HomeMy WebLinkAbout6/11/2024 - Energy Right - Lazard's Levelized Cost of Energy Analysis (April 2023)Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
With support from
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Table of Contents
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 1
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 15
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 24
APPENDIX
A Maturing Technologies 29
1 Carbon Capture & Storage Systems 30
2 Long Duration Energy Storage 33
B LCOE v16.0 36
C LCOS v8.0 41
D LCOH v3.0 43
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
I Lazard’s Levelized Cost of Energy Analysis—Version
16.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Introduction
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Lazard’s Levelized Cost of Energy (“LCOE”) analysis addresses the following topics:
•Comparative LCOE analysis for various generation technologies on a $/MWh basis, including sensitivities for U.S. federal tax subsidies, fuel prices,
carbon pricing and cost of capital
•Illustration of how the LCOE of onshore wind, utility-scale solar and hybrid projects compare to the marginal cost of selected conventional
generation technologies
•Illustration of how the LCOE of onshore wind, utility-scale solar and hybrid projects, plus the cost of firming intermittency in various regions,
compares to the LCOE of selected conventional generation technologies
•Historical LCOE comparison of various utility-scale generation technologies
•Illustration of the historical LCOE declines for onshore wind and utility-scale solar technologies
•Comparison of capital costs on a $/kW basis for various generation technologies
•Deconstruction of the LCOE for various generation technologies by capital cost, fixed operations and maintenance (“O&M”) expense, variable O&M
expense and fuel cost
•Considerations regarding the operating characteristics and applications of various generation technologies
•Appendix materials, including:
−An overview of the methodology utilized to prepare Lazard’s LCOE analysis
−A summary of the assumptions utilized in Lazard’s LCOE analysis
Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of this
current analysis. These additional factors, among others, could include: implementation and interpretation of the full scope of the Inflation
Reduction Act (“IRA”); network upgrades, transmission, congestion or other integration-related costs; permitting or other development costs,
unless otherwise noted; and costs of complying with various environmental regulations (e.g., carbon emissions offsets or emissions control
systems). This analysis also does not address potential social and environmental externalities, including, for example, the social costs and
rate consequences for those who cannot afford distributed generation solutions, as well as the long-term residual and societal consequences
of various conventional generation technologies that are difficult to measure (e.g., nuclear waste disposal, airborne pollutants, greenhouse
gases, etc.)
Note:This report has been compiled using U.S.-focused data. 1
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$117
$49
$24
$46
$61
$24
$42
$72
$115
$141
$68
$39
$282
$185
$96
$102
$102
$75
$114
$140
$221
$221
$166
$101
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
(2)
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Levelized Cost of Energy Comparison—Unsubsidized Analysis
$52(4)
$62(4)
Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances
(2)
(1)
$31(4)
$116(6)$156(7)
(5)
(3)
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Here and throughout this presentation, unless otherwise indicated, the analysis assumes 60% debt at an 8% interest rate and 40% equity at a 12% cost. See page titled “Levelized Cost of Energy Comparison—Sensitivity to
Cost of Capital” for cost of capital sensitivities.
(1)Given the limited data set available for new-build geothermal projects, the LCOE presented herein represents Lazard’s LCOE v15.0 results adjusted for inflation.
(2)The fuel cost assumption for Lazard’s unsubsidized analysis for gas-fired generation resources is $3.45/MMBTU for year-over-year comparison purposes. See page titled “Levelized Cost of Energy Comparison—Sensitivity to
Fuel Prices” for fuel price sensitivities.
(3)Given the limited public and/or observable data set available for new-build nuclear projects and the emerging range of new nuclear generation strategies, the LCOE presented herein represents Lazard’s LCOE v15.0 results
adjusted for inflation (results are based on then-estimated costs of the Vogtle Plant and are U.S.-focused).
(4)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle, coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the
salvage value for a decommissioned gas combined cycle or coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle, coal and nuclear
assets across the U.S. Capacity factors, fuel, variable and fixed operating expenses are based on upper-and lower-quartile estimates derived from Lazard’s research. See page titled “Levelized Cost of Energy Comparison—
Renewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies” for additional details.
(5)Given the limited public and/or observable data set available for new-build coal projects, the LCOE presented herein represents Lazard’s LCOE v15.0 results adjusted for inflation. High end incorporates 90% carbon capture and
storage (“CCS”). Does not include cost of transportation and storage.
(6)Represents the LCOE of the observed high case gas combined cycle inputs using a 20% blend of “Blue” hydrogen, (i.e., hydrogen produced from a steam-methane reformer, using natural gas as a feedstock, and sequestering
the resulting CO2 in a nearby saline aquifer). No plant modifications are assumed beyond a 2% adjustment to the plant’s heat rate. The corresponding fuel cost is $5.20/MMBTU, assuming ~$1.40/kg for Blue hydrogen.
(7)Represents the LCOE of the observed high case gas combined cycle inputs using a 20% blend of “Green” hydrogen, (i.e., hydrogen produced from an electrolyzer powered by a mix of wind and solar generation and stored in a
nearby salt cavern). No plant modifications are assumed beyond a 2% adjustment to the plant’s heat rate. The corresponding fuel cost is $10.05/MMBTU, assuming ~$4.15/kg for Green hydrogen.
Levelized Cost of Energy ($/MWh)
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
2
Renewable Energy
Conventional
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$117
$74
$49
$32
$24
$16
$24
$0
$46
$31
$61
$37
$24
$0
$42
$12
$72
$56
$282
$229
$185
$155
$96
$80
$96
$77
$102
$88
$102
$87
$75
$66
$114
$103
$140
$114
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Solar PV–Rooftop Residential
Solar PV–Community & C&I
Solar PV–Utility-Scale (ITC)
Solar PV–Utility-Scale (PTC)
Solar PV + Storage–Utility-Scale (ITC)
Geothermal
Wind—Onshore (PTC)
Wind + Storage—Onshore (PTC/ITC)
Offshore Wind
Unsubsidized
Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Subsidized (excl. Domestic Content)(3)Subsidized (incl. Domestic Content)(4)
(1)
(1)
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Unless otherwise indicated, this analysis does not include other state or federal subsidies (e.g., energy community adder,etc.). The IRA is comprehensive legislation that is still being implemented and remains subject to
interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.
(1)Results at this level are driven by Lazard’s approach to calculating the LCOE and selected inputs (see Appendix for further details). Lazard’s Unsubsidized LCOE analysis assumes, for year-over-year reference purposes,
60% debt at an 8% interest rate and 40% equity at a 12% cost (together implying an after-tax IRR/WACC of 7.7%). Implied IRRs at this level for Solar PV—Utility-Scale (PTC) equals 17% (excl. Domestic Content) and 22%
(incl. Domestic Content) and implied IRRs at this level for Wind—Onshore (PTC) equals 17% (excl. Domestic Content) and 25% (incl. Domestic Content).
(2)Given the limited public and/or observable data set available for new-build geothermal projects, the LCOE presented herein represents Lazard’s LCOE v15.0 results adjustment for inflation.
(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity, debt and tax equity.
(4)This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
Levelized Cost of Energy ($/MWh)
(2)
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
The Investment Tax Credit (“ITC”), Production Tax Credit (“PTC”) and domestic content adder, among other provisions in the IRA, are important
components of the levelized cost of renewable energy generation technologies
3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$117
$49
$24
$46
$61
$24
$42
$72
$105
$138
$64
$33
$282
$185
$96
$102
$102
$75
$114
$140
$229
$223
$171
$108
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Variations in fuel prices can materially affect the LCOE of conventional generation technologies, but direct comparisons to “competing”
renewable energy generation technologies must take into account issues such as dispatch characteristics (e.g., baseload and/or dispatchable
intermediate capacity vs. peaking or intermittent technologies)
Unsubsidized ±25% Fuel Price AdjustmentSource:Lazard and Roland Berger estimates and publicly available information.
Note:Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1)Given the limited public and/or observable data set available for new-build geothermal, coal and nuclear projects, and the emerging range of new nuclear generation strategies, the LCOE presented herein represents Lazard’s
LCOE v15.0 results adjusted for inflation and, for nuclear, are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.
(2)Assumes a fuel cost range for gas-fired generation resources of $2.59/MMBTU –$4.31/MMBTU (representing a sensitivity range of ±25% of the $3.45/MMBTU used in the Unsubsidized Analysis).
(3)Assumes a fuel cost range for nuclear generation resources of $0.64/MMBTU –$1.06/MMBTU (representing a sensitivity range of ±25% of the $0.85MMBTU used in the Unsubsidized Analysis).
(4)Assumes a fuel cost range for coal-fired generation resources of $1.10/MMBTU –$1.84/MMBTU (representing a sensitivity range of ±25% of the $1.47/MMBTU used in the Unsubsidized Analysis).
Levelized Cost of Energy ($/MWh)
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility-Scale
Solar PV + Storage—Utility-Scale
Geothermal(1)
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking(2)
Nuclear(1)(3)
Coal(1)(4)
Gas Combined Cycle(2)
4
Renewable Energy
Conventional
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$117
$49
$24
$46
$61
$24
$42
$72
$115
$126
$141
$68
$86
$39
$46
$282
$185
$96
$102
$102
$75
$114
$140
$221
$240
$221
$171
$101
$118
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Nuclear
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Levelized Cost of Energy Comparison—Sensitivity to Carbon Pricing
Carbon pricing is one avenue for policymakers to address carbon emissions; a carbon price range of $20 –$40/Ton of carbon would increase the
LCOE for certain conventional generation technologies relative to those of onshore wind and utility-scale solar
Levelized Cost of Energy ($/MWh)
Gas Peaking(1)
Coal(1)(3)
Gas Combined Cycle(1)(4)
Unsubsidized Unsubsidized with Carbon PricingMarginal Cost without Carbon Pricing
$52(4)
$62(4)
$31(4)
$82(5)
$99(6)
Marginal Cost with Carbon Pricing
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1)Given the limited public and/or observable data set available for new-build geothermal, coal and nuclear projects, and the emerging range of new nuclear generation strategies, the LCOE presented herein represents Lazard’s
LCOE v15.0 results adjusted for inflation and, for nuclear, are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.
(2)The low and high ranges reflect the LCOE of selected conventional generation technologies including illustrative carbon prices of $20/Ton and $40/Ton, respectively.
(3)The IRA is comprehensive legislation that is still being implemented and remains subject to interpretation—important elements of the IRA (e.g., nuclear subsidies) are not included in our analysis and could impact outcomes.
(4)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle, coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the
salvage value for a decommissioned gas combined cycle or coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle, coal and nuclear
assets across the U.S. Capacity factors, fuel, variable and fixed operating expenses are based on upper-and lower-quartile estimates derived from Lazard’s research. See page titled “Levelized Cost of Energy Comparison—
Renewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies” for additional details.
(5)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated coal facilities with illustrative carbon pricing. Operating coal facilities are not assumed to employ CCS technology.
(6)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle facilities with illustrative carbon pricing.
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
5
Renewable Energy
Conventional
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$66 $71 $76 $82 $88 $94
$41 $44 $50 $57
$85
$95
$106
$117
$128
$140
$61 $64 $67 $70
$74 $77
$136
$146
$157 $168
$179
$192
$124 $142
$160
$180
$201
$222
$87 $93 $99 $106
$114
$122
0
25
50
75
100
125
150
175
200
$225
LCOE($/MWh)
Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
A key consideration in determining the LCOE values for utility-scale generation technologies is the cost, and availability, of capital(1); this
dynamic is particularly significant for renewable energy generation technologies
Source:Lazard and Roland Berger estimates and publicly available information.
Note: Analysis assumes 60% debt and 40% equity. Unless otherwise noted, the assumptions used in this sensitivity correspond to those used on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1)Cost of capital as used herein indicates the cost of capital applicable to the asset/plant and not the cost of capital of a particular investor/owner.
(2)Reflects the average of the high and low LCOE for each respective cost of capital assumption.
Midpoint of Unsubsidized LCOE(2)
Gas Peaking
Geothermal
Coal
Gas Combined Cycle
Solar PV—Utility-Scale
Wind—Onshore
After-Tax 4.2%5.4%6.5%7.7%8.8%10.0%
6.0%8.0%10.0%12.0%14.0%16.0%
5.0%6.0%7.0%8.0%9.0%10.0%
LCOE v16.0
Nuclear
Wind—Offshore
6
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$24
$46
$16
$0
$31
$24
$42
$0
$12
$29
$29
$51
$96
$102
$80
$77
$88
$75
$114
$66
$103
$34
$74
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120
Levelized Cost of Energy ($/MWh)
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of existing conventional
generation
Source:Lazard and Roland Berger estimates and publicly available information.
