Assessing the Economic Value of New Utility-Scale Renewable Generation Projects Using Levelized Cost of Electricity and Levelized Avoided Cost of Electricity

On July 25, the Energy Information Administration (EIA) hosted a workshop examining  the various uses of the concept of levelized cost of electricity (LCOE), its shortcomings, and potential alternatives to provide a more representative measure of the economic value for power generation projects. Experts from the power industry, policymakers, and energy analysis communities presented differing perspectives of the use of LCOE analysis and the need for better analytic tools for an increasingly complex grid environment.  In particular, Chris Namovicz from EIA presented the concept of levelized avoided cost of energy (LACE) as a proposed solution to many of the problems with conventional LCOE analysis. About 60 people attended the workshop in person, and over 80 participated via the live online webinar.

EIA's draft paper on Levelized Cost and Levelized Avoided Cost of Electricity and its methodology supplement