycle
• Comparison of capital costs on a $/kW basis for various generation technologies
• Deconstruction of the LCOE for various generation technologies by capital cost, fixed operations and maintenance expense, variable operations
and maintenance expense and fuel cost
• Overview of the methodology utilized to prepare Lazard’s LCOE analysis
• Considerations regarding the operating characteristics and applications of various generation technologies
• Summary of assumptions utilized in Lazard’s LCOE analysis
• Summary considerations in respect of Lazard’s approach to evaluating the LCOE of various conventional and renewable energy 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 upgrades, transmission,
congestion or other integration-related costs; significant permitting or other development costs, unless otherwise noted; and costs of
complying with various environmental regulations (e.g., carbon emissions offsets or emissions control systems). This analysis also does not
address potential social and environmental externalities, including, for example, the social costs and rate consequences for those who cannot
afford distributed generation solutions, as well as the long-term residual and societal consequences of various conventional generation
technologies that are difficult to measure (e.g., nuclear waste disposal, airborne pollutants, greenhouse gases, etc.)
1

Renewable Energy
Conventional
$147
$67
$59
$30
$28
$126
$56
$26
$151
$131
$65
$45
$221
$180
$91
$41
$37
$156
$93
$50
$196
$204
$152
$74
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
Solar PV–Rooftop Residential
Solar PV–Rooftop C&I
Solar PV–Community
Solar PV–Crystalline Utility Scale
Solar PV–Thin Film Utility Scale
Solar Thermal Tower with Storage
Geothermal
Wind
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
(1)
(1)
(6)
$83(2)
(4)
Source: Lazard estimates.
Note: Here and throughout this presentation, unless otherwise indicated, the analysis assumes 60% debt at 8% interest rate and 40% equity at 12% cost. Please see page titled “Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital” for cost of
capital sensitivities. These results are not intended to represent any particular geography. Please see page titled “Solar PV versus Gas Peaking and Wind versus CCGT—Global Markets” for regional sensitivities to selected technologies.
(1) Unless otherwise indicated herein, the low case represents a single-axis tracking system and the high case represents a fixed-tilt system.
(2) Represents the estimated implied midpoint of the LCOE of offshore wind, assuming a capital cost range of approximately $2,500 – $3,600/kW.
(3) The fuel cost assumption for Lazard’s global, unsubsidized analysis for gas-fired generation resources is $3.45/MMBTU.
(4) Unless otherwise indicated, the analysis herein does not reflect decommissioning costs, ongoing maintenance-related capital expenditures or the potential economic impacts of federal loan guarantees or other subsidies.
(5) Represents the midpoint of the marginal cost of operating fully depreciated gas combined cycle, coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the salvage value for a decommissioned gas
combined cycle or coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle, coal and nuclear assets across the U.S. Capacity factors, fuel, variable and fixed
operating expenses are based on upper- and lower-quartile estimates derived from Lazard’s research. Please see page titled “Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of Selected Existing Conventional
Generation” for additional details.
(6) High end incorporates 90% carbon capture and storage. Does not include cost of transportation and storage.
(7) Represents the LCOE of the observed high case gas combined cycle inputs using a 20% blend of “Blue” hydrogen, (i.e., hydrogen produced from a steam-methane reformer, using natural gas as a feedstock, and sequestering the resulting CO2 in a
nearby saline aquifer). No plant modifications are assumed beyond a 2% adjustment to the plant’s heat rate. The corresponding fuel cost is $5.20/MMBTU, assuming ~$1.40/kg for Blue hydrogen.
(8) Represents the LCOE of the observed high case gas combined cycle inputs using a 20% blend of “Green” hydrogen, (i.e., hydrogen produced from an electrolyzer powered by a mix of wind and solar generation and stored in a nearby salt cavern). No
plant modifications are assumed beyond a 2% adjustment to the plant’s heat rate. The corresponding fuel cost is $10.05/MMBTU, assuming ~$4.15/kg for Green hydrogen.
Levelized Cost of Energy Comparison—Unsubsidized Analysis
$29(5)
$42(5)
Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances
(3)
(3)
Levelized Cost ($/MWh)
$24(5) $89(7) $129(8)
2