Note: Unless otherwise noted, the assumptions used in this sensitivity correspond to those used on page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
(1)Represents the marginal cost of operating fully depreciated gas combined cycle, coal and nuclear facilities, inclusive of decommissioning costs for nuclear facilities. Analysis assumes that the salvage value for a
decommissioned gas combined cycle and coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle, coal and nuclear assets across the
U.S. Capacity factors, fuel, variable and fixed O&M are based on upper-and lower-quartile estimates derived from Lazard’s research. Assumes a fuel cost of $0.79/MMBTU for Nuclear, $3.11/MMBTU for Coal and
$6.85/MMBTU for Gas Combined Cycle.
(2)See page titled “Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies” for additional details.
(3)Results at this level are driven by Lazard’s approach to calculating the LCOE and selected inputs (see Appendix for further details). Lazard’s Unsubsidized LCOE analysis assumes, for year-over-year reference purposes, 60%
debt at an 8% interest rate and 40% equity at a 12% cost (together implying an after-tax IRR/WACC of 7.7%). Implied IRRs at this level for Solar PV—Utility-Scale (PTC) equals 17% (excl. Domestic Content) and 22% (incl.
Domestic Content) and implied IRRs at this level for Wind—Onshore (PTC) equals 17% (excl. Domestic Content) and 25% (incl. Domestic Content).
(4)The IRA is comprehensive legislation that is still being implemented and remains subject to interpretation—important elements of the IRA (e.g., nuclear subsidies) are not included in our analysis and could impact outcomes.
Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of
Selected Existing Conventional Generation Technologies
Unsubsidized
(3)
Subsidized Marginal Cost
(3)
$52
$62
Marginal Cost Midpoint without Carbon Pricing
Solar PV—Utility-
Solar PV + Storage—Utility-
Solar PV—Utility-Scale (ITC)
Solar PV—Utility-Scale (PTC)
Solar PV + Storage—Utility-
(ITC)
Wind—
Wind + Storage—
Wind—Onshore (PTC)
Wind + Storage—
(PTC/ITC)
Nuclear $31
7
Levelized Cost of
New-Build Wind and
Solar
Marginal Cost of
Selected Existing
Conventional
Generation(1)
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Firming costs reflect the additional capacity needed to supplement the net capacity of the renewable resource (nameplate capacity * (1 –ELCC)) and the net cost of new entry (net “CONE”) of a new firm resource (capital
and operating costs, less expected market revenues). Net CONE is assessed and published by grid operators for each regional market. Grid operators use a natural gas CT as the assumed new resource in MISO
($8.22/kW-mo), SPP ($8.56/kW-mo) and PJM ($10.20/kW-mo). In CAISO, the assumed new resource is a 4 hour lithium-ion battery storage system ($18.92/kW-mo). For the PV + Storage cases in CAISO and PJM,
assumed Storage configuration is 50% of PV MW and 4 hour duration.
(2)ELCC is an indicator of the reliability contribution of different resources to the electricity grid. The ELCC of a generation resource is based on its contribution to meeting peak electricity demand. For example, a 1 MW wind
resource with a 15% ELCC provides 0.15 MW of capacity contribution and would need to be supplemented with 0.85 MW of additional firm capacity in order to represent the addition of 1 MW of firm system capacity.
(3)LCOE values represent the midpoint of Lazard’s LCOE v16.0 cost inputs for each technology adjusted for a regional capacity factor to demonstrate the regional differences in both project and firming costs.
(4)For PV + Storage cases, the effective ELCC value is represented. CAISO and PJM assess ELCC values separately for the PV and storage components of a system. Storage ELCC value is provided only for the capacity that
can be charged directly by the accompanying resource up to the energy required for a 4 hour discharge during peak load. Any capacity available in excess of the 4 hour maximum discharge is attributed to the system at the
solar ELCC. ELCC values for storage range from 90% –95% for CAISO and PJM.
LCOE v16.0 Levelized Firming Cost ($/MWh)(3)
Levelized Cost of Energy Comparison—Cost of Firming Intermittency
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
The incremental cost to firm(1)intermittent resources varies regionally, depending on the current effective load carrying capability (“ELCC”)(2)
values and the current cost of adding new firming resources—carbon pricing, not considered below, would have an impact on this analysis
$54
$35 $42
$18
$43
$28
$67
$47
$60
$43 $51
$36
$11
$57
$37
$88
$62
$46
$24
$82
$63 $64
$41
$141
$126 $117
$97
$132
$115
$60
$42
$55
$30
$102
$82
$110
$84 $77
$55
0
25
50
75
100
125
150
175
200
$225
Le
v
e
l
i
z
e
d
C
o
s
t
o
f
E
n
e
r
g
y
(
$
/
M
W
h
)
Lazard’s Unsubsidized LCOE Firming Cost
Solar Wind Solar PV + Storage Wind Solar Wind Solar PV + Storage Wind
ELCC 50%16%7%51%(4)15%85%17%38%70%(4)15%
Capacity Factor 20%43%25%25%30%21%50%19%19%39%
Resource
Penetration 3%25%32%32%19%1%56%5%5%7%
MISO CAISO SPP PJM
Gas Peaking LCOE v16.0
($115 –$221/MWh)
Lazard’s Subsidized LCOE
Gas Combined Cycle
LCOE v16.0 ($39 –
$101/MWh)
(3)(3)(1)
8
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Levelized Cost of Energy Comparison—Historical Utility-Scale Generation
Comparison
Selected Historical Mean Unsubsidized LCOE Values(1)
Solar PV—
Utility-Scale(3)
(83%)
Lazard’s unsubsidized LCOE analysis indicates significant historical cost declines for utility-scale renewable energy generation technologies
driven by, among other factors, decreasing capital costs, improving technologies and increased competition
$359
$248
$157
$125
$98 $79
$64
$55 $50 $43
$40 $37 $36
$60
$111
$111 $111
$102 $105
$109
$108 $102 $102 $102 $109 $112 $108 $117
$83
$82 $83 $75 $74
$74 $65
$63 $60 $58 $56 $59 $60 $70
$135 $124
$71 $72 $70
$59 $55 $47 $45 $42
$41 $40 $38
$50
$123
$96 $95 $96
$104 $112
$117 $117
$148 $151 $155 $163
$167
$180
$168
$157 $159
$174
$145
$124
$150 $151
$140 $140 $141
$76
$107 $104 $116 $116 $116
$100 $98 $97
$91 $91
$80 $75 $82
$275
$243 $227
$216
$205 $205
$192 $191 $183 $179 $175 $175 $173
$168
20
80
140
200
260
320
$380
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
Mean LCOE
($/MWh)
Gas Combined
Cycle
(15%)
Wind—Onshore
(63%)
Nuclear
47%
Coal
5%
Solar Thermal
Tower(2)
(16%)
Gas Peaking
(39%)
Geothermal
8%
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Reflects the average of the high and low LCOE for each respective technology in each respective year. Percentages represent the total decrease in the average LCOE since Lazard’s LCOE v3.0.
(2)The LCOE no longer analyzes solar thermal costs; percent decrease is as of Lazard’s LCOE v13.0.
(3)Prior versions of Lazard’s LCOE divided Utility-Scale Solar PV into Thin Film and Crystalline subcategories. All values before Lazard’s LCOE v16.0 reflect those of the Solar PV—Crystalline technology.
LCOE Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0
//
9
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$323
$226
$148
$101 $91
$72 $58 $49 $46 $40 $36 $31 $30 $24
$394
$270
$166 $149
$104
$86 $70 $61 $53 $46 $44 $42 $41
$96
0
50
100
150
200
250
300
350
400
$450
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
LCOE
($/MWh)
Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Even in the face of inflation and supply chain challenges, the LCOE of best-in-class onshore wind and utility-scale solar has declined at the
low-end of our cost range, the reasons for which could catalyze ongoing consolidation across the sector—although the average LCOE has
increased for the first time in the history of our studies
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Represents the average percentage decrease/increase of the high end and low end of the LCOE range.
(2)Represents the average compounded annual rate of decline of the high end and low end of the LCOE range.
LCOE
Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0
Utility-Scale Solar LCOE Range
Utility-Scale Solar LCOE Midpoint
Unsubsidized Onshore Wind LCOE
$101 $99
$50 $48 $45 $37 $32 $32 $30 $29 $28 $26 $26 $24
$169
$148
$92 $95 $95
$81 $77
$62 $60 $56 $54 $54 $50
$75
0
50
100
150
200
$250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
LCOE
($/MWh)
Unsubsidized Solar PV LCOE
Onshore Wind 2009 –2023 Percentage Decrease/CAGR: (66%)(1)(8%)(2)
Onshore Wind LCOE Range
Onshore Wind LCOE Midpoint
Utility-Scale Solar 2009 –2023 Percentage Decrease/CAGR: (84%)(1)(13%)(2)
Onshore Wind 2016 –2023 Percentage Decrease/CAGR: (2)%(1)(1%)(2)Utility-Scale Solar 2016 –2023 Percentage Increase/CAGR: 3%(1)(2%)(2)
LCOE
Version 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0
////
10
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Levelized Cost of Energy Comparison—Capital Cost Comparison
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
In some instances, the capital costs of renewable energy generation technologies have converged with those of certain conventional
generation technologies, which coupled with improvements in operational efficiency for renewable energy technologies, have led to a
convergence in LCOE between the respective technologies
$2,230
$1,200
$700
$1,075
$4,700
$1,025
$1,375
$3,000
$700
$8,475
$3,200
$650
$4,150
$2,850
$1,400
$1,600
$6,075
$1,700
$2,250
$5,000
$1,150
$13,925
$6,775
$1,300
$0 $1,500 $3,000 $4,500 $6,000 $7,500 $9,000 $10,500 $12,000 $13,500 $15,000
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Capital Cost ($/kW)
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
Nuclear
Coal
Source:Lazard and Roland Berger estimates and publicly available information.
Notes:Figures may not sum due to rounding.
(1)Given the limited public and/or observable data set available for new-build geothermal, coal and nuclear projects, and the emerging range of new nuclear generation strategies, the LCOE presented herein represents
Lazard’s LCOE v15.0 results adjusted for inflation and, for nuclear, are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.
11
Renewable Energy
Conventional
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Levelized Cost of Energy Components—Low End
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; key factors
regarding the continued cost decline of renewable energy generation technologies are the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies
$109
$44
$21
$37
51
$20
$33
$59
$72
$113
$47
$14
$9
$5
$3
$8
$2
$4
$8
$12
$5
$15
$5
$1
$9
$4
$4
$3
$3
$34
$9
$13
$21
$117
$49
$24
$46
$61
$24
$42
$72
$115
$141
$68
$39
$0 $25 $50 $75 $100 $125 $150
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Levelized Cost ($/MWh)
Capital Cost Fixed O&M Variable O&M Fuel Cost
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
Nuclear
Coal
Source:Lazard and Roland Berger estimates and publicly available information.
Notes:Figures may not sum due to rounding.
(1)Given the limited public and/or observable data set available for new-build geothermal, coal and nuclear projects, and the emerging range of new nuclear generation strategies, the LCOE presented herein represents
Lazard’s LCOE v15.0 results adjusted for inflation and, for nuclear, are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.
12
Renewable Energy
Conventional
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$268
$172
$85
$76
$76
$62
$84
$120
$169
$190
$127
$66
$14
$14
$11
$26
$2
$13
$30
$20
$19
$17
$16
$6
$24
$5
$5
$6
$5
$28
$9
$18
$24
$282
$185
$96
$102
$102
$75
$114
$140
$221
$221
$166
$101
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Solar PV—Rooftop Residential
Solar PV—Community & C&I
Solar PV—Utility
Solar PV + Storage—Utility Scale
Geothermal
Wind—Onshore
Wind + Storage—Onshore
Wind—Offshore
Gas Peaking
Nuclear
Coal
Gas Combined Cycle
Levelized Cost ($/MWh)
Capital Cost Fixed O&M Variable O&M Fuel Cost
Levelized Cost of Energy Components—High End
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; key factors
regarding the continued cost decline of renewable energy generation technologies are the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies
Solar PV—
Solar PV—
Solar PV—Utility-
Solar PV + Storage—Utility-
Geothermal
Wind—
Wind + Storage—
Wind—
Nuclear
Coal
Renewable Energy
Conventional
Source:Lazard and Roland Berger estimates and publicly available information.
