2023 Levelized Cost Of Energy+

Reports and studies — Financial Advisory, Levelized Cost of Energy, Levelized Cost of Hydrogen, Levelized Cost of Storage, LCOE

April 12, 2023

Lazard undertakes an annual detailed analysis into the levelized costs of energy from various generation technologies, energy storage technologies and hydrogen production methods.

Below, the Power, Energy & Infrastructure Group shares some of the key findings from the 2023 Levelized Cost of Energy+ report.

Levelized Cost of Energy: Version 16.0

The central findings of our LCOE analysis reinforce what we observe across the Power, Energy & Infrastructure Industry—companies of scale that can take advantage of supply chain and other economies of scale will continue to lead the buildout of new renewable assets given the observed LCOE declines for best-in-class renewable generation relative to smaller or more regionally-focused companies that have seen moderate to significant LCOE increases—a trend that we believe will lead to ongoing consolidation across the sector as well as development of evolved business models and strategies to address supply chain and scale considerations.

Levelized Cost of Storage: Version 8.0

The central findings of our LCOS analysis reinforce what we observe across the Power, Energy & Infrastructure Industry—Energy Storage System (“ESS”) use cases and applications are becoming more valuable, well understood and, by extension, widespread as grid operators begin adopting methodologies to value ESS resources, which is leading to increased transaction activity and an infrastructure classification for the ESS asset class. Further, while input costs are exposed to the same pressures as the broader Energy Transition sector (e.g., supply chain issues and inflationary pressures), the IRA’s grant of ITC eligibility for standalone ESS assets has kept LCOS_v8.0 values relatively neutral as compared to LCOS_v7.0.

Levelized Cost of Hydrogen: Version 3.0

Hydrogen is currently produced primarily from fossil fuels using steam-methane reforming and methane splitting processes (i.e., “gray” hydrogen). A variety of additional processes are available to produce hydrogen from electricity and water, which are at varying degrees of development and commercial viability. Given its versatility as an energy carrier, hydrogen has the potential to be used across industrial processes, power generation and transportation, creating a path for decarbonizing energy-intensive industries where other technologies/alternatives are not presently viable. In that regard, it is critical to evaluate hydrogen through the lens of the use case at issue, as opposed to generically.

Click here to read the 2023 LCOE Report.

Meet the Authors

George Bilicic

Managing Director, Financial Advisory

United States

Samuel Scroggins

Director, Financial Advisory

United States

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