OPEX
Operating expenditure: recurring costs to run and maintain an energy asset, split into fixed costs per kW-year and variable costs per MWh.
OPEX (operating expenditure) covers all recurring costs over an asset's life. It is usually split into:
- Fixed O&M (USD/kW-year): staff, scheduled maintenance, insurance, land lease, property tax, grid fees and asset management, independent of output.
- Variable O&M (USD/MWh): consumables, water, wear-related maintenance and start-up costs, scaling with generation.
- Fuel and carbon costs, often treated separately from O&M.
Indicative fixed O&M (NREL ATB, IRENA): utility-scale PV about 15 to 25 USD/kW-year; onshore wind 30 to 45 USD/kW-year; offshore wind 80 to 120 USD/kW-year; combined-cycle gas 15 to 30 USD/kW-year plus 2 to 5 USD/MWh variable; nuclear 120 to 180 USD/kW-year. Lithium-ion storage fixed O&M is commonly 1.5 to 2.5% of CAPEX per year.
For wind and solar, OPEX is typically 15 to 30% of lifetime cost; for gas plants, fuel and carbon dominate, often 60 to 80% of LCOE. Wind O&M costs per MWh have fallen substantially since the late 2000s thanks to larger turbines, condition monitoring and longer full-service contracts. OPEX is discounted along with energy output in LCOE and NPV analysis, and variable costs determine a plant's position in the merit order.
Related terms
All terms →- CAPEX
Capital expenditure: the upfront investment to build an energy asset, usually quoted per kW of capacity for power plants or per kWh for storage.
- LCOE (Levelized Cost of Electricity)
The constant price per MWh that recovers all lifetime costs of a power plant, discounted to present value, divided by its discounted lifetime output.
- NPV (Net Present Value)
The sum of all future cash flows of a project discounted to today, minus the initial investment; a positive NPV indicates value creation.
- Merit order
The ranking of power plants by ascending marginal cost, used to dispatch the cheapest units first and set the market clearing price.
- Heat rate
The fuel energy a thermal power plant consumes per kWh of electricity generated; the inverse of efficiency, usually in BTU/kWh or kJ/kWh.
- Discount rate
The annual rate used to convert future costs and revenues into present value, reflecting the time value of money and investment risk.