Notes:Figures may not sum due to rounding.
(1)Given the limited public and/or observable data set available for new-build geothermal, coal and nuclear projects, and the emerging range of new nuclear generation strategies, the LCOE presented herein represents
Lazard’s LCOE v15.0 results adjusted for inflation and, for nuclear, are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.
13
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Energy Resources—Matrix of Applications
I L A Z A R D ’ S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S —V E R S I O N 1 6 . 0
Despite convergence in the LCOE of certain renewable energy and conventional generation technologies, direct comparisons must take into
account issues such as location (e.g., centralized vs. distributed) and dispatch characteristics (e.g., baseload and/or dispatchable
intermediate capacity vs. peaking or intermittent technologies)
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Represents the full range of solar PV technologies.
Carbon
Neutral/
REC
Potential
Location Dispatch
Distributed Centralized Geography Intermittent Peaking
Load-
Following Baseload
Renewable
Energy
Solar PV(1)Universal
Solar PV + Storage Universal
Geothermal Varies
Onshore Wind Rural
Onshore Wind + Storage Rural
Offshore Wind Coastal
Conventional
Gas Peaking Universal
Nuclear Rural
Coal Co-located or rural
Gas
Combined Cycle Universal
14
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
II Lazard’s Levelized Cost of Storage Analysis—Version
8.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Introduction
Lazard’s Levelized Cost of Storage (“LCOS”) analysis addresses the following topics:
•Lazard’s LCOS analysis
−Overview of the operational parameters of selected energy storage systems for each use case analyzed
−Comparative LCOS analysis for various energy storage systems on a $/kW-year basis
−Comparative LCOS analysis for various energy storage systems on a $/MWh basis
•Energy Storage Value Snapshot analysis
−Overview of potential revenue applications for various energy storage systems
−Overview of the Value Snapshot analysis and identification of selected geographies for each use case analyzed
−Summary results from the Value Snapshot analysis
•Appendix materials, including:
−An overview of the methodology utilized to prepare Lazard’s LCOS analysis
−A summary of the assumptions utilized in Lazard’s LCOS analysis
Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of this
current analysis. These additional factors, among others, could include: implementation and interpretation of the full scope of the IRA;
network upgrades, transmission, congestion or other integration-related costs; permitting or other development costs, unless otherwise
noted; and costs of complying with various regulations (e.g., federal import tariffs or labor requirements). This analysis also does not address
potential social and environmental externalities, as well as the long-term residual and societal consequences of various energy storage
system technologies that are difficult to measure (e.g., resource extraction, end of life disposal, lithium-ion-related safety hazards, etc.)
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Note:This report has been compiled using U.S.-focused data. 15
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Energy Storage Use Cases—Overview
Use Case Description Technologies Assessed
In
-Fr
o
n
t
-of
-th
e
-Me
t
e
r
Utility-Scale
(Standalone)
•Large-scale energy storage system designed for rapid start and precise following of dispatch
signal. Variations in system discharge duration are designed to meet varying system needs
(i.e., short-duration frequency regulation, longer-duration energy arbitrage(1)or capacity, etc.)
−To better reflect current market trends, this report analyzes one-, two-and four-hour
durations(2)
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Utility-Scale
(PV + Storage)
•Energy storage system designed to be paired with large solar PV facilities to better align
timing of PV generation with system demand, reduce curtailment and provide grid support
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Utility-Scale
(Wind + Storage)
•Energy storage system designed to be paired with large wind generation facilities to better
align timing of wind generation with system demand, reduce curtailment and provide grid
support
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Be
h
i
n
d
-th
e
-Me
t
e
r
Commercial &
Industrial
(Standalone)
•Energy storage system designed for behind-the-meter peak shaving and demand charge
reduction for C&I users
−Units often configured to support multiple commercial energy management strategies and
provide optionality for the system to provide grid services to a utility or the wholesale
market, as appropriate, in a given region
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Commercial &
Industrial
(PV + Storage)
•Energy storage system designed for behind-the-meter peak shaving and demand charge
reduction services for C&I users
−Systems designed to maximize the value of the solar PV system by optimizing available
revenue streams and subsidies
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Residential
(Standalone)
•Energy storage system designed for behind-the-meter residential home use—provides backup
power and power quality improvements
−Depending on geography, can arbitrage residential time-of-use (TOU) rates and/or
participate in utility demand response programs
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
Residential
(PV + Storage)
•Energy storage system designed for behind-the-meter residential home use—provides backup
power, power quality improvements and extends usefulness of self-generation (e.g., PV +
storage)
−Regulates the power supply and smooths the quantity of electricity sold back to the grid
from distributed PV applications
•Lithium Iron Phosphate (LFP)
•Lithium Nickel Manganese
Cobalt Oxide (NMC)
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Source:Lazard and Roland Berger estimates and publicly available information.
(1)For the purposes of this analysis, “energy arbitrage” in the context of storage systems paired with solar PV includes revenue streams associated with the sale of excess generation from the solar PV system, as
appropriate, for a given use case.
(2)The Value Snapshot analysis only evaluates the 4 hour utility-scale use case.
1
2
3
4
5
6
7
By identifying and evaluating selected energy storage applications, Lazard’s LCOS analyzes the cost of energy storage for in-front-of-the-
meter and behind-the-meter use cases
16
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Energy Storage Use Cases—Illustrative Operational Parameters
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Project
Life
(Years)
Storage
(MW)(3)
Solar/
Wind
(MW)
Battery
Degradation
(per annum)
Storage
Duration
(Hours)
Nameplate
Capacity
(MWh)(4)
90%DOD
Cycles/
Day(5)
Days/
Year(6)
Annual
MWh(7)
Project
MWh
In
-Fr
o
n
t
-of
-th
e
-Me
t
e
r
Utility-Scale
(Standalone)
20 100 –2.6%1 100 1 350 31,500 630,000
20 100 –2.6%2 200 1 350 63,000 1,260,000
20 100 –2.6%4 400 1 350 126,000 2,520,000
Utility-Scale
(PV + Storage)(8)20 50 100 2.6%4 200 1 350 191,000 3,820,000
Utility-Scale
(Wind + Storage)(8)20 50 100 2.6%4 200 1 350 366,000 7,320,000
Be
h
i
n
d
-th
e
-Me
t
e
r
Commercial &
Industrial
(Standalone)
20 1 –2.6%2 2 1 350 630 12,600
Commercial &
Industrial
(PV + Storage)(8)
20 0.50 1 2.6%4 2 1 350 1,690 33,800
Residential
(Standalone)20 0.006 –1.9%4 0.025 1 350 8 158
Residential
(PV + Storage)(8)20 0.006 0.010 1.9%4 0.025 1 350 15 300
= “Usable Energy”(2)
A B FCED
x =B C
G
x
x =
D E
F
H
x =A G
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Operational parameters presented herein are applied to Value Snapshot and LCOS calculations. Annual and Project MWh in the Value Snapshot analysis may vary from the representative project.
(1)The use cases herein represent illustrative current and contemplated energy storage applications.
(2)Usable energy indicates energy stored and available to be dispatched from the battery.
(3)Indicates power rating of system (i.e., system size).
(4)Indicates total battery energy content on a single, 100% charge, or ”usable energy”. Usable energy divided by power rating (in MW) reflects hourly duration of system. This analysis reflects common practice in the market
whereby batteries are upsized in year one to 110% of nameplate capacity (e.g., a 100 MWh battery actually begins project life with 110 MWh).
(5)“DOD” denotes depth of battery discharge (i.e., the percent of the battery’s energy content that is discharged). A 90% DOD indicates that a fully charged battery discharges 90% of its energy. To preserve battery longevity,
this analysis assumes that the battery never charges over 95%, or discharges below 5%, of its usable energy.
(6)Indicates number of days of system operation per calendar year.
(7)Augmented to nameplate MWh capacity as needed to ensure usable energy is maintained at the nameplate capacity, based on Year 1 storage module cost.
(8)For PV + Storage and Wind + Storage cases, annual MWh represents the net output of combined system (generator output, less storage “round trip efficiency” losses) assuming 100% storage charging from the generator.
1
2
3
4
5
6
7
a
b
c
Lazard’s LCOS evaluates selected energy storage applications and use cases by identifying illustrative operational parameters(1)
•Energy storage systems may also be configured to support combined/“stacked” use cases
17
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$79
$59
$135
$104
$252
$194
$210
$125
$251
$120
$256
$197
$380
$224
$102
$80
$180
$143
$323
$258
$247
$171
$288
$161
$282
$229
$402
$277
In-Front-of-
the-Meter
Utility-Scale Standalone
(100 MW, 1 hour)
Utility-Scale Standalone
(100 MW, 2 hour)
Utility-Scale Standalone
(100 MW, 4 hour)
Utility-Scale PV + Storage(1)
(50 MW, 4 hour) (100 MW PV)
Utility-Scale Wind + Storage(1)
(50 MW, 4 hour) (100 MW Wind)
Behind-the-
Meter
C&I Standalone
(1 MW, 2 hour)
C&I PV + Storage(1)
(0.5 MW, 4 hour) (1 MW PV)
Residential Standalone(2)
(0.006 MW, 4 hour)
Residential PV + Storage(1)(2)
(0.006 MW, 4 hour) (0.01 MW PV)
$1,595
$1,172
$989
$584
$1,769
$1,408
$1,055
$735
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Here and throughout this presentation, unless otherwise indicated, analysis assumes 20% debt at an 8% interest rate and 80% equity at a 12% cost, which is a different capital structure than Lazard’s LCOE analysis and
therefore numbers will not tie. Capital costs are comprised of the storage module, balance of system and power conversion equipment, collectively referred to as the energy storage system, equipment (where
applicable) and EPC costs. Augmentation costs are included as part of O&M expenses in this analysis and vary across use cases due to usage profiles and lifespans. Charging costs for standalone cases are assessed
at the weighted average hourly pricing (wholesale energy prices) across an optimized annual charging profile of the asset. No charging costs are assumed for hybrid systems. See Appendix for charging cost
assumptions and additional details.
(1)For PV + Storage and Wind + Storage cases, the levelized cost is based on the capital and operating costs of the combined system, levelized over the net output of the combined system.
(2)In previous LCOS reports, residential battery storage costs have reflected equipment purchase costs only. For Lazard’s LCOE v16.0 and LCOS v8.0, capital costs for residential battery storage projects includes
installation/labor, balance-of-system components and warranties.
(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity, debt and tax equity. In this analysis only the wind portion of the Wind + Storage system
utilizes the PTC.
(4)This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
Unsubsidized
Levelized Cost of Capacity ($/kW-year)
Subsidized (excl. Domestic Content)(3)Subsidized (incl. Domestic Content)(4)
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Levelized Cost of Storage Comparison—Capacity ($/kW-year)
Lazard’s LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy
storage use cases and configurations
2
3
1 a
1 b
1 c
4
5
6
7
18
$0 $50 $100 $150
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
In-Front-of-
the-Meter
Utility-Scale Standalone
(100 MW, 1 hour)
Utility-Scale Standalone
(100 MW, 2 hour)
Utility-Scale Standalone
(100 MW, 4 hour)
Utility-Scale PV + Storage(1)
(50 MW, 4 hour) (100 MW PV)
Utility-Scale Wind + Storage(1)
(50 MW, 4 hour) (100 MW Wind)
Behind-the-
Meter
C&I Standalone
(1 MW, 2 hour)
C&I PV + Storage(1)
(0.5 MW, 4 hour) (1 MW PV)
Residential Standalone(2)
(0.006 MW, 4 hour)
Residential PV + Storage(1)(2)
(0.006 MW, 4 hour) (0.01 MW PV)
$1,215
$893
$663
$392
$1,348
$1,072
$730
$508
$249
$186
$215
$166
$200
$154
$110
$65
$69
$33
$407
$313
$225
$133
$323
$252
$285
$227
$257
$205
$131
$91
$79
$44
$448
$363
$241
$166
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Levelized Cost of Storage Comparison—Energy ($/MWh)
Lazard’s LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy
storage use cases and configurations
Unsubsidized
Levelized Cost of Energy ($/MWh)
Subsidized (excl. Domestic Content)(3)Subsidized (incl. Domestic Content)(4)
2
3
1 a
1 b
1 c
4
5
6
7
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Here and throughout this presentation, unless otherwise indicated, analysis assumes 20% debt at an 8% interest rate and 80% equity at a 12% cost, which is a different capital structure than Lazard’s LCOE analysis and
therefore numbers will not tie. Capital costs are comprised of the storage module, balance of system and power conversion equipment, collectively referred to as the energy storage system, equipment (where
applicable) and EPC costs. Augmentation costs are included as part of O&M expenses in this analysis and vary across use cases due to usage profiles and lifespans. Charging costs for standalone cases are assessed
at the weighted average hourly pricing (wholesale energy prices) across an optimized annual charging profile of the asset. No charging costs are assumed for hybrid systems. See Appendix for charging cost
assumptions and additional details.