(1) The sensitivity analysis presented on this page assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity, tax equity and debt.
Unsubsidized
Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies(1)
The Investment Tax Credit (“ITC”) and Production Tax Credit (“PTC”) remain important components of the levelized cost of renewable energy
generation technologies
Subsidized
$147
$135
$67
$62
$59
$57
$30
$25
$28
$23
$126
$117
$56
$47
$26
$9
$221
$203
$180
$166
$91
$88
$41
$34
$37
$31
$156
$143
$93
$89
$50
$40
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
Geothermal
Wind
3

Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices
Variations in fuel prices can materially affect the LCOE of conventional generation technologies, but direct comparisons to “competing”
renewable energy generation technologies must take into account issues such as dispatch characteristics (e.g., baseload and/or dispatchable
intermediate capacity vs. those of peaking or intermittent technologies)
Note: Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized
Analysis”.
(1) Assumes a fuel cost range for gas-fired generation resources of $2.59/MMBTU – $4.31/MMBTU (representing a range of ± 25% of the standard assumption of $3.45/MMBTU).
(2) Assumes a fuel cost range for nuclear generation resources of $0.64/MMBTU – $1.06/MMBTU (representing a range of ± 25% of the standard assumption of $0.85MMBTU).
(3) Assumes a fuel cost range for coal-fired generation resources of $1.10/MMBTU – $1.84/MMBTU (representing a range of ± 25% of the standard assumption of $1.47/MMBTU).
Unsubsidized ± 25% Fuel Price Adjustment
Renewable Energy
Conventional
$147
$67
$59
$30
$28
$126
$56
$26
$141
$128
$61
$38
$221
$180
$91
$41
$37
$156
$93
$50
$204
$207
$157
$81
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
Geothermal
Wind
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
(1)
(1)
(2)
(3)
4

Renewable Energy
Conventional
$147
$67
$59
$30
$28
$126
$56
$26
$151
$164
$131
$65
$86
$45
$53
$221
$180
$91
$41
$37
$156
$93
$50
$196
$218
$204
$152
$165
$74
$93
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
Geothermal
Wind
Nuclear
Note: Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1) The low and high ranges reflect the LCOE of selected conventional generation technologies including illustrative carbon prices of $20/Ton and $40/Ton, respectively.
(2) Reflects the midpoint of the marginal cost of operating fully depreciated gas combined cycle and coal facilities as shown on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(3) The narrow spread between the high end of new build coal with and without carbon pricing results from the incorporation of 90% carbon capture and compression. The midpoint of the marginal cost of operating fully depreciated
coal facilities with the illustrative carbon pricing presented herein is $180/MWh. Operating coal facilities are not assumed to employ carbon capture and storage technology.
(4) The midpoint of the marginal cost of operating fully depreciated gas combined cycle facilities with the illustrative carbon pricing presented herein is $56/MWh, reflecting the relatively higher heat rate for existing plants compared to
new build facilities.
Levelized Cost of Energy Comparison—Sensitivity to Carbon Pricing
Carbon pricing is one avenue for policymakers to address carbon emissions via a market-based mechanism; a carbon price range of $20 – $40/Ton
of carbon would increase the LCOE for certain conventional generation technologies to levels above those of onshore wind and utility-scale solar
Gas Peaking
Coal
Gas Combined Cycle
Unsubsidized Unsubsidized with Carbon Pricing
Marginal Cost without Carbon Pricing
(1)
(1)(3)
(1)(4)
5
$29(2)
$42(2)
$24(2)

