Levelised Cost of Electricity

The levelised cost of electricity (LCOE) is a common metric for comparing power generating technologies. We assess the LCOE for the UK Department of International Development’s (DFID) 28 priority countries using a life-cycle project finance model, building countryand technology-specific input data for capital, operational and finance costs, according to data availability. This analysis suggests that new utilityscale wind and solar PV are, in most cases, more expensive than coal and gas-fired power in DFID’s 28 priority countries. This is mainly due to a lack of experience in developing, building and financing renewable projects. While wind and solar technology will continue to get cheaper with technology innovation in manufacturing, further deployment is critical to build supply chains, reduce balance of plant and operating costs, and put downward pressure on technology and counterparty risk that currently results in high costs for commercial finance.