(1)For PV + Storage and Wind + Storage cases, the levelized cost is based on the capital and operating costs of the combined system, levelized over the net output of the combined system.
(2)In previous LCOS reports, residential battery storage costs have reflected equipment purchase costs only. For Lazard’s LCOE v16.0 and LCOS v8.0, capital costs for residential battery storage projects includes
installation/labor, balance-of-system components and warranties.
(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity, debt and tax equity. In this analysis only the wind portion of the Wind + Storage system
utilizes the PTC.
(4)This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
19
$0 $50 $100 $150
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Use Cases(1)
Description Utility-Scale
(S)
Utility-Scale
(PV + S)
Utility-Scale
(Wind + S)
Commercial
& Industrial
(S)
Commercial
& Industrial
(PV + S)
Residential
(PV + S)
Residential
standalone
(S)
Wh
o
l
e
s
a
l
e
Demand
Response—
Wholesale
•Manages high wholesale price or emergency
conditions on the grid by calling on users to
reduce or shift electricity demand
Energy
Arbitrage
•Storage of inexpensive electricity to sell later at
higher prices (only evaluated in the context of a
wholesale market)
Frequency
Regulation
•Provides immediate (four-second) power to
maintain generation-load balance and prevent
frequency fluctuations
Resource
Adequacy
•Provides capacity to meet generation
requirements at peak load
Spinning/
Non-
spinning
Reserves
•Maintains electricity output during unexpected
contingency events (e.g., outages) immediately
(spinning reserve) or within a short period of time
(non-spinning reserve)
Ut
i
l
i
t
y
Demand
Response—
Utility
•Manages high wholesale price or emergency
conditions on the grid by calling on users to
reduce or shift electricity demand
Cu
s
t
o
m
e
r
Bill
Management
•Allows reduction of demand charge using battery
discharge and the daily storage of electricity for
use when time of use rates are highest
Backup
Power
•Provides backup power for use by Residential
and Commercial customers during grid outages
Value Snapshots—Revenue Potential for Relevant Use Cases
Source:Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
(1)Represents the universe of potential revenue streams available to the various use cases. Does not represent the use cases analyzed in the Value Snapshots.
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Numerous potential sources of revenue available to energy storage systems reflect the benefits provided to customers and the grid
•The scope of revenue sources is limited to those captured by existing or soon-to-be commissioned projects—revenue sources that
are not clearly identifiable or without publicly available data have not been analyzed
20
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Value Snapshot Case Studies—Overview
Source:Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Note: Actual project returns may vary due to differences in location-specific costs, revenue streams and owner/developer risk preferences.
(1)Refers to the California Independent System Operator.
(2)Refers to the Electricity Reliability Council of Texas.
(3)Refers to Pacific Gas & Electric Company.
(4)Refers to Hawaiian Electric Company.
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Location Description
Storage
(MW)
Generation
(MW)
Storage
Duration
(hours)Revenue Streams
In
-Fr
o
n
t
-of
-th
e
-
Me
t
e
r
Utility-Scale
(Standalone)
CAISO(1)
(SP-15)Large-scale energy storage system 100 –4 •Energy Arbitrage
•Frequency Regulation
•Resource Adequacy
•Spinning/Non-spinning
Reserves
Utility-Scale
(PV + Storage)
ERCOT(2)
(South Texas)
Energy storage system designed to be
paired with large solar PV facilities 50 100 4
Utility-Scale
(Wind + Storage)
ERCOT(2)
(South Texas)
Energy storage system designed to be
paired with large wind generation
facilities
50 100 4
Be
h
i
n
d
-th
e
-Me
t
e
r
Commercial &
Industrial
(Standalone)
PG&E(3)
(California)
Energy storage system designed for
behind-the-meter peak shaving and
demand charge reduction for C&I energy
users
1 –2 •Demand Response—Utility
•Bill Management
•Incentives
•Tariff Settlement, DR
Participation, Avoided Costs to
Commercial Customer, Local
Capacity Resource Programs
and Incentives
Commercial &
Industrial
(PV + Storage)
PG&E(3)
(California)
Energy storage system designed for
behind-the-meter peak shaving and
demand charge reduction services for
C&I energy users
0.5 1 4
Residential
(Standalone)
HECO(4)
(Hawaii)
Energy storage system designed for
behind-the-meter residential home use—
provides backup power and power quality
improvements
0.006 –4
•Demand Response—Utility
•Bill Management/Tariff
Settlement
•IncentivesResidential
(PV + Storage)
HECO(4)
(Hawaii)
Energy storage system designed for
behind-the-meter residential home use—
provides backup power, power quality
improvements and extends usefulness of
self-generation
0.006 0.01 4
1
2
3
4
5
6
7
Lazard’s Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases
21
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Value Snapshot Case Studies—Overview (cont’d)
Lazard’s Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
Honolulu, Hawaii
Residential PV + Storage(2)
HECO
Project size:0.006 MW / 0.025 MWh
0.010 MW PV
Residential Standalone(2)
HECO
Project size:0.006 MW / 0.025 MWh
Los Angeles, California
Utility-Scale
CAISO
Project size:100 MW / 400 MWh
1
San Francisco, California
C&I Standalone(1)
PG&E
Project size:1 MW / 2 MWh
C&I PV + Storage(1)
PG&E
Project size:0.5 MW / 2 MWh
1 MW PV
Corpus Christi, Texas
Project size:50 MW / 200 MWh
100 MW PV
Utility-Scale PV + Storage
ERCOT
Project size:50 MW / 200 MWh
100 MW Wind
Utility-Scale Wind + Storage
ERCOT
2
3
4
5
6
7
Source:Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Note: Project parameters (i.e., battery size, duration, etc.) presented above correspond to the inputs used in the LCOS analysis.
(1)Assumes the project provides services under contract with PG&E.
(2)Assumes the project provides services under contract with HECO.
22
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Utility-Scale
(Standalone)
(CAISO)
Utility-Scale
(PV + Storage)
(ERCOT)
Utility-Scale
(Wind + Storage)
(ERCOT)
0
50
100
150
200
250
300
Wholesale Energy Sales Frequency Regulation Spinning/Non-spinning Reserves Resource Adequacy
Demand Response—Utility Bill Management Local Incentive Payments
C&I
(Standalone)
(PG&E)
C&I
(PV+Storage)
(PG&E)
Residential
(Standalone)
(HECO)
Residential
(PV+Storage)
(HECO)
0
200
400
600
800
1,000
1,200
$1,400
Value Snapshot Case Studies—Summary Results
Project economics evaluated in the Value Snapshot analysis continue to evolve year-over-year as costs change and the value of revenue
streams adjust to reflect underlying market conditions, utility rate structures and policy developments
I I L A Z A R D ’ S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S—V E R S I O N 8 . 0
<0.0%24.6%16.2%34.1%30.9%27.6%49.2%
1 2 3 4 5 6 7
In-Front-of-the-Meter Revenue Behind-the-Meter Revenue
$/MWh $/MWh
Subsidized IRR
Source:Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Note:Levelized costs presented for each Value Snapshot reflect local market and operating conditions (including installed costs, market prices, charging costs and incentives) and are different in certain cases from the
LCOS results for the equivalent use case on the pages titled “Levelized Cost of Storage Comparison—Energy ($/MWh)”, which are more broadly representative of U.S. storage market conditions versus location-
specific. Levelized revenues in all cases show gross revenues (not including charging costs) to be comparable with the levelized cost, which incorporates charging costs. Subsidized levelized cost for each Value
Snapshot reflects: (1) average cost structure for storage, solar and wind capital costs, (2) charging costs based on local wholesale prices or utility tariff rates and (3) all applicable state and federal tax incentives,
including 30% federal ITC for solar, 30% federal ITC for storage, $26/MWh federal PTC for wind and 35% Hawaii state ITC for solar and solar + storage systems. Value Snapshots do not include cash payments from
state or utility incentive programs. Revenues for Value Snapshots (1) –(3) are based on hourly wholesale prices from the 365 days prior to Dec. 15, 2022. Revenues for Value Snapshots (4) –(6) are based on the
most recent tariffs, programs and incentives available as of December 2022.
23
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
III Lazard’s Levelized Cost of Hydrogen Analysis—
Version 3.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Introduction
Lazard’s Levelized Cost of Hydrogen (“LCOH”) analysis addresses the following topics:
•An overview of the current commercial context for hydrogen in the U.S.
•Comparative and illustrative LCOH analysis for various hydrogen power production systems on a $/kg basis
•Comparative and illustrative LCOE analysis for gas peaking generation, a key use case in the U.S. power sector, utilizing a 25% blend of Green and
Pink hydrogen on a $/MWh basis, including sensitivities for U.S. federal tax subsidies
•Appendix materials, including:
−An overview of the methodology utilized to prepare Lazard’s LCOH analysis
−A summary of the assumptions utilized in Lazard’s LCOH analysis
Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of this
current analysis. These additional factors, among others, could include: implementation and interpretation of the full scope of the IRA;
development costs of the electrolyzer and associated renewable energy generation facility; conversion, storage and transportation costs of
the hydrogen once produced; additional costs to produce alternate products (e.g., ammonia); costs to upgrade existing infrastructure to
facilitate the transportation of hydrogen (e.g., natural gas pipelines); electrical grid upgrades; costs associated with modifying end-use
infrastructure/equipment to use hydrogen as a fuel source; potential value associated with carbon-free fuel production (e.g., carbon credits,
incentives, etc.). This analysis also does not address potential environmental and social externalities, including, for example,water
consumption and the societal consequences of displacing the various conventional fuels with hydrogen that are difficult to measure
As a result of the developing nature of hydrogen production and its applications, it is important to have in mind the somewhat limited nature
of the LCOH (and related limited historical market experience and current market depth). In that regard, we are aware that, as a result of our
data collection methodology, some will have a view that electrolyzer cost and efficiency, plus electricity costs, suggest a different LCOH than
what is presented herein. The sensitivities presented in our study are intended to address, in part, such views
I I I L A Z A R D ’ S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S —V E R S I O N 3 . 0
Note:This report has been compiled using U.S.-focused data.
