Work out levelised cost of energy instantly with clear inputs, formula shown and shareable results.
LCOE is the constant price per megawatt-hour that recovers all costs over the project life at the required return. Capital cost is annualised with the capital recovery factor r(1+r)^n / ((1+r)^n - 1) over a 25-year life, added to annual operating cost, and divided by annual generation.
Capital recovery factor
CRF = r(1+r)^n / ((1+r)^n - 1)
LCOE
LCOE = (capex x CRF + annual opex) / annual generation
Because their cost is almost entirely capital. For a wind or solar project, moving the discount rate from 6% to 10% raises LCOE by roughly a third, while for a gas plant with high fuel cost the effect is much smaller.
System integration costs — firming, transmission, balancing — and the time-of-day value of the output. Two technologies with equal LCOE can have very different value to a grid.