How this LCOE calculator works
The levelized cost of electricity answers one question: what average price per MWh does this plant need to pay for itself over its life? It works for any generating technology. Start from one of 11 presets (utility and rooftop solar, onshore and offshore wind, gas combined cycle and peaker, coal, nuclear, hydro, geothermal and biomass), then overwrite any input with your own project data.
Every cost and every MWh is discounted to the present at your real WACC. A euro spent in year 20 counts for less than one spent during construction, and the same goes for a MWh produced in year 20. Five components are levelized separately and stacked: capital recovery (including interest during construction and optional decommissioning), fixed O&M, variable O&M, fuel and carbon. A sensitivity chart shows which input moves the answer most, and a comparison chart runs all 11 technologies at your carbon price.
The formula
Capital = capex × IDC ÷ Σ [8.76 × CF × (1 − d)^(t−1) / (1 + r)^t] (per kW, MWh per kW-year) Fuel = heat rate (GJ/MWh) × fuel price (per GJ) Carbon = heat rate × fuel CO₂ factor (t/GJ) × carbon price IDC = average of (1 + r)^(k − 0.5) over the construction years k
Without degradation and construction time, the capital term reduces to the familiar capex × CRF ÷ (8.76 × CF), where CRF = r(1+r)ⁿ / ((1+r)ⁿ − 1) is the capital recovery factor.
Worked example: a utility-scale solar farm
The defaults describe a typical 2024 solar project: 750 per kW overnight capex, 12 per kW-year fixed O&M, an 18% capacity factor (1,577 kWh per kW per year), 30-year life, 0.5%/yr degradation, one year of construction and a 6% real WACC.
- Capital recovery factor at 6% over 30 years: 7.26% per year
- Interest during construction adds 3.0% to capex (half a year at 6%)
- Capital: ≈ 37.4 per MWh (82% of the total)
- Fixed O&M: ≈ 8.0 per MWh
- LCOE ≈ 45.4 per MWh, or 4.5 cents per kWh, in line with IRENA’s 2023 global average for solar of 44 USD/MWh.
Switch to the gas CCGT preset and the picture flips. Capital is only ~20 per MWh, but fuel at 8 per GJ adds ~53, and a carbon price of 70 per tonne adds another ~26.
How to read the results
- LCOE is the break-even average price in real money. Compare it with the price the plant can actually earn. For solar and wind that is the capture price, often 10–40% below baseload averages in markets with a lot of renewables.
- The breakdown tells you where to look. Capital-heavy technologies respond to cheaper finance, fuel-heavy ones to fuel and carbon prices.
- The sensitivity chart shows the LCOE when each input moves by ±20%.
Typical inputs (2023–2024, USD-like money)
| Technology | Capex /kW | Fixed O&M /kW-yr | CF | Life | Typical LCOE /MWh |
|---|---|---|---|---|---|
| Solar PV utility | 600–1,000 | 8–17 | 15–28% | 25–35 | 30–60 |
| Solar PV rooftop | 1,000–2,500 | 15–30 | 11–18% | 25 | 70–150 |
| Onshore wind | 1,000–1,700 | 25–45 | 25–45% | 25–30 | 30–70 |
| Offshore wind | 2,500–4,500 | 60–110 | 40–55% | 25–30 | 70–140 |
| Gas CCGT | 800–1,300 | 12–25 | 40–70% | 30 | 45–110 (fuel-driven) |
| Coal | 1,500–4,000 | 35–80 | 50–80% | 40 | 65–170 |
| Nuclear (new) | 5,000–12,000 | 100–160 | 85–93% | 60 | 90–220 |
Tips to lower LCOE
- Cheaper capital beats cheaper hardware for renewables: one percentage point of WACC is worth roughly 6–8% of LCOE.
- Raise the capacity factor with better sites, trackers, taller turbines and higher DC/AC ratios.
- Extend life with quality components and repowering. Running 35 years instead of 25 cuts capital cost per MWh by 10–15%.
- Build faster. Long construction piles up interest, especially for nuclear and large hydro.
- On thermal plants, efficiency decides a lot. One point of efficiency on a CCGT saves about 1 per MWh with gas at 8 per GJ.
Limitations
LCOE is a plant-level, real, pre-tax indicator. It ignores taxes, subsidies, inflation, revenue profile and system costs, and it assumes fuel and carbon prices stay constant in real terms, as does the capacity factor (fossil plants often run less as renewables grow). Preset values are typical global figures; costs in a given country can be half or double. Use the NPV & IRR calculator for a tax- and debt-aware cash-flow view.
Method & assumptions
LCOE = [Σ (capext + O&Mt + fuelt + carbont) / (1 + r)t] ÷ [Σ Et / (1 + r)t]. Capex is spread evenly over the construction years and compounded to the commissioning date (interest during construction). Energy per kW = 8.76 MWh × capacity factor, reduced each year by degradation. Fuel cost per MWh = heat rate × fuel price; carbon cost = heat rate × fuel CO₂ factor × carbon price. Fixed O&M is per kW-year and is levelized over discounted energy.
Frequently asked questions
What is LCOE?
What is the LCOE of solar and wind today?
Why does the discount rate (WACC) matter so much?
How do I convert a fuel price to a cost per MWh of electricity?
Is LCOE a fair way to compare solar with gas or nuclear?
What capacity factor should I use?
Sources & references
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