LCOE+ 2023-61页-WN7.pdf
Copyright 2023 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.With support fromA P R I L 2 0 2 3Copyright 2023 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.Table of Contents ILAZARDS LEVELIZED COST OF ENERGY ANALYSISVERSION 16.01IILAZARDS LEVELIZED COST OF STORAGE ANALYSISVERSION 8.015IIILAZARDS LEVELIZED COST OF HYDROGEN ANALYSISVERSION 3.024APPENDIX AMaturing Technologies291Carbon Capture&Storage Systems302Long Duration Energy Storage33BLCOE v16.036CLCOS v8.041DLCOH v3.043A P R I L 2 0 2 3Copyright 2023 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.ILazards Levelized Cost of Energy AnalysisVersion 16.0A P R I L 2 0 2 3Copyright 2023 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 I 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 6.0Lazards Levelized Cost of Energy(“LCOE”)analysis addresses the following topics:Comparative LCOE analysis for various generation technologies on a$/MWh basis,including sensitivities for U.S.federal tax subsidies,fuel prices,carbon pricing and cost of capitalIllustration of how the LCOE of onshore wind,utility-scale solar and hybrid projects compare to the marginal cost of selected conventional generation technologies Illustration of how the LCOE of onshore wind,utility-scale solar and hybrid projects,plus the cost of firming intermittency in various regions,compares to the LCOE of selected conventional generation technologiesHistorical LCOE comparison of various utility-scale generation technologies Illustration of the historical LCOE declines for onshore wind and utility-scale solar technologiesComparison of capital costs on a$/kW basis for various generation technologiesDeconstruction of the LCOE for various generation technologies by capital cost,fixed operations and maintenance(“O&M”)expense,variable O&M expense and fuel costConsiderations regarding the operating characteristics and applications of various generation technologiesAppendix materials,including:An overview of the methodology utilized to prepare Lazards LCOE analysis A summary of the assumptions utilized in Lazards LCOE analysisOther 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:implementation and interpretation of the full scope of the Inflation Reduction Act(“IRA”);network upgrades,transmission,congestion or other integration-related costs;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.)Note:This report has been compiled using U.S.-focused data.1Copyright 2023 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.$117$49$24$46$61$24$42$72$115$141$68$39$282$185$96$102$102$75$114$140$221$221$166$101$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined Cycle(2)I 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 6.0Levelized Cost of Energy ComparisonUnsubsidized Analysis$52(4)$62(4)Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances(2)(1)$31(4)$116(6)$156(7)(5)(3)Source:Lazard and Roland Berger estimates and publicly available information.Note:Here and throughout this presentation,unless otherwise indicated,the analysis assumes 60%debt at an 8%interest rate and 40%equity at a 12%cost.See page titled“Levelized Cost of Energy ComparisonSensitivity to Cost of Capital”for cost of capital sensitivities.(1)Given the limited data set available for new-build geothermal projects,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation.(2)The fuel cost assumption for Lazards unsubsidized analysis for gas-fired generation resources is$3.45/MMBTU for year-over-year comparison purposes.See page titled“Levelized Cost of Energy ComparisonSensitivity to Fuel Prices”for fuel price sensitivities.(3)Given the limited public and/or observable data set available for new-build nuclear projects and the emerging range of new nuclear generation strategies,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation(results are based on then-estimated costs of the Vogtle Plant and are U.S.-focused).(4)Represents the midpoint of the unsubsidized 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 Lazards research.See page titled“Levelized Cost of Energy ComparisonRenewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies”for additional details.(5)Given the limited public and/or observable data set available for new-build coal projects,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation.High end incorporates 90%carbon capture and storage(“CCS”).Does not include cost of transportation and storage.(6)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 CO2in a nearby saline aquifer).No plant modifications are assumed beyond a 2%adjustment to the plants heat rate.The corresponding fuel cost is$5.20/MMBTU,assuming$1.40/kg for Blue hydrogen.