$103
$114
$127
$141
$156
$172
$61
$65
$70
$75
$81
$87
$27 $30
$32 $36
$39 $43
$32 $33 $36 $38 $40 $43
$116
$132
$149
$167
$185
$205
$80
$92
$98
$108
$119
$130
$53
$55 $57 $60 $62 $64
$141
$152
$162
$173
$185
$197
0
20
40
60
80
100
120
140
160
180
200
$220
LCOE
($/MWh)
Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital
A key consideration in determining the LCOE values for utility-scale generation technologies is the cost, and availability, of capital(1); this
dynamic is particularly significant for renewable energy generation technologies
Note: Analysis assumes 60% debt and 40% equity. Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on
the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1) Cost of capital as used herein indicates the cost of capital applicable to the asset/plant and not the cost of capital of a particular investor/owner.
(2) Reflects the average of the high and low LCOE for each respective cost of capital assumption.
Midpoint of Unsubsidized LCOE(2)
Gas Peaker
Nuclear
Geothermal
Coal
Gas—Combined
Cycle
Solar PV–
Crystalline
Wind
Solar Thermal
Tower
After-Tax
IRR/WACC
4.2% 5.4% 6.5% 7.7% 8.8% 10.0%
Cost of Equity 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Cost of Debt 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
LCOE v15
6

$26
$9
$28
$23
$37
$24
$19
$50
$40
$37
$31
$47
$33
$29
0
10
20
30
40
50
60
$70
Onshore Wind Onshore Wind
(Subsidized)
Solar PV–Thin Film Utility
Scale
Solar PV–Thin Film Utility
Scale (Subsidized)
Coal Nuclear Gas—Combined Cycle
Cost
of
Energy
($/MWh)
Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of existing conventional
generation
Note: Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the page titled “Levelized Cost of Energy
Comparison—Unsubsidized Analysis”.
(1) Represents the marginal cost of operating fully depreciated gas combined cycle, coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the salvage
value for a decommissioned gas combined cycle or coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle,
coal and nuclear assets across the U.S. Capacity factors, fuel, variable and fixed operating expenses are based on upper and lower quartile estimates derived from Lazard’s research.
(2) Please see page titled “Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies” for additional details.
Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of
Selected Existing Conventional Generation
Levelized Cost of New-Build Wind and Solar Marginal Cost of Selected Existing
Conventional Generation(1)
(2) (2)
Subsidized
Wind
Unsubsidized
Solar PV
Unsubsidized
Wind
Subsidized
Solar PV
7

Levelized Cost of Energy Comparison—Historical Utility-Scale Generation
Comparison
Selected Historical Mean Unsubsidized LCOE Values(1)
Solar PV—
Crystalline
(90%)
Lazard’s unsubsidized LCOE analysis indicates significant historical cost declines for utility-scale renewable energy generation technologies
driven by, among other factors, decreasing capital costs, improving technologies and increased competition
$359
$248
$157
$125
$98 $79
$64
$55
$50 $43
$40 $37 $36
$111
$111 $111
$102
$105
$109
$108 $102 $102 $102
$109
$112
$108
$83
$82
$83 $75 $74
$74
$65
$63 $60 $58 $56 $59 $60
$135
$124
$71 $72 $70
$59
$55
$47 $45 $42
$41 $40 $38
$123
$96 $95 $96
$104 $112
$117
$117
$148 $151
$155
$163
$167
$168
$157 $159
$174
$145
$124
$150 $151
$140 $140 $141
$141
$141
$76
$107
$104
$116
$116 $116
$100 $98 $97
$91 $91
$80
$75
$275
$243
$227
$216
$205 $205
$192 $191
$183 $179
$175 $175 $173
20
80
140
200
260
320
$380
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Mean LCOE
($/MWh)
Gas—Combined
Cycle
(27%)
Wind
(72%)
Nuclear
36%
Coal
(3%)
Solar Thermal
Tower
(16%)
Gas Peaker
(37%)
Geothermal
(1%)
(1) Reflects the average of the high and low LCOE for each respective technology in each respective year. Percentages represent the total decrease in the average LCOE since Lazard’s LCOE—
Version 3.0.
4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0
LCOE Version 3.0 14.0
8
15.0

