OCTOBER 2020

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 LY S I S — V E R S I O N 1 4 . 0

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Introduction

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 costs of capital•

Illustration of how the LCOE of onshore wind and utility-scale solar compare to the marginal cost of selected conventional generation technologies•

Historical LCOE comparison of various utility-scale generation technologies•

Illustration