(7)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 plants heat rate.The corresponding fuel cost is$10.05/MMBTU,assuming$4.15/kg for Green hydrogen.Levelized Cost of Energy($/MWh)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas Peaking(2)Nuclear(3)Coal(5)Gas Combined Cycle(2)2Renewable EnergyConventionalCopyright 2023 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.$117$74$49$32$24$16$24$0$46$31$61$37$24$0$42$12$72$56$282$229$185$155$96$80$96$77$102$88$102$87$75$66$114$103$140$114$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-Scale(ITC)Solar PVUtility-Scale(PTC)Solar PV+StorageUtility-Scale(ITC)GeothermalWindOnshore(PTC)Wind+StorageOnshore(PTC/ITC)Offshore WindUnsubsidizedLevelized Cost of Energy ComparisonSensitivity to U.S.Federal Tax SubsidiesI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Subsidized(excl.Domestic Content)(3)Subsidized(incl.Domestic Content)(4)(1)(1)Source:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise indicated,this analysis does not include other state or federal subsidies(e.g.,energy community adder,etc.).The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes.(1)Results at this level are driven by Lazards approach to calculating the LCOE and selected inputs(see Appendix for further details).Lazards Unsubsidized LCOE analysis assumes,for year-over-year reference purposes,60%debt at an 8%interest rate and 40%equity at a 12%cost(together implying an after-tax IRR/WACC of 7.7%).Implied IRRs at this level for Solar PVUtility-Scale(PTC)equals 17%(excl.Domestic Content)and 22%(incl.Domestic Content)and implied IRRs at this level for WindOnshore(PTC)equals 17%(excl.Domestic Content)and 25%(incl.Domestic Content).(2)Given the limited public and/or observable data set available for new-build geothermal projects,the LCOE presented herein represents Lazards LCOE v15.0 results adjustment for inflation.(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity,debt and tax equity.(4)This sensitivity analysis assumes the above and also includes a 10%domestic content adder.Levelized Cost of Energy($/MWh)(2)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-Scale(ITC)Solar PVUtility-Scale(PTC)Solar PV+StorageUtility-Scale(ITC)Geothermal(2)WindOnshore(PTC)Wind+StorageOnshore(PTC/ITC)WindOffshore(PTC)The Investment Tax Credit(“ITC”),Production Tax Credit(“PTC”)and domestic content adder,among other provisions in the IRA,are important components of the levelized cost of renewable energy generation technologies3Copyright 2023 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.$117$49$24$46$61$24$42$72$105$138$64$33$282$185$96$102$102$75$114$140$229$223$171$108$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined CycleLevelized Cost of Energy ComparisonSensitivity to Fuel Prices I 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 6.0Variations 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.peaking or intermittent technologies)Unsubsidized 25%Fuel Price AdjustmentSource:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise noted,the assumptions used in this sensitivity correspond to those used in the unsubsidized analysis as presented on the page titled“Levelized Cost of Energy ComparisonUnsubsidized Analysis”.(1)Given the limited public and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation and,for nuclear,are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.(2)Assumes a fuel cost range for gas-fired generation resources of$2.59/MMBTU$4.31/MMBTU(representing a sensitivity range of 25%of the$3.45/MMBTU used in the Unsubsidized Analysis).(3)Assumes a fuel cost range for nuclear generation resources of$0.64/MMBTU$1.06/MMBTU(representing a sensitivity range of 25%of the$0.85MMBTU used in the Unsubsidized Analysis).(4)Assumes a fuel cost range for coal-fired generation resources of$1.10/MMBTU$1.84/MMBTU(representing a sensitivity range of 25%of the$1.47/MMBTU used in the Unsubsidized Analysis).Levelized Cost of Energy($/MWh)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas Peaking(2)Nuclear(1)(3)Coal(1)(4)Gas Combined Cycle(2)4Renewable EnergyConventionalCopyright 2023 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.$117$49$24$46$61$24$42$72$115$126$141$68$86$39$46$282$185$96$102$102$75$114$140$221$240$221$166$171$101$118$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop Residential Solar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility Scale GeothermalWindOnshoreWind+StorageOnshoreWindOffshoreNuclearI 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 6.0Levelized Cost of Energy ComparisonSensitivity to Carbon Pricing Carbon pricing is one avenue for policymakers to address carbon emissions;a carbon price range of$20$40/Ton of carbon would increase the LCOE for certain conventional generation technologies relative to those of onshore wind and utility-scale solarLevelized Cost of Energy($/MWh)Gas Peaking(1)Coal(1)(3)Gas Combined Cycle(1)(4)UnsubsidizedUnsub