$323
$226
$148
$101
$91
$72
$58
$49 $46 $40 $36 $31 $30
$394
$270
$166
$149
$104
$86
$70
$61
$53 $46 $44 $42 $41
0
50
100
150
200
250
300
350
400
$450
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
LCOE
($/MWh)
Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE
Declines
In light of material declines in the pricing of system components and improvements in efficiency, among other factors, wind and utility-scale
solar PV have exhibited dramatic LCOE declines; however, as these industries have matured, the rates of decline have diminished
(1) Represents the average percentage decrease of the high end and low end of the LCOE range.
(2) Represents the average compounded annual rate of decline of the high end and low end of the LCOE range.
LCOE
Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0
Crystalline Utility-Scale Solar LCOE Range
Crystalline Utility-Scale Solar LCOE Mean
Unsubsidized Wind LCOE
$101 $99
$50 $48 $45
$37
$32 $32 $30 $29 $28 $26 $26
$169
$148
$92 $95 $95
$81 $77
$62 $60 $56 $54 $54 $50
0
50
100
150
200
$250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
LCOE
($/MWh)
Unsubsidized Solar PV LCOE
Wind 2009 – 2021 Percentage Decrease: (72%)(1)
Wind 2009 – 2021 CAGR: (10%)(2)
Wind LCOE Range
Wind LCOE Mean
Utility-Scale Solar 2009 – 2021 Percentage Decrease: (90%)(1)
Utility-Scale Solar 2009 – 2021 CAGR: (18%)(2)
Wind 2016 – 2021 CAGR: (4%)(2) Utility-Scale Solar 2016 – 2021 CAGR: (8%)(2)
LCOE
Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0
9

Solar PV(2)
versus
Gas Peaker(3)
Wind(4)
versus
Gas Combined
Cycle(5)
Unsubsidized LCOE
Solar PV versus Gas Peaking and Wind versus CCGT—Global Markets(1)
Solar PV and wind have become increasingly competitive with conventional technologies with similar generation profiles; without storage,
however, these resources lack the dispatch characteristics, and associated benefits, of such conventional technologies
Note: The analysis presented on this page assumes country-specific or regionally applicable tax rates.
(1) Equity IRRs are assumed to be 10.0% – 12.0% for Australia, 15.0% for Brazil and South Africa, 13.0% – 15.0% for India, 8.0% – 10.0% for Japan, 7.5% – 12.0% for Europe and 7.5% – 9.0% for
the U.S. Cost of debt is assumed to be 5.0% – 5.5% for Australia, 10.0% – 12.0% for Brazil, 12.0% – 13.0% for India, 3.0% for Japan, 4.5% – 5.5% for Europe, 12.0% for South Africa and 4.0% –
4.5% for the U.S.
(2) Low end assumes crystalline utility-scale solar with a single-axis tracker. High end assumes rooftop C&I solar. Solar projects assume illustrative capacity factors of 21% – 28% for the U.S., 26% –
30% for Australia, 26% – 28% for Brazil, 22% – 23% for India, 27% – 29% for South Africa, 16% – 18% for Japan and 13% – 16% for Europe.
(3) Assumes natural gas prices of $3.45 for the U.S., $4.00 for Australia, $8.00 for Brazil, $7.00 for India, South Africa and Japan and $6.00 for Europe (all in U.S.$ per MMBtu). Assumes a capacity
factor of 10% for all geographies.
(4) Wind projects assume illustrative capacity factors of 38% – 55% for the U.S., 29% – 46% for Australia, 45% – 55% for Brazil, 25% – 35% for India, 31% – 36% for South Africa, 22% – 30% for
Japan and 33% – 38% for Europe.
(5) Assumes natural gas prices of $3.45 for the U.S., $4.00 for Australia, $8.00 for Brazil, $7.00 for India, South Africa and Japan and $6.00 for Europe (all in U.S.$ per MMBtu). Assumes capacity
factors of 55% – 70% on the high and low ends, respectively, for all geographies.
Solar PV Wind
Gas Peaker CCGT
$30
$151
$28
$124
$30
$146
$42
$208
$54
$209
$44
$200
$39
$157
$48
$163
$26
$45
$22
$41
$27
$47
$30
$77
$47
$72
$46
$70
$36
$65
$33
$60
$180
$196
$108
$159
$99
$185
$131
$246
$163
$253
$137
$240
$126
$183
$173
$197
$50
$74
$42
$62
$57
$71
$49
$108
$88
$105
$71
$101
$66
$88
$50
$85
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
LCOE v15
U.S.
Australia
Brazil
India
South Africa
Japan
Europe
LCOE v15
U.S.
Australia
Brazil
India
South Africa
Japan
Europe
10