24
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Technology Overview & Commercial Readiness
Hydrogen and Hydrogen Production
•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 (called electrolysis), which are at varying degrees of
development and commercial viability, but the two most discussed forms of electrolysis are alkaline and PEM
•Alkaline is generally best for large-scale industrial installations requiring a steady H2 output at low pressure while PEM is generally well-suited for off-
grid installations powered by highly variable renewable energy sources
Hydrogen for Power Generation
•Combustion turbines for 100% hydrogen are not commercially available today. Power generators are exploring blending with natural gas as a way to
reduce carbon intensity
•Several pilots and studies are being conducted and planned in the U.S. today. Most projects include up to 5% hydrogen blend by volume, but some
testing facilities have used blends of over 40% hydrogen by volume
•Hydrogen for power generation can occur via two different combustion methods: (1) premixed systems (or Dry, Low-NOx (“DLN”) systems) that mix
fuel and air upstream before combustion which lowers required temperature and NOx emissions and (2) non-mixed systems that combust fuel and air
without premixing which requires water injection to lower NOx emissions
Market Activity & Policy Support
•Hydrogen is currently used primarily in industrial applications, including oil refining, steel production, ammonia and methanol production and as
feedstock for other smaller-scale chemical processes
•Clean hydrogen is well-positioned to reduce CO2 emissions in typically “hard-to-decarbonize” sectors such as cement production, centralized energy
systems, steel production, transportation and mobility (e.g., forklifts, maritime vessels, trucks and buses)
•Natural gas utilities are likely to be early adopters of Green hydrogen as methanation (i.e., combining hydrogen with CO2 to produce methane)
becomes commercially viable and pipeline infrastructure is upgraded to support hydrogen blends
•The IRA provides a distinct policy push to grow hydrogen production through the hydrogen PTC and ITC. In addition, clean hydrogen would see
added lifts from tax and other benefits aimed at clean generation technologies
Future Perspectives
•Given its versatility as an energy carrier, hydrogen has the potential to be used across industrial processes, power generation and transportation,
creating a potential path for decarbonizing energy-intensive industries where current technologies/alternatives are not presently viable
•Clean hydrogen is expected to play a significant role in decarbonizing U.S. energy and other industries, including power generation through
combustion, feedstock for ammonia, refining processes and e-fuels
Overview of Analysis
•The LCOH illustratively compares hydrogen produced through electrolysis via renewable power (Green) and nuclear power (Pink)
•The analysis also includes the LCOE impact of blending these hydrogen sources with natural gas for power generation
•For the analysis, unsubsidized renewables pricing is based on the average LCOE of a wind plant, oversized as compared to the electrolyzer and
accounting for costs of curtailment. Unsubsidized nuclear power pricing is based on the average LCOE for an existing nuclear plant
•Subsidized costs include the impact of the IRA. The IRA is comprehensive legislation that is still being implemented and remains subject to
interpretation—important elements of the IRA are not included in our analysis and could impact outcomes
Lazard’s Levelized Cost of Hydrogen (“LCOH”) Analysis—Executive Summary
I I I L A Z A R D ’ S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S —V E R S I O N 3 . 0
Source:Lazard and Roland Berger estimates and publicly available information. 25
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
I I I L A Z A R D ’ S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S —V E R S I O N 3 . 0
Hydrogen Applications in Today’s Economy
Today,most hydrogen is produced using fossil sources (i.e., Gray hydrogen) and is used primarily in refining and chemicals sectors,but
clean (i.e., Blue, Green or Pink) hydrogen is expected to play an important role in several new growth sectors, including power generation
8.5 8.1 7.8
2.9 3.2 3.5
0.9 1.6 2.70.1
0.31.2
6.8
0.7
4.8
0.5
1.3
0.1
1.2
0.2
1.2
0
5
10
15
20
25
2021
LDC Blending
2030E
Power
Generation
Aviation Fuel
2040E
Petroleum
Refining
Ammonia
Road Transport
Steelmaking
Shipping Fuel
30
Methanol
23%
31%
284%
21%
30%
12%
6%
1%
0%
CAGR ‘21–‘40
Forecasted U.S. Hydrogen Demand (million tons)
16
12
Overview of
Hydrogen
Color
Spectrum
•Hydrogen production can be divided into “conventional” and “clean” hydrogen:
•Conventional:
−Gray: Almost all hydrogen produced in the U.S. today is through steam-
methane reforming, where hydrogen is separated from natural gas.
Carbon dioxide is a byproduct of this process
−Black (or Brown): Uses steam and oxygen to break molecules in coal
into a gaseous mixture resulting in streams of hydrogen and carbon
dioxide
•A catch-all, Yellow hydrogen is produced through electrolysis using grid
electricity
•“Clean” hydrogen comes in several colors, which are based on the
production process, including:
−Blue:Black, Brown or Gray hydrogen, but with carbon emissions
captured or stored
−Green:Renewable power used for electrolysis, where water molecules
are split into hydrogen and oxygen using electricity
−Pink:Nuclear power used for electrolysis
•Other novel production processes include Turquoise hydrogen from
methane pyrolysis,which uses thermal splitting of methane into hydrogen
and solid carbon and is considered carbon-free if using electricity from
renewable sources
Implications
for the
Power
Sector
•Several utilities and developers have started exploring co-firing clean hydrogen
with natural gas in combustion turbines to reduce emissions
•Clean hydrogen production as a method to store renewable energy could
utilize what would otherwise be curtailed renewable load and turn this energy
into carbon-free dispatchable load, allowing for higher penetration of
intermittent renewable resources, while also impacting capacity market prices
and seasonal pricing peaks
Key Hydrogen Terms and Implications for the Power Sector
Source:Lazard and Roland Berger estimates and publicly available information. 26
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Green
Hydrogen
PEM
(20 –100 MW)
Alkaline
(20 –100 MW)
Pink
Hydrogen
PEM
(20 –100 MW)
Alkaline
(20 –100 MW)
$4.77
$1.68
$3.79
$0.83
$3.47
$1.16
$2.75
$0.48
$7.37
$4.28
$5.78
$2.83
$5.29
$2.99
$4.08
$1.81
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00
I I I L A Z A R D ’ S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S —V E R S I O N 3 . 0
Subsidized Green and Pink hydrogen can reach levelized production costs under $2/kg—fully depreciated operating nuclear plants yield
higher capacity factors and, when only accounting for operating expenses, Pink can reach production levels lower than Green hydrogen
Levelized Cost of Hydrogen Analysis—Illustrative Results
Levelized Cost of Hydrogen ($/kg)
Unsubsidized Subsidized (excl. Domestic Content)(1)
Source:Lazard and Roland Berger estimates and publicly available information.
Note: Here and throughout this presentation, unless otherwise indicated, this analysis assumes electrolyzer capital expenditure assumptions based on high and low values of sample ranges, with additional capital expenditure for
hydrogen storage. Capital expenditure for underground hydrogen storage assumes $20/kg storage cost, sized at 120 tons for Green H2 and 200 tons for Pink H2 (size is driven by electrolyzer capacity factors). Pink
hydrogen costs are based on marginal costs for an existing nuclear plant (see Appendix for detailed assumptions).
(1)This sensitivity analysis assumes that projects qualify for the full PTC and have a capital structure that includes sponsor equity, debt and tax equity. The IRA is comprehensive legislation that is still being implemented and
remains subject to interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.
27
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Green
Hydrogen
PEM (20 MW)
Alkaline (20 MW)
Pink
Hydrogen
PEM (20 MW)
Alkaline (20 MW)
Source:Lazard and Roland Berger estimates and publicly available information.
Note:The analysis presented herein assumes a fuel blend of 25% hydrogen and 75% natural gas. Results are driven by Lazard’s approach to calculating the LCOE and selected inputs (see Appendix for further details). Natural
gas fuel cost assumed $3.45/MMBtu, hydrogen fuel cost based on LCOH $/kg for case scenarios, assumes 8.8 kg/MMBtu for hydrogen. Analysis includes hydrogen storage costs for a maximum of 8 hour peak episodes for
a maximum of 7 days per year, resulting in additional costs of $120/kW (Green) and $190/kW (Pink).
(1)This sensitivity analysis assumes that projects qualify for the full PTC and have a capital structure that includes sponsor equity, debt and tax equity. The IRA is comprehensive legislation that is still being implemented and
remains subject to interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.
I I I L A Z A R D ’ S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S —V E R S I O N 3 . 0
While hydrogen-ready natural gas turbines are still being tested, preliminary results, including our illustrative LCOH analysis,indicate that a
25% hydrogen by volume blend is feasible and cost competitive
Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend
28
Reference LCOE Gas Peaking
at 0% H2 blend ($173/MWh)
$178
$198
$185
$206
$184
$210
$193
$220
$186
$206
$196
$217
$195
$221
$208
$235
$0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300
Lazard’s LCOE v16.0 Gas Peaking Range:
$115 –$221/MWh
Levelized Cost of Energy ($/MWh)
Unsubsidized Subsidized (excl. Domestic Content)(1)
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Appendix
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
A Maturing Technologies
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Introduction
Lazard’s preliminary perspectives on selected maturing technologies addresses the following topics:
•Lazard’s Carbon Capture & Storage (“CCS”) System perspectives
−An overview of key findings and observed trends in the CCS sector
−A comparative levelized cost of CCS for power generation on a $/MWh basis, including selected sensitivities for U.S. federal tax subsidies
−An illustrative view of the value-add of CCS when included as an element of a new-build and retrofitted combined cycle gas plant
−A comparison of capital costs on a $/kW basis for both new-build natural gas plants with CCS technology and existing natural gas plants retrofitted with
CCS technology
•Lazard’s Long Duration Energy Storage (“LDES”) analysis
−An overview of key findings and observed trends in the LDES sector
−A comparative levelized cost for three selected types of LDES technologies, including selected sensitivities for U.S. federal tax subsidies
Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of this
current analysis. These additional factors, among others, could include: implementation and interpretation of the full scope of the IRA;
development costs of the carbon capture or LDES system or associated generation facility; conversion, storage or transportation costs of the
CO2 once past the project site; costs to upgrade existing infrastructure to facilitate the transportation of CO2; potential value associated with
carbon-free fuel production (e.g., carbon credits, incentives, etc.); potential value associated with energy storage revenue (e.g., capacity
payments, demand response, energy arbitrage, etc.); network upgrades, transmission, congestion or other integration-related costs;
permitting or other development costs, unless otherwise noted; and costs of complying with various regulations (e.g., federal import tariffs or
labor requirements). This analysis also does not address potential environmental and social externalities, including, for example, water
consumption and the societal consequences of storing or transporting CO2, material mining and land use
Importantly, this analysis is preliminary in nature, largely directional and does not fully take into account the maturing nature of the
technologies analyzed herein
A M A T U R I N G T E C H N O L O G I E S
Note:This report has been compiled using U.S.-focused data.
29
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
1 Carbon Capture & Storage Systems
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Technology Overview & Commercial Readiness
•CCS refers to technologies designed to sequester carbon dioxide emissions, particularly from power generation or industrial sources
•The core technology involves a specialized solvent or other material that enables the capture of carbon dioxide from a gas stream (usually an
exhaust gas)
•Oxycombustion is emerging as a potential new type of natural gas power plant design that integrates CO2 capture in the combustion cycle for a
claimed 100% capture rate
•In power generation, CCS can be applied as a retrofit to existing coal and gas-fired power plants or incorporated into new-build plants
•CO2 capture rates are currently 80% –90%, with a near-term goal of 95%+
•Current “post-combustion” CCS technologies require power plants to operate close to full load in order to maintain high capture rates
•CCS systems require energy input and represent a parasitic load on the generation unit effectively increasing the “heat rate”of the generator
•CCS also requires compression, transportation and either secure permanent underground storage of carbon dioxide or alternate end-use
•To date, there are very few completed power generation CCS project examples
Market Activity & Policy Support
•CCS has attracted significant interest and investment from various market participants
•Project costs, especially for retrofits, are highly dependent upon site characteristics
•The Department of Energy (“DOE”)/National Energy Technology Laboratory (“NETL”) have provided significant support for the emerging CCS sector
by funding engineering studies and collecting cost estimates and performance data
•The IRA has increased the tax credit for carbon sequestration to $85/ton, providing a significant subsidy for CCS deployment that can offset much of
the increased capital and operating costs of a CCS retrofit or new-build with CCS
•A number of power sector CCS projects are being developed to retrofit existing coal and natural gas power plants, some of which are expected to be
completed by the middle of the decade
Future Perspectives
•Natural gas power generation will continue to play an important role in grid reliability, especially as renewable penetration increases and more coal
retires
•CCS has the potential to allow natural gas plants to remain in operation as the U.S. continues to rapidly decarbonize its power grid
•CCS costs are still high, and given that the majority of the capital cost of a CCS system consists of balance-of-system components, innovations in
solvents and other core capture technologies may not result in significant cost reductions
•New technologies such as oxycombustion systems may represent meaningful improvements in capture efficiency and cost
•The deployment of any CCS technology depends on the availability of either offtake or permanent CO2 storage reservoirs (placing geographic
limitations on deployment) and the validation of the security of permanent storage (in avoiding CO2 leakage)
Overview of Analysis
•The illustrative analysis presented herein is limited to post-combustion CCS for power generation
•Two cases are included: (1) an amine CCS system retrofitted to an existing natural gas combined cycle plant and (2) an amine CCS system with a
new-build natural gas combined cycle plant
•CO2 transportation and storage costs are assumed to be fixed across both cases at $23/ton
•Subsidized costs include the impact of the IRA. The IRA is comprehensive legislation that is still being implemented and remains subject to
interpretation—important elements of the IRA are not included in our analysis and could impact outcomes
Lazard’s Carbon Capture & Storage Analysis—Executive Summary
1 C A R B O N C A P T U R E & S T O R A G E S Y S T E M S
Source:Lazard and Roland Berger estimates and publicly available information.
