The levelized cost of energy (LCOE) for some kinds of solar and wind power can be cheaper than that for conventional gas-fired power plants. That is one conclusion to be had from the 2017 edition of the National Renewable Energy Lab’s Annual Technology Baseline (ATB) which summarizes the current and projected technology cost and performance data—capacity factor, capital expenditures, fuel cost, operations and maintenance costs, and levelized costs of energy — for 12 generation technologies.
The levelized cost of energy used in the NREL analysis is a way of comparing different methods of electricity generation. It is an economic assessment of the average total cost to build and operate a specific power plant over its lifetime divided by its total energy output over that lifetime. The LCOE can also be regarded as the average minimum cost at which electricity must be sold to break-even over the lifetime of the project.
One conclusion to be drawn from the ATB is that solar photovoltaic (PV) capital costs have declined and probably will continue to decline. Similarly, land-based wind capital costs have fallen while capacity factors have risen. Such trends could make wind increasingly competitive with new generation from natural gas combined-cycle plants in the near term. The ATB provides three different levels of future technology cost and performance through 2050 to support analysis of future U.S. electric sector scenarios.
The ATB, which is supported by the Energy Department’s Office of Energy Efficiency and Renewable Energy, incorporates NREL analysis, data from the U.S. Energy Information Administration, and information from numerous published reports. The Annual Technology Baseline spreadsheet documents detailed current and projected cost and performance data for electricity generation technologies. This year, a new interactive website describes each of the technologies and provides additional context for their treatment. For each technology, the website provides: Historical trends, current estimates, and future projections of three primary cost and performance factors: capital expenditures, capacity factor, and operations and maintenance cost Documentation of the methodology and assumptions used to develop the projections of future cost and performance under high-, mid-, and low-cost cases A calculated levelized cost of energy to illustrate the combined effect of the primary cost and performance factors.