Renewable Energy
Conventional
$2,475
$1,400
$1,200
$800
$800
$6,000
$4,325
$1,025
$700
$7,800
$2,950
$700
$2,850
$2,850
$1,450
$950
$950
$9,090
$5,575
$1,350
$925
$12,800
$6,225
$1,300
$0 $1,500 $3,000 $4,500 $6,000 $7,500 $9,000 $10,500 $12,000 $13,500
Geothermal
Wind
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Capital Cost ($/kW)
Capital Cost Comparison
In some instances, the capital costs of renewable energy generation technologies have converged with those of certain conventional
generation technologies, which coupled with improvements in operational efficiency for renewable energy technologies, have led to a
convergence in LCOE between the respective technologies
(1) Represents the estimated midpoint of the total capital cost for offshore wind.
$3,050(1)
11

Renewable Energy
Conventional
Levelized Cost of Energy Components—Low End
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; a key factor
regarding the continued cost decline of renewable energy generation technologies is the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies
Note: Figures may not sum due to rounding.
$137
$61
$52
$26
$24
$113
$47
$20
$105
$103
$45
$18
$10
$6
$7
$4
$4
$13
$2
$5
$8
$15
$5
$2
$8
$4
$4
$3
$3
$34
$9
$13
$21
$147
$67
$59
$30
$28
$126
$56
$26
$151
$130
$65
$45
$0 $25 $50 $75 $100 $125 $150 $175
Geothermal
Wind
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Capital Cost Fixed O&M Variable O&M Fuel Cost
12

Renewable Energy
Conventional
$205
$168
$80
$36
$32
$132
$69
$39
$138
$173
$115
$42
$15
$12
$11
$5
$5
$23
$2
$11
$24
$17
$14
$4
$22
$5
$5
$5
$5
$28
$9
$18
$24
$221
$180
$91
$41
$37
$156
$93
$50
$196
$204
$152
$74
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275
Geothermal
Wind
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Capital Cost Fixed O&M Variable O&M Fuel Cost
Levelized Cost of Energy Components—High End
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; a key factor
regarding the continued cost decline of renewable energy generation technologies is the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies
13
Note: Figures may not sum due to rounding.

