Lazard has released its annual in-depth studies comparing the costs of energy from various generation technologies and of energy storage technologies for different applications.
Lazard’s latest annual Levelized Cost of Energy Analysis (LCOE 13.0) shows that as the cost of renewable energy continues to decline, certain technologies (onshore wind and utility-scale solar), which became cost-competitive with conventional generation several years ago on a new-build basis, continue to maintain competitiveness with the marginal cost of existing conventional generation technologies.
Lazard’s latest annual Levelized Cost of Storage Analysis (LCOS 5.0) shows that storage costs, particularly for lithium-ion technology, have continued to decline faster than for alternate storage technologies.
LCOE 13.0 highlights:
- The cost of generating energy from onshore wind and utility-scale solar projects fell by 3.5% and 7.0%, respectively, over the past year.
- While the reductions in costs continue, their rate of decline has slowed, especially for onshore wind. Costs for utility-scale solar have been falling more rapidly (about 13% per year) compared to onshore wind (about 7% per year) over the past five years.
- When U.S. government subsidies are included, the cost of building new onshore wind and utility-scale solar (with values averaging $28/MWh and $36/MWh, respectively) is competitive with the marginal cost of coal and nuclear generation (with values averaging $34/MWh and $29/MWh, respectively).
- Regional differences in resource availability and fuel costs can drive meaningful variance in the LCOE of certain technologies, although some of this variance can be mitigated by adjustments to a project’s capital structure, reflecting the availability, and cost, of debt and equity.
LCOS 5.0 highlights:
- Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analyzed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain.
- Solar PV and storage systems are economically attractive for short-duration wholesale and commercial use cases, though they remain challenged for residential and longer-duration wholesale use cases.
LCOE 13.0 and LCOS 5.0 reflect Lazard’s approach to long-term thought leadership, commitment to the sectors in which we participate and focus on intellectual differentiation. The two studies are posted at www.lazard.com/perspective/LCOE2019.
News item from Lazard
Vince says
Should we stop using LCOE to compare electricity sources and use value adjusted LCOE (or VALCOE) instead? It is more accurate
Solarman says
Interesting: “Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analyzed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain.
Solar PV and storage systems are economically attractive for short-duration wholesale and commercial use cases, though they remain challenged for residential and longer-duration wholesale use cases.”
I believe this will change sooner than later. When large utilities are “allowed” to shut down power lines in high wind areas, perhaps for days, to ‘try’ and stop wild fires from starting, people will get sick and tired of food spoiling, sitting in the dark and maybe even having to suffer in extreme heat or very cold conditions while the (PSPS) is in effect. From what I can see the PSPS isn’t “just” to keep power lines that would break and spark fires, but is “the” opportunity for the utility to finally “inspect and repair” any power lines that were shut down during the PSPS. Not to mention the loss of work when the businesses are without power for perhaps days.
The electric utilities realize, that the technology is “cheap enough” for the residential sector and small business that, turning power off will only incentivize more distributed solar PV and smart energy storage to be installed. Since California’s woes of the Camp Fire and bankrupt (again) PG&Es ‘fix’ is the PSPS, how many electric utilities do you think will adopt this as the way to correct poor operations and maintenance of facilities? It will get to the point of (How much and how long will I stand for power going out, until I install something that allows the lights to stay on and the refrigerator/freezer to keep running while suffering another PSPS.)