30
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
$84
$59
$66
$40
$128
$103
$110
$86
$0 $25 $50 $75 $100 $125 $150
Retrofitted CCGT with CCS
New Build Power Plant with CCS
Levelized Cost of Energy—Gas Combined Cycle + CCS System
Unsubsidized
Levelized Cost of Energy ($/MWh)
Subsidized (excl. Domestic Content)(4)
CCS systems benefit from federal subsidies through the IRA, making the LCOE of a gas combined cycle plant plus a CCS system cost-
competitive with a standalone gas combined cycle plant in both a retrofit and new-build scenario
(2)
1 C A R B O N C A P T U R E & S T O R A G E S Y S T E M S
Retrofitted Gas Combined
Cycle(1) with CCS(2)
New-Build Gas Combined
Cycle(3)with CCS(2)
Lazard’s LCOE v16.0 Gas Combined Cycle Range:
$39 –$101/MWh
LCOE
550 MW Gas
Combined Cycle
Plus CCS System
Reference LCOE of Gas Combined
Cycle plus CCS
50% Capacity Factor ($74/MWh)
Source:Lazard and Roland Berger estimates and publicly available information.
Note:The fuel cost assumption for Lazard’s analysis for gas-fired generation resources is $3.45/MMBTU.
(1)Represents the LCOE of a combined system, new CCS with a useful life of 12 years and LCOE of Gas Combined Cycle including remaining book value of retrofitted power plant. The low case represents an 85% capacity
factor while the high case represents a 50% capacity factor.
(2)Represents a 2 million-ton CO2 plant and generation heat rate increases of 11% for the low case (85% capacity factor) and 21% for the high case (50% capacity factor) due to fixed usage of parasitic power by the CCS
equipment.
(3)Represents the LCOE of a combined system with a useful life of 20 years. The low case represents an oxycombustion CCS system with a capacity factor of 92.5% and a $10/MWh benefit for industrial gas sales. The high
case represents a Gas Combined Cycle + CCS with a capacity factor of 50% and a $2.50/MWh benefit for industrial gas sales.
(4)Subsidized value assumes $85/ton CO2 credit for 12 years with nominal carbon capture rate of 95% for Gas Combined Cycle + CCS and 100% nominal capture rate for oxycombustion. Assumes an emissions rate of 0.41
ton CO2 per MWh generated. All costs include a $23/ton CO2 cost of transportation and storage. There is no domestic content adder available for the CO2 tax credit. The IRA is comprehensive legislation that is still being
implemented and remains subject to interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.
31
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Lazard’s LCOE v16.0 Gas Combined Cycle Capital Cost Range:
$650 –$1,300/kW
Carbon Capture & Storage Systems—Capital Cost Comparison (Unsubsidized)
Capital Cost ($/kW)
1 C A R B O N C A P T U R E & S T O R A G E S Y S T E M S
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Represents an assumed 2-million-ton CO2 plant and 550 MW Gas Combined Cycle generation at 85% capacity factor.
(2)Represents an assumed $440 –$550/ton CO2 of nameplate capacity CCS system.
(3)Represents an assumed $700 –$1,300/kW for Gas Combined Cycle and $400 –$500/ton CO2 of nameplate capacity for CCS.
(4)New-build range also includes a capital expenditure estimate for a 280 MW oxycombustion project.
32
CCS costs are still high and the majority of the capital cost of a CCS system consists of balance-of-system components
$1,042
$1,547
$1,965
$3,086
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500
Retrofitted CCGT - CCS Cost
Only
New Build Power Plant with CCS
550 MW Gas
Combined Cycle
Plus CCS System
Retrofitted Gas Combined
Cycle—CCS Cost Only(1)(2)
New-Build Power Plant with
CCS(1)(3)(4)
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
2 Long Duration Energy Storage
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Technology Overview & Commercial Readiness
•LDES technologies are emerging alternatives to lithium-ion batteries because they have the potential to be more economical at storage
durations of 6 –8+ hours
•Technological categories include electrochemical (including flow batteries and other non-lithium chemistries), mechanical (including
compressed air storage) and thermal
•A key challenge for LDES economics is the round-trip efficiency or the percentage of the stored energy that can later be output.Currently,
LDES technologies have round trip efficiencies, which are varied but generally less than the 85% –90% for lithium-ion battery systems
•LDES technologies generally do not rely on scarce or expensive mineral inputs, but they can require increased engineering, labor and site work
compared to lithium-ion, particularly for mechanical storage solutions
•Most LDES technologies have not yet reached commercialization due to technology immaturity and, with limited deployments, seemingly none
of the emerging LDES technologies have achieved the track record for performance required to be fully bankable
Market Activity & Policy Support
•Emerging LDES technology companies have attracted significant capital investment in the past 5 years
•To date, LDES deployments have generally been limited to pilot/early commercial scale
•LDES providers are generally seeking to reach commercial manufacturing scale by the end of the decade to be able to support grid-scale
deployments that are cost-competitive
•The U.S. DOE’s concerted funding initiatives, along with the IRA ITC for energy storage resources support and somewhat de-risk LDES
deployment
•LDES technologies are divorced from the lithium-ion/electric vehicle supply chain, which may confer attractiveness in the short term given
increased lithium costs and ongoing supply chain concerns
•However, Industry participants are still evaluating the system need for long duration storage as well as appropriate market mechanisms and
signals
Future Perspectives
•At increasingly high wind and solar penetrations, there will be a need for resources that can provide capacity over longer durations in order to
meet overall capacity and reliability requirements
•LDES technologies could potentially serve this function and enable higher levels of decarbonized power generation as a substitute for
traditional "peaking" resources
•Market structures and pricing signals may be established/adopted to reflect identified value of longer duration storage resources
•LDES technologies will compete with, among other things, green hydrogen (generation and storage), natural gas generators with carbon
capture systems and advanced nuclear reactors to provide capacity to a decarbonized power grid (assuming viability/acceptability of the
relevant LDES technologies)
Overview of Analysis
•The illustrative analysis presented herein includes non-lithium technologies and compares the levelized costs of several flow battery cases
along with a compressed air energy system (“CAES”) case
•All systems are 100 MW, 8 hour systems with one cycle per day at maximum charge and depth of discharge (maximum stored energy output
given round trip efficiency)
•Subsidized costs include the impact of the IRA. The IRA is comprehensive legislation that is still being implemented and remains subject to
interpretation—important elements of the IRA are not included in our analysis and could impact outcomes
Lazard’s Long Duration Energy Storage Analysis—Executive Summary
2 L O N G D U R A T I O N E N E R G Y S T O R A G E
Source:Lazard and Roland Berger estimates and publicly available information.
33
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
2 L O N G D U R A T I O N E N E R G Y S T O R A G E
Electrochemical Mechanical Thermal
Description
•Energy storage systems generating
electrical energy from chemical
reactions
•Solutions that store energy as a kinetic,
gravitational potential or
compression/pressure medium
•Solutions stocking thermal energy by
heating or cooling a storage medium
Typical Technologies
•Flow batteries (vanadium, zinc-
bromide)
•Sodium-sulfur
•Iron-air
•Adiabatic and cryogenic compressed
liquids (change in internal energy)
•Geo-mechanical pumped hydro
•Gravitational
•Latent heat (phase change)
•Sensible heat (molten salt)
Selected Advantages
•No degradation
•Cycling throughout the day
•Modular options available
•Considered safe
•Considered safe
•Attractive economics
•Proven technologies (e.g., pumped
hydro)
•Able to leverage matureindustrialcryogenictechnology base
•Inexpensive materials
•Power/energy independent
•Scalable
Selected
Disadvantages
•Membrane materials costly
•Difficult to mass produce
•Scalability unclear
•Large volumetric storage sites
•Difficult to modularize
•Cycling typically limited to once per day
•Reduced energy density
•Cryogenic safety concerns
•Cannot modularize after install
Key Challenges
•Expensive ion-exchange membranesrequireddueto voltage and electrolytestress
•Less compact (lower energy density)
•Geographic limitations of some sub-technologies
•Low efficiency of diabatic systems
•Visibility into peak and off-peak
•Climate impact on effectiveness
•Scale of application (e.g.,bestfordistrictheating)
LDES technologies typically fall into three main technological categories that provide unique advantages and disadvantages and also make
them suitable (or not) across a variety of use cases
Long Duration Energy Storage Technologies—Overview
Source:Lazard and Roland Berger estimates and publicly available information.
34
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Electrochemical(1)
100 MW, 8 hour
Mechanical(2)
100 MW, 8 hour
Thermal(3)
100 MW, 8 hour
$127
$99
$158
$126
$178
$142
$221
$188
$215
$176
$253
$211
$0 $50 $100 $150 $200 $250 $300 $350 $400
2 L O N G D U R A T I O N E N E R G Y S T O R A G E
The LCOE of LDES technologies is expected to be competitive with lithium-ion for large-scale 8 hour systems in the second half of the
decade, with anticipated unit cost advantages at longer durations overcoming lower round-trip efficiency
Levelized Cost of Energy—Illustrative LDES at Scale
Source:Lazard and Roland Berger estimates and publicly available information.
Note:All cases assume a 20-year system life and 1 cycle per day at maximum depth-of-discharge.
(1)Electrochemical includes flow batteries (vanadium redox, zinc bromine) and non-flow (liquid metal).
(2)Mechanical includes CAES and liquified air energy storage (”LAES”).
(3)Thermal includes sensible heat storage solutions (molten salt).
(4)This sensitivity analysis assumes that projects qualify for the full standalone storage ITC.
(5)This sensitivity analysis assumes the above and also includes a 10% domestic content adder. The IRA is comprehensive legislation that is still being implemented and remains subject to interpretation—important
elements of the IRA are not included in our analysis and could impact outcomes.
Unsubsidized Subsidized(4)Subsidized with Domestic Content Adder(5)
Levelized Cost of Storage ($/MWh)
Lazard’s LCOS v8.0 Utility-Scale (100 MW, 4 hour) Subsidized:
$154 –$205/MWh
35
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
B LCOE v16.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Year 0 1 2 3 4 5 6 7 20 Key Assumptions
Capacity (MW)(A)175 175 175 175 175 175 175 175 Capacity (MW) 175
Capacity Factor (B)55%55%55%55%55%55%55%55%Capacity Factor 55%
Total Generation ('000 MWh)(A) x (B) = (C)*843 843 843 843 843 843 843 843 Fuel Cost ($/MMBtu)$0.00
Levelized Energy Cost ($/MWh)(D)$24.4 $24.4 $24.4 $24.4 $24.4 $24.4 $24.4 $24.4 Heat Rate (Btu/kWh) 0
Total Revenues (C) x (D) = (E)*$20.6 $20.6 $20.6 $20.6 $20.6 $20.6 $20.6 $20.6 Fixed O&M ($/kW-year) $20.0
Variable O&M ($/MWh)$0.0
Total Fuel Cost (F)----------------O&M Escalation Rate 2.25%
Total O&M (G)*3.5 3.6 3.7 3.7 3.8 3.9 4.0 5.5 Capital Structure
Total Operating Costs (F) + (G) = (H)$3.5 $3.6 $3.7 $3.7 $3.8 $3.9 $4.0 $5.5 Debt 60.0%
Cost of Debt 8.0%
EBITDA (E) - (H) = (I)$17.1 $17.0 $16.9 $16.8 $16.7 $16.7 $16.6 $15.1 Tax Investors 0.0%
Cost of Equity for Tax Investors 10.0%
Debt Outstanding - Beginning of Period (J) $107.6 $105.5 $103.2 $100.7 $98.0 $95.1 $92.0 $9.9 Equity 40.0%
Debt - Interest Expense (K)(8.6)(8.4)(8.3)(8.1)(7.8)(7.6)(7.4)(0.8)Cost of Equity 12.0%
Debt - Principal Payment (L)(2.1)(2.3)(2.5)(2.7)(2.9)(3.1)(3.4)(9.9)Taxes and Tax Incentives:
Levelized Debt Service (K) + (L) = (M)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)Combined Tax Rate 40%
Economic Life (years) 20
EBITDA (I)$17.1 $17.0 $16.9 $16.8 $16.7 $16.7 $16.6 $15.1 MACRS Depreciation (Year Schedule) 5
Depreciation (MACRS)(N)(35.9)(57.4)(34.4)(20.7)(20.7)(10.3)0.0 0.0 PTC (+10% for Domestic Content)$0.0
Interest Expense (K)(8.6)(8.4)(8.3)(8.1)(7.8)6.3 16.6 (0.8)PTC Escalation Rate 1.5%
Taxable Income (I) + (N) + (K) = (O) ($27.4)($48.8)($25.8)($11.9)($11.8)($7.6)($7.4)$14.3 Capex
EPC Costs ($/kW)$1,025
Federal Production Tax Credit Value (P)$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Additional Owner's Costs ($/kW)$0
Federal Production Tax Credit Received (P) x (C) = (Q)*$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Transmission Costs ($/kW)$0
Tax Benefit (Liability)(O) x (tax rate) + (Q) = (R)$11.0 $19.5 $10.3 $4.8 $4.7 $0.0 $0.0 $0.0 Total Capital Costs ($/kW)$1,025
Capital Expenditures ($71.8)($107.6)$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Total Capex ($mm)$179
After-Tax Net Equity Cash Flow (I) + (M) + (R) = (S)($71.8)$17.3 $25.8 $16.5 $10.8 $10.7 $0.0 $0.0 ($1.4)
Cash Flow Distribution
Cash Flow to Equity Investors (S) x (% to Equity Investors)($71.8)$17.3 $25.8 $16.5 $10.8 $10.7 $6.4 $2.1 ($1.4)Portion to Tax Investors (After Return is Met)1%
IRR For Equity Investors 12.0%
Lazard’s LCOE analysis consists of creating a power plant model representing an illustrative project for each relevant technology and
solving for the $/MWh value that results in a levered IRR equal to the assumed cost of equity (see subsequent “Key Assumptions” pages for
detailed assumptions by technology)
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Onshore Wind—Low LCOE case presented for illustrative purposes only.