Year 0 1 2 3 4 5 20 Key Assumptions
Capacity (MW) (A) 175 175 175 175 175 175 Capacity (MW) 175
Capacity Factor (B) 38% 38% 38% 38% 38% 38% Capacity Factor 38%
Total Generation ('000 MWh) (A) x (B) = (C)* 583 583 583 583 583 583 Fuel Cost ($/MMBtu) $0.00
Levelized Energy Cost ($/M Wh) (D) $49.9 $49.9 $49.9 $49.9 $49.9 $49.9 Heat Rate (Btu/kWh) 0
Total Revenues (C) x (D) = (E)* $29.0 $29.0 $29.0 $29.0 $29.0 $29.0 Fixed O&M ($/kW-year) $36.0
Variable O&M ($/MWh) $0.0
Total Fuel Cost (F) -- -- -- -- -- -- O&M Escalation Rate 2.25%
Total O&M (G)* 6.3 6.4 6.6 6.7 6.9 9.8 Capital Structure
Total Operating Costs (F) + (G) = (H) $6.3 $6.4 $6.6 $6.7 $6.9 $9.8 Debt 60.0%
Cost of Debt 8.0%
EBITDA (E) - (H) = (I) $22.7 $22.6 $22.5 $22.3 $22.2 $19.2 Equity 40.0%
Cost of Equity 12.0%
Debt Outstanding - Beginning of Period (J) $141.8 $138.9 $135.9 $132.6 $129.1 $13.1
Debt - Interest Expense (K) (11.3) (11.1) (10.9) (10.6) (10.3) (1.0) Taxes and Tax Incentives:
Debt - Principal Payment (L) (2.8) (3.0) (3.3) (3.5) (3.8) (13.1) Combined Tax Rate 40%
Levelized Debt Service (K) + (L) = (M) ($14.2) ($14.2) ($14.2) ($14.2) ($14.2) ($14.2) Economic Life (years) 20
MACRS Depreciation (Year Schedule) 5
EBITDA (I) $22.7 $22.6 $22.5 $22.3 $22.2 $19.2 Capex
Depreciation (MACRS) (N) (47.3) (75.6) (45.4) (27.2) (27.2) -- EPC Costs ($/kW) $1,350
Interest Expense (K) (11.3) (11.1) (10.9) (10.6) (10.3) (1.0) Additional Ow ner's Costs ($/kW) $0
Taxable Income (I) + (N) + (K) = (O) ($35.8) ($64.1) ($33.8) ($15.5) ($15.4) $18.2 Transmission Costs ($/kW) $0
Total Capital Costs ($/kW) $1,350
Tax Benefit (Liability) (O) x (tax rate) = (P) $14.3 $25.6 $13.5 $6.2 $6.2 ($7.3)
Total Capex ($mm) $236
After-Tax Net Equity Cash Flow (I) + (M) + (P) = (Q) ($94.5) $22.9 $34.1 $21.8 $14.4 $14.2 ($2.2)
IRR For Equity Investors 12.0%
Note: Wind—High LCOE case presented for illustrative purposes only.
* Denotes unit conversion.
(1) Assumes half-year convention for discounting purposes.
(2) Assumes full monetization of tax benefits or losses immediately.
(3) Reflects initial cash outflow from equity investors.
(4) Reflects a “key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
(5) Economic life sets debt amortization schedule. For comparison purposes, all technologies calculate LCOE on a 20-year IRR basis.
Levelized Cost of Energy Comparison—Methodology
($ in millions, unless otherwise noted)
Lazard’s LCOE analysis consists of creating a power plant model representing an illustrative project for each relevant technology and solving
for the $/MWh value that results in a levered IRR equal to the assumed cost of equity (see subsequent “Key Assumptions” pages for detailed
assumptions by technology)
Technology-dependent
Levelized
(1)
Unsubsidized Wind — High Case Sample Illustrative Calculations
(5)
(2)
(4)
(3)
14

Energy Resources—Matrix of Applications
Despite convergence in the LCOE of certain renewable energy and conventional generation technologies, direct comparisons must take into
account issues such as location (e.g., centralized vs. distributed) and dispatch characteristics (e.g., baseload and/or dispatchable
intermediate capacity vs. those of peaking or intermittent technologies)
• This analysis does not take into account potential social and environmental externalities or reliability-related considerations
(1) Represents the full range of solar PV technologies.
(2) Qualification for RPS requirements varies by location.
Carbon
Neutral/
REC
Potential
Location Dispatch
Distributed Centralized Geography Intermittent Peaking
Load-
Following Baseload
Renewable
Energy
Solar PV(1)
   Universal(2)
 
Solar Thermal   Rural   
Geothermal   Varies 
Onshore Wind   Rural 
Conventional
Gas Peaking    Universal  
Nuclear   Rural 
Coal   Co-located or rural 
Gas
Combined Cycle   Universal  
15

