THE TRADITIONAL 'LEVELISED COST OF ENERGY' LCOE IS NOT AN INDICATOR FOR GRID PARITY

摘要

The traditional Levelised Cost of Energy (LCOE) is not an indicator of grid parity. Therefore, it isincorrect to believe that in general a public promotion of renewable energy systems is necessary aslong as the traditional LCOE of a particular system lies above the price of conventional energy thatshall be replaced. The conventional LCOE is not appropriate for that.The reason for the problem is that traditional LCOE-calculations neglect energy price changes.Although Net Present Value (NPV) calculations show that rising energy prices (e.g. the price ofelectrical current from the public grid) lead to an increasing profitability of renewable energy systems2and bring them therefore closer to the point of grid parity, the traditional LCOE does not consider that.In order to solve this problem a method has been developed that allows the integration of varyingenergy prices into the calculation of the LCOE. This new approach is more accurate and shows that aninvestment in renewable energy systems or in energy efficiency can be profitable – in terms ofgenerating a positive Net Present Value (NPV) – even if the traditional LCOE is below the currentprice for energy from the grid. Thus, the LCOE should be revised.In this paper such a revision will be presented. After explaining the derivation of the traditional LCOE,discussing relevant parameters and analysing the problem in detail, we will rework and adjust thetraditional LCOE formula step-by-step. The first result will be an “Energy price adjusted LCOE”which enables the consideration of (constant) price changes. In the second half of the paper we will goeven further in terms of making the calculation of the LCOE very flexible: besides introducing varyingprice rise rates into the calculation scheme there will be additional modifications steps covering thepossibility of varying discount rates, varying degradation rates, and varying OPEX price rise rates.The result of the latter modification steps will be a “Total LCOE” and a calculation scheme (presentedby a table) at its side that is very flexible as it allows adjustment of all the relevant parameters of amodel in every period over the complete project life time.