Levelized Cost of Electricity (LCOE)

Levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall competiveness of different generating technologies. It represents the per-megawatthour cost (in discounted real dollars) of building and operating a generating plant over an assumed financial life and duty cycle. 

The key inputs to calculating LCOE include 

  • capital costs 
  • fuel costs
  • fixed and variable operations and maintenance (O&M) costs
  • financing costs and 
  • an assumed utilization rate for each plant type.