Levelized Cost of Energy—Key Assumptions
(1) The “Low Case” represents assumptions used to calculate the low end of the LCOE range, representing a project with single-axis tracking. The “High Case” represents assumptions used to
calculate the high end of the LCOE range, representing a project with fixed-tilt design.
Solar PV
Rooftop—Residential Rooftop—C&I Community
Utility Scale—
Crystalline(1)
Utility Scale—
Thin Film(1)
Units
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Net Facility Output MW 0.005 0.005 1 1 5 5 150 150 150 150
EPC Cost $/kW $2,475 $2,850 $1,400 $2,850 $1,200 $1,450 $950 $800 $950 $800
Capital Cost During Construction $/kW –– –– –– –– –– –– –– –– –– ––
Total Capital Cost $/kW $2,475 $2,850 $1,400 $2,850 $1,200 $1,450 $950 $800 $950 $800
Fixed O&M $/kW-yr $15.00 $18.00 $11.75 $18.00 $12.00 $16.00 $13.00 $9.50 $13.00 $9.50
Variable O&M $/MWh –– –– –– –– –– –– –– –– –– ––
Heat Rate Btu/kWh –– –– –– –– –– –– –– –– –– ––
Capacity Factor % 18% 14% 23% 17% 21% 17% 34% 21% 36% 23%
Fuel Price $/MMBtu –– –– –– –– –– –– –– –– –– ––
Construction Time Months 3 3 3 3 4 6 9 9 9 9
Facility Life Years 25 25 25 25 30 30 30 30 30 30
CO2 Emissions lb/MWh –– –– –– –– –– –– –– –– –– ––
Levelized Cost of Energy $/MWh $147 $221 $67 $180 $59 $91 $30 $41 $28 $37
16

(1) The “Low Case” represents assumptions used to calculate the low end of the LCOE range, representing a project with 18 hours of storage capacity. The “High Case” represents
assumptions used to calculate the high end of the LCOE range, representing a project with eight hours of storage.
(2) Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
Levelized Cost of Energy—Key Assumptions (cont’d)
Solar Thermal Tower with
Storage(1) Geothermal Wind—Onshore Wind—Offshore
Units
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Net Facility Output MW 110 150 20 50 175 175 210 385
EPC Cost $/kW $7,950 $5,250 $3,775 $4,875 $1,025 $1,350 $2,500 $3,600
Capital Cost During Construction $/kW $1,150 $750 $550 $700 –– –– –– ––
Total Capital Cost(2)
$/kW $9,090 $6,000 $4,325 $5,575 $1,025 $1,350 $2,500 $3,600
Fixed O&M $/kW-yr $75.00 $80.00 $13.00 $13.00 $25.50 $36.00 $65.75 $79.50
Variable O&M $/MWh –– –– $8.00 $22.00 –– –– –– ––
Heat Rate Btu/kWh –– –– –– –– –– –– –– ––
Capacity Factor % 68% 39% 90% 80% 55% 38% 53% 49%
Fuel Price $/MMBtu –– –– –– –– –– –– –– ––
Construction Time Months 36 36 36 36 12 12 12 12
Facility Life Years 35 35 25 25 20 20 20 20
CO2 Emissions lb/MWh –– –– –– –– –– –– –– ––
Levelized Cost of Energy $/MWh $126 $156 $56 $93 $26 $50 $66 $100
17

(1) Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
(2) CO2 emissions calculated based on U.S. Energy Information Administration estimates of CO2 emission coefficients by fuel type and the plant heat rates indicated above.
(3) Reflects a coal plant with 2,522 lb/MWh of CO2 emissions operating with a 90% carbon capture and storage system.
Gas Peaking Nuclear (New Build) Coal (New Build)
Gas Combined Cycle
(New Build)
Units
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case(3)
Low
Case
High
Case
Net Facility Output MW 240 50 2,200 2,200 600 600 550 550
EPC Cost $/kW $675 $875 $6,100 $10,025 $2,375 $4,925 $650 $1,175
Capital Cost During Construction $/kW $25 $50 $1,675 $2,775 $575 $1,300 $50 $125
Total Capital Cost(1)
$/kW $700 $925 $7,800 $12,800 $2,950 $6,225 $700 $1,300
Fixed O&M $/kW-yr $7.00 $21.25 $121.00 $140.50 $36.25 $84.00 $15.00 $18.00
Variable O&M $/MWh $4.00 $5.25 $4.00 $4.50 $2.50 $5.00 $2.75 $5.00
Heat Rate Btu/kWh 9,800 8,000 10,450 10,450 8,750 12,000 6,150 6,900
Capacity Factor % 10% 10% 92% 89% 83% 66% 70% 50%
Fuel Price $/MMBtu $3.45 $3.45 $0.85 $0.85 $1.45 $1.45 $3.45 $3.45
Construction Time Months 12 18 69 69 60 66 24 24
Facility Life Years 20 20 40 40 40 40 20 20
CO2 Emissions(2)
lb/MWh 1,147 936 –– –– 1,839 2,522(3)
720 807
Levelized Cost of Energy $/MWh $151 $196 $130 $204 $65 $152 $45 $74
18