*Denotes unit conversion.
(1)Assumes half-year convention for discounting purposes.
(2)Assumes full monetization of tax benefits or losses immediately.
(3)Reflects initial cash outflow from equity investors.
(4)Reflects a “key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
(5)Economic life sets debt amortization schedule. For comparison purposes, all technologies calculate LCOE on a 20-year IRR basis.
Levelized Cost of Energy Comparison—Methodology
($ in millions, unless otherwise noted)
B L C O E V 1 6 . 0
Technology-dependent
Levelized
(1)
Unsubsidized Onshore Wind —Low Case Sample Illustrative Calculations
(5)
(2)
(4)
(3)
36
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Solar PV
Rooftop—Residential Community and C&I Utility-Scale Utility Scale + Storage
Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case
Net Facility Output MW 0.005 5 150 100
Total Capital Costs $/kW $2,230
Fixed O&M $/kW-yr $15.00
Variable O&M $/MWh ––––––––
Heat Rate Btu/kWh ––––––––
Capacity Factor %20%
Fuel Price $/MMBTU
––
––––
––
Construction Time Months 3 4
Facility Life Years 25 30 30 30
Levelized Cost of Energy $/MWh $117
Levelized Cost of Energy—Key Assumptions
B L C O E V 1 6 . 0
(1)
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
37
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Geothermal Wind—Onshore
Wind—Onshore +
Storage Wind—Offshore
Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case
Net Facility Output MW 250 175 100 1000
Total Capital Costs $/kW $4,700
Fixed O&M $/kW-yr $14.00
Variable O&M $/MWh $8.75
Heat Rate Btu/kWh ––––––––
Capacity Factor %90%
Fuel Price $/MMBTU ––––––––
Construction Time Months 36 12 12 12
Facility Life Years 25 20 20 20
Levelized Cost of Energy $/MWh $61
B L C O E V 1 6 . 0
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Given the limited data set available for new-build geothermal projects, the LCOE presented herein represents Lazard’s LCOE v15.0 results adjusted for inflation.
(2)Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
Levelized Cost of Energy—Key Assumptions (cont’d)
(2)
(1)
38
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
B L C O E V 1 6 . 0
Levelized Cost of Energy—Key Assumptions (cont’d)
Gas Peaking Nuclear (New Build)Coal (New Build)
Gas Combined Cycle
(New Build)
Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case
Net Facility Output MW 240 –50 2,200 600 550
Total Capital Costs $/kW $700 –$1,150 $8,475 –$13,925 $3,200 –$6,775 $650 –$1,300
Fixed O&M $/kW-yr $7.00 –$17.00 $131.50 –$152.75 $39.50 –$91.25 $10.00 –$17.00
Variable O&M $/MWh ––$4.25 –$5.00 $3.00 –$5.50 $2.75 –$5.00
Heat Rate Btu/kWh ––10,450 8,750 –12,000 6,150 –6,900
Capacity Factor %15%–10%92%–89%85%–65%90%–30%
Fuel Price $/MMBTU ––
$0.85
$1.47 $3.45
Construction Time Months 12 69 60 –66 24
Facility Life Years 20 40 40 20
Levelized Cost of Energy $/MWh $115 –$221 $141 –$221 $68 –$166 $39 –$101
(3)
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Given the limited public and/or observable data set available for new-build nuclear projects and the emerging range of new nuclear generation strategies, the LCOE presented herein represents Lazard’s
LCOE v15.0 results adjusted for inflation (results are based on then-estimated costs of the Vogtle Plant and are U.S.-focused).
(2)High end incorporates 90% CCS. Does not include cost of transportation and storage. Given the limited public and/or observable data set available for new-build coal projects, the LCOE presented herein
represents Lazard’s LCOE v15.0 results adjusted for inflation.
(3)Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
(1)(2)
39
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
B L C O E V 1 6 . 0
Levelized Cost of Energy—Key Assumptions (cont’d)
x
Nuclear (Operating)Coal (Operating)
Gas Combined Cycle
(Operating)
Units Low Case High Case Low Case High Case Low Case High Case
Net Facility Output MW 2,200 600 550
Total Capital Costs $/kW $0.00 $0.00 $0.00
Fixed O&M $/kW-yr $97.25 –$120.00 $18.50 –$31.00 $9.25 –$14.00
Variable O&M $/MWh $3.05 –$3.55 $2.75 –$5.50 $1.00 –$2.00
Heat Rate Btu/kWh 10,400 10,075 –11,075 6,925 –7,450
Capacity Factor %95%–90%65%–35%70%–45%
Fuel Price $/MMBTU
$0.79
$1.89 –$4.33
$6.00 –$7.69
Construction Time Months 69 60 –66 24
Facility Life Years 40 40 20
Levelized Cost of Energy $/MWh $29 –$34 $29 –$74 $51 –$73
Source:Lazard and Roland Berger estimates and publicly available information.
(1)Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
(1)
40
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
C LCOS v8.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Year 0 1 2 3 4 5 20 Key Assumptions
Capacity (MW)(A)100 100 100 100 100 100 Power Rating (MW)100
Available Capacity (MW)110 109 106 103 100 110 102 Duration (Hours)2
Total Generation ('000 MWh)(B)*63 63 63 63 63 63 Usable Energy (MWh)200
Levelized Storage Cost ($/MWh)(C)$178 $178 $178 $178 $178 $178 90% Depth of Discharge Cycles/Day 1
Total Revenues (B) x (C) = (D)*$11.2 $11.2 $11.2 $11.2 $11.2 $11.2 Operating Days/Year 350
Charging Cost ($/kWh)$0.064
Total Charging Cost (E)(4.4)(4.5)(4.6)(4.7)(4.8)(6.3)Fixed O&M Cost ($/kWh)$1.30
Total O&M, Warranty, & Augmentation (F)*(0.3)(0.3)(0.6)(0.6)(4.3)(0.8)Fixed O&M Escalator (%)2.5%
Total Operating Costs (E) + (F) = (G)($4.7)($4.8)($5.2)($5.3)($9.1)($7.1)Charging Cost Escalator (%)1.87%
Efficiency (%)91%
EBITDA (D) - (G) = (H)$6.5 $6.4 $5.9 $5.8 $2.1 $4.1
Capital Structure
Debt Outstanding - Beginning of Period (I)$11.7 $11.4 $11.2 $10.9 $10.5 $1.1 Debt 20.0%
Debt - Interest Expense (J)(0.9)(0.9)(0.9)(0.9)(0.8)(0.1)Cost of Debt 8.0%
Debt - Principal Payment (K)(0.3)(0.3)(0.3)(0.3)(0.3)(1.1)Equity 80.0%
Levelized Debt Service (J) + (K) = (L)(1.2)(1.2)(1.2)(1.2)(1.2)(1.2)Cost of Equity 12.0%
EBITDA (H)$6.5 $6.4 $5.9 $5.8 $2.1 $4.1 Taxes
Depreciation (5-yr MACRS)(M)(9.9)(15.9)(9.5)(5.7)(5.7)0.0 Combined Tax Rate 21.0%
Interest Expense (J)(0.9)2.8 0.0 (0.0)0.0 0.0 Contract Term / Project Life (years)20
Taxable Income (H) + (M) + (J) = (N)($4.4)($6.6)($3.6)$0.1 ($3.6)$4.1 MACRS Depreciation Schedule 5 Years
Federal ITC - BESS 30%
Tax Benefit (Liability)(N) x (Tax Rate) = (O)$0.9 $1.4 $0.8 ($0.0)$0.8 ($0.9)
Capex
Federal Investment Tax Credit (ITC)(P)$17.5 $0.0 $0.0 $0.0 $0.0 $0.0 Total Initial Installed Cost ($/kWh)$292
Extended Warranty (% of Capital Cost)0.7%
Capital Expenditures ($46.7)($11.7)$0.0 $0.0 $0.0 $0.0 $0.0 Extended Warranty Start Year 3
After-Tax Net Equity Cash Flow (H) + (L) + (O) + (P) = (Q)($46.7)$23.7 $6.6 $5.5 $4.6 $1.7 $2.1 Total Capex ($mm)$58
IRR For Equity Investors 12.0%
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Subsidized Utility-Scale (100 MW / 200 MWh)—Low LCOS case presented for illustrative purposes only.
* Denotes unit conversion.
(1)Assumes half-year convention for discounting purposes.
(2)Total Generation reflects (Cycles) x (Available Capacity) x (Depth of Discharge) x (Duration). Note for the purpose of this analysis, Lazard accounts for Degradation in the Available Capacity calculation.
(3)Charging Cost reflects (Total Generation) / [(Efficiency) x (Charging Cost) x (1 + Charging Cost Escalator)].
(4)O&M costs include general O&M ($1.30/kWh, plus any relevant Solar PV or Wind O&M, escalating annually at 2.5%), augmentation costs (incurred in years needed to maintain usable energy at original storage module cost) and warranty costs
(0.7% of equipment, starting in year 3).
(5)Reflects a ”key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
(6)Initial Installed Cost includes Inverter cost of $35/kW, Module cost of $188/kWh, Balance-of-System cost of $30/kWh and EPC cost of $30/kWh.
(7)Reflects initial cash outflow from equity sponsor.
Levelized Cost of Storage Comparison—Methodology
Lazard’s LCOS analysis consists of creating a power plant model representing an illustrative project for each relevant technology and solving
for the $/MWh value that results in a levered IRR equal to the assumed cost of equity (see subsequent “Key Assumptions” pages for detailed
assumptions by technology)
C L C O S V 8 . 0
Subsidized Utility-Scale (100 MW / 200 MWh)—Low Case Sample Calculations
(1)
Use-case specific
Global assumptions
(5)
(4)
(6)
(2)
(3)
(7)
41
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Levelized Cost of Storage—Key Assumptions
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Assumed capital structure of 80% equity (with a 12% cost of equity) and 20% debt (with an 8% cost of debt). Capital cost units are the total investment divided by the storage equipment’s energy capacity
(kWh rating) and inverter rating (kW rating). All cases were modeled using 90% depth of discharge. Wholesale charging costs reflect weighted average hourly wholesale energy prices across a
representative charging profile of a standalone storage asset participating in wholesale revenue streams. Escalation is derived from the EIA’s “AEO 2022 Energy Source–Electric Price Forecast (20-year
CAGR)”. Storage systems paired with Solar PV or Wind do not charge from the grid.
