Lazard’s 16.0 LCOE Research Findings

• Lazard's latest report shows average LCOE of utility scale solar and onshore wind went up for the 1^st time in its history
• It attributes the increase to inflation and supply chain challenges but says the LCOE of best-in-class assets declined at the low-end of cost range
• Analysts foresee growing consolidation in the industry as it is advantage for companies with deep pockets

In its latest report Levelized Cost of Energy Version 16.0 Lazard says despite inflation and supply chain challenges, the levelized cost of energy (LCOE) of best-in-class onshore wind and utility-scale solar declined at the low-end of its cost range, even as it claims the average LCOE increased for the first time in its history.

For unsubsidized solar PV, the LCOE ranged between $24/MWh to $96/MWh in 2023, having gone up from $30/MWh to $41/MWh in 2021.

As for unsubsidized onshore wind energy, the average ranged within $24/MWh to $75/MWh, compared to 2021 range of $26/MWh and $50/MWh.

In comparison, unsubsidized gas peaking ranged between $115/MWh to $221/MWh, coal $68/MWh to $166/MWh, nuclear $141/MWh to $221/MWh, and gas combined cycle $39/MWh to $101/MWh.

In solar PV domain, unsubsidized residential rooftop LCOE is reported to be $117/MWh to $282/MWh, commercial and commercial & industrial (C&I) $49/MWh to $185/MWh, and utility scale PV+storage $46/MWh and $102/MWh.

Lazard analysts point out at the growing trend of consolidation across the renewable energy sector as companies of scale that can take advantage of supply chain and other economies of scale will continue to lead the buildout of new renewable assets.

Their assumption is based on the observation that LCOE declines were larger for best-in-class facilities, as compared to smaller or more regionally-focused companies that experienced moderate to significant increases.

In the Levelized Cost of Storage Version 8.0, Lazard notes that energy storage system (ESS) use cases and applications are becoming more valuable, well understood and by extension widespread as grid operators expand its use. Input costs for storage are dependent on supply chain issues and inflationary pressures, which are the same for the broader energy transition sector, but the Inflation Reduction Act (IRA) should exercise positive influence.

Lazard's Levelized Cost of Hydrogen Version 3.0 stresses the need to evaluate this energy carrier 'through the lens of the use case at issue, as opposed to generically'.

The reports are available for free download on Lazard's website.