Nuclear (Operating) Coal (Operating)
Gas Combined Cycle
(Operating)
Units
Low
Case
High
Case
Low
Case
High
Case
Low
Case
High
Case
Net Facility Output MW
2,200 2,200 600 600 550 550
EPC Cost $/kW –– –– –– –– –– ––
Capital Cost During Construction $/kW –– –– –– –– –– ––
Total Capital Cost $/kW –– –– –– –– –– ––
Fixed O&M $/kW-yr $83.50 $119.30 $24.90 $30.10 $8.90 $14.40
Variable O&M $/MWh $2.60 $4.20 $2.90 $8.30 $0.80 $2.00
Heat Rate Btu/kWh 10,400 10,400 10,125 11,900 6,900 7,475
Capacity Factor % 95% 88% 24% 58% 69% 45%
Fuel Price $/MMBtu $0.60 $0.60 $1.70 $2.20 $2.10 $2.60
Construction Time Months –– –– –– –– –– ––
Facility Life Years 40 40 40 40 20 20
CO2 Emissions(1)
lb/MWh –– –– 2,128 2,501 807 875
Levelized Cost of Energy $/MWh $24 $33 $37 $47 $19 $29
(1) CO2 emissions calculated based on U.S. Energy Information Administration estimates of CO2 emission coefficients by fuel type and the plant heat rates indicated above.
19

Summary Considerations
Lazard has conducted this analysis comparing the LCOE for various conventional and renewable energy generation technologies in order to
understand which renewable energy generation technologies may be cost-competitive with conventional generation technologies, either now
or in the future, and under various operating assumptions. We find that renewable energy technologies are complementary to conventional
generation technologies, and believe that their use will be increasingly prevalent for a variety of reasons, including to mitigate the
environmental and social consequences of various conventional generation technologies, RPS requirements, carbon regulations, continually
improving economics as underlying technologies improve and production volumes increase, and supportive regulatory frameworks in certain
regions.
In this analysis, Lazard’s approach was to determine the LCOE, on a $/MWh basis, that would provide an after-tax IRR to equity holders equal
to an assumed cost of equity capital. Certain assumptions (e.g., required debt and equity returns, capital structure, etc.) 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 other important metrics. These inputs were originally developed with a leading consulting and engineering firm to the
Power & Energy Industry, augmented with Lazard’s commercial knowledge where relevant. This analysis (as well as previous versions) has
benefited from additional input from a wide variety of Industry participants and is informed by Lazard’s many client interactions on this topic.
Lazard has not manipulated the cost of capital or capital structure for various technologies, as the goal of this analysis is to compare the
current levelized cost of various generation technologies, rather than the benefits of financial engineering. The results contained herein would
be altered by different assumptions regarding capital structure (e.g., increased use of leverage) or the cost of capital (e.g., a willingness to
accept lower returns than those assumed herein).
Key sensitivities examined included fuel costs, tax subsidies, carbon pricing and costs of capital. 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 upgrades, transmission, congestion or other integration-related costs;
significant permitting or other development costs, unless otherwise noted; and other costs of complying with various environmental
regulations (e.g., carbon emissions offsets or emissions control systems). This analysis also does not address potential social and
environmental externalities, including, for example, the social costs and rate consequences for those who cannot afford distributed
generation solutions, as well as the long-term residual and societal consequences of various conventional generation technologies that are
difficult to measure (e.g., nuclear waste disposal, airborne pollutants, greenhouse gases, etc.).
20

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