C L C O S V 8 . 0
42
Utility-Scale
(Standalone)
Utility-Scale
(PV + Storage)
Utility-Scale
(Wind + Storage)
C&I
(Standalone)
C&I
(PV + Storage)
Residential
(Standalone)
Residential
(PV + Storage)
Units (100 MW / 100 MWh)(100 MW / 200 MWh)(100 MW / 400 MWh) (50 MW / 200 MWh)(50 MW / 200 MWh)(1 MW / 2 MWh)(0.5 MW / 2 MWh)(0.006 MW / 0.025 MWh)(0.006 MW / 0.025 MWh)
Power Rating MW 100 100 100 50 50 1 0.5 0.006 0.006
Duration Hours 1.0 2.0 4.0 4.0 4.0 2.0 4.0 4.2 4.2
Usable Energy MWh 100 200 400 200 200 2 2 0.025 0.025
90% Depth of Discharge Cycles/Day #1 1 1 1 1 1 1 1 1
Operating Days/Year #350 350 350 350 350 350 350 350 350
Solar / Wind Capacity MW 0.00 0.00 0.00 100 100 0.00 1.00 0.000 0.010
Annual Solar / Wind Generation MWh 0 0 0 197,000 372,000 0 1,752 0 15
Project Life Years 20 20 20 20 20 20 20 20 20
Annual Storage Output MWh 31,500 63,000 126,000 63,000 63,000 630 630 8 8
Lifetime Storage Output MWh 630,000 1,260,000 2,520,000 1,260,000 1,260,000 12,600 12,600 158 158
Initial Capital Cost—DC $/kWh $280
Initial Capital Cost—AC $/kW $35
EPC Costs $/kWh $30
Solar / Wind Capital Cost $/kW $0
Total Initial Installed Cost $$35
Storage O&M $/kWh $1.7
Extended Warranty Start Year 3 3 3 3 3 3 3 3 3
Warranty Expense % of Capital Costs %0.50%
Investment Tax Credit (Solar)%0%0%0%30%
Investment Tax Credit (Storage)%30%
Production Tax Credit $/MWh $0 $0 $0 $0 $26
Charging Cost $/MWh $61 $64 $59 $0 $0 $117 $0 $325 $0
Charging Cost Escalator %1.87%1.87%1.87%0.00%0.00%0.00%0.00%0.00%0.00%
Efficiency of Storage Technology %91%
Unsubsidized LCOS $/MWh $249
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
D LCOH v3.0
A P R I L 2 0 2 3
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Year 1 2 3 4 5 25 Key Assumptions
Electrolyzer size (MW)(A)20 20 20 20 20 20 Electrolyzer size (MW)20.00
Electrolyzer input capacity factor (%)(B)55%55%55%55%55%55%Electrolyzer input capacity factor (%)55%
Total electric demand (MWh)(A) x (B) = (C)*96,360 96,360 96,360 96,360 96,360 96,360 Lower heating value of hydrogen (kWh/kgH2)33
Electric consumption of H2 (kWh/kg)(D)61.87 61.87 61.87 61.87 61.87 61.87 Electrolyzer efficiency (%)58.0%
Total H2 output ('000 kg)(C) / (D) = (E)1,558 1,558 1,558 1,558 1,558 1,558 Levelized penalty for efficiency degradation (kWh/kg)4.4
Levelized Cost of Hydrogen ($/kg)(F)$7.37 $7.37 $7.37 $7.37 $7.37 $7.37 Electric consumption of H2 (kWh/kg)57.47
Total Revenues (E) x (F) = (G)*$11.47 $11.47 $11.47 $11.47 $11.47 $11.47 Warranty / insurance 1.0%
Total O&M 5.34
Warranty / insurance (H)----($0.5)($0.5)($0.5)($0.6)O&M escalation 2.00%
Total O&M (I)*(5.3)(5.4)(5.4)(5.4)(5.4)(5.8)
Total Operating Costs (H) + (I) = (J)($5.3)($5.4)($5.8)($5.8)($5.9)($6.3)
Capital Structure
EBITDA (G) - (J) = (K)$6.1 $6.1 $5.6 $5.6 $5.6 $5.1 Debt 40.0%
Cost of Debt 8.0%
Debt Outstanding - Beginning of Period (L)$18.1 $17.9 $17.6 $17.3 $17.0 $1.6 Equity 60.0%
Debt - Interest Expense (M)($1.4)($1.4)($1.4)($1.4)($1.4)($0.1)Cost of Equity 12.0%
Debt - Principal Payment (N)($0.2)($0.3)($0.3)($0.3)($0.3)($1.6)
Levelized Debt Service (M) + (N) = (O)($1.7)($1.7)($1.7)($1.7)($1.7)($1.7)Taxes and Tax Incentives:
EBITDA (K)$6.1 $6.1 $5.6 $5.6 $5.6 $5.1 Economic Life (years) 25
Depreciation (MACRS)(P)(6.5)(11.1)(7.9)(5.7)(4.0)0.0 MACRS Depreciation (Year Schedule) 7-Year MACRS
Interest Expense (M)(1.4)(1.4)(1.4)(1.4)(1.4)(0.1)
Taxable Income (K) + (P) + (M) = (Q) ($1.8)($6.4)($3.7)($1.4)$0.2 $5.0 Capex
EPC Costs ($/kW)$2,265
Tax Benefit (Liability)(Q) x (tax rate) = (R)$0.4 $1.3 $0.8 $0.3 ($0.0)$2.9 Additional Owner's Costs ($/kW)$0
Transmission Costs ($/kW)$0
Capital Expenditures ($27)($18.1)$0.0 $0.0 $0.0 $0.0 $0.0 Total Capital Costs ($/kW)$2,265
After-Tax Net Equity Cash Flow (K) + (O) + (R) = (S)$4.8 $5.8 $4.7 $4.2 $3.9 $6.3 Total Capex ($mm)$45
IRR For Equity Investors 12.0%
Source:Lazard and Roland Berger estimates and publicly available information.
Note:Unsubsidized Green PEM—High LCOH case presented for illustrative purposes only.
*Denotes unit conversion.
(1)Assumes half-year convention for discounting purposes.
(2)Total Electric Demand reflects (Electrolyzer Size) x (Electrolyzer Capacity Factor) x (8,760 hours/year).
(3)Electric Consumption reflects (Heating Value of Hydrogen) x (Electrolyzer Efficiency) + (Levelized Degradation).
(4)Reflects initial cash outflow from equity investors.
(5)Reflects a “key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
(6)Economic life sets debt amortization schedule.
Levelized Cost of Hydrogen Comparison—Methodology
($ in millions, unless otherwise noted)
D L C O H V 3 . 0
Lazard’s LCOH analysis consists of creating a model representing an illustrative project for each relevant technology and solving for the $/kg
value that results in a levered IRR equal to the assumed cost of equity (see subsequent “Key Assumptions” pages for detailed assumptions
by technology)
Technology-dependent
Levelized
(1)
Unsubsidized Green PEM—High Case Sample Illustrative Calculations
(6)
(2)
(4)
(3)
(5)
43
61.87
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Green Hydrogen Pink Hydrogen
PEM Alkaline PEM Alkaline
Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case
Capacity MW 100 –20 100 –20 100 –20 100 –20
Total Capex $/kW $943 –$2,265 $740 –$1,984 $1,013 –$2,335 $810 –$2,054
Electrolyzer Stack Capex $/kW $341 –$1,052 $203 –$652 $341 –$1,052 $203 –$652
Plant Lifetime Years 25 25 25 25
Stack Lifetime Hours 60,000 67,500 60,000 67,500
Heating Value kWh/kg H2 33 33 33 33
Electrolyzer Utilization %90%90%90%90%
Electrolyzer Capacity Factor %55%55%95%95%
Electrolyzer Efficiency % LHV 58%67%58%67%
Operating Costs:
Annual H2 Produced MT 7,788 –1,558 8,902 –1,780 12,744 –2,549 14,568 –2,914
Process Water Costs $/kg H2 $0.005 $0.005 $0.005 $0.005
Annual Energy Consumption MWh 481,800 –96,360 481,800 –96,360 788,400 –157,680 788,400 –157,680
Net Electricity Cost (Unsubsidized)$/MWh $48.00 $48.00 $35.00 $35.00
Net Electricity Cost (subsidized)$/MWh $30.56 $30.56 $30.31 $30.31
Warranty & Insurance (% of Capex)%1.0%1.0%1.0%1.0%
Warranty & Insurance Escalation %1.0%1.0%1.0%1.0%
O&M (% of Capex)%1.50%1.50%1.50%1.50%
Annual Inflation %2.00%2.00%2.00%2.00%
Capital Structure:
Debt %40.0%40.0%40.0%40.0%
Cost of Debt %8.0%8.0%8.0%8.0%
Equity %60.0%60.0%60.0%60.0%
Cost of Equity %12.0%12.0%12.0%12.0%
Tax Rate %21.0%21.0%21.0%21.0%
WACC %9.7%9.7%9.7%9.7%
Unsubsidized Levelized Cost of Hydrogen $/kg $4.77 $7.37 $3.79 $5.78 $3.47 $5.29 $2.75 $4.08
Subsidized Levelized Cost of Hydrogen $/kg $1.68 $4.28 $0.83 $2.83 $1.16 $2.99 $0.48 $1.81
Memo: Unsubsidized Natural Gas Equivalent Cost $/MMBTU $41.90 $64.65 $33.30 $50.70 $30.40 $46.45 $24.15 $35.80
Memo: Subsidized Natural Gas Equivalent Cost $/MMBTU $14.80 $37.55 $7.30 $24.80 $10.20 $26.25 $4.25 $15.90
Levelized Cost of Hydrogen—Key Assumptions
D L C O H V 3 . 0
Source:Lazard and Roland Berger estimates and publicly available information. 44
Copyright 2023 Lazard
This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or
other advice. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.
Green Hydrogen Pink Hydrogen
PEM Alkaline PEM Alkaline
Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case
Capacity MW 20 20 20 20
Total Capex $/kW $1,412 –$2,265 $1,230 –$1,984 $1,482 –$2,335 $1,300 –$2,054
Electrolyzer Stack Capex $/kW $479 –$1,052 $186 –$652 $479 –$1,052 $186 –$652
Plant Lifetime Years 25 25 25 25
Stack Lifetime Hours 60,000 67,500 60,000 67,500
Heating Value kWh/kg H2 33 33 33 33
Electrolyzer Utilization %90%90%90%90%
Electrolyzer Capacity Factor %55%55%95%95%
Electrolyzer Efficiency % LHV 58%67%58%67%
Operating Costs:
Annual H2 Produced MT 1,558 1,780 2,549 2,914
Process Water Costs $/kg H2 $0.005 $0.005 $0.005 $0.005
Annual Energy Consumption MWh 96,360 96,360 157,680 157,680
Net Electricity Cost (Unsubsidized)$/MWh $48.00 $48.00 $35.00 $35.00
Net Electricity Cost (subsidized)$/MWh $30.56 $30.56 $30.31 $30.31
Warranty & Insurance (% of Capex)%1.0%1.0%1.0%1.0%
Warranty & Insurance Escalation %1.0%1.0%1.0%1.0%
O&M (% of Capex)%1.50%1.50%1.50%1.50%
Annual Inflation %2.00%2.00%2.00%2.00%
Capital Structure:
Debt %40.0%40.0%40.0%40.0%
Cost of Debt %8.0%8.0%8.0%8.0%
Equity %60.0%60.0%60.0%60.0%
Cost of Equity %12.0%12.0%12.0%12.0%
Tax Rate %21.0%21.0%21.0%21.0%
WACC %9.7%9.7%9.7%9.7%
Unsubsidized Levelized Cost of Hydrogen $/kg $5.65 $7.37 $4.53 $5.78 $4.05 $5.29 $3.20 $4.08
Subsidized Levelized Cost of Hydrogen $/kg $2.55 $4.28 $1.57 $2.83 $1.74 $2.99 $0.93 $1.81
Natural gas price $/mmbtu $3.45 $3.45 $3.45 $3.45
Peaker LCOE at 0% H2 blend by vol. (unsubsidized)$/MWh $173.00 $173.00 $173.00 $173.00
Peaker LCOE at 25% H2 blend by vol. (unsubsidized)$/MWh $220 –$235 $210 –$221 $206 –$217 $198 –$206
Peaker LCOE at 25% H2 blend by vol. (subsidized)$/MWh $193 –$208 $184 –$195 $185 –$196 $178 –$186
Memo: Unsubsidized Natural Gas Equivalent Cost $/MMBTU $49.55 $64.65 $39.75 $50.70 $35.50 $46.45 $28.05 $35.80
Memo: Subsidized Natural Gas Equivalent Cost $/MMBTU $22.40 $37.55 $13.75 $24.80 $15.30 $26.25 $8.15 $15.90
Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend Key
Assumptions
D L C O H V 3 . 0
Source:Lazard and Roland Berger estimates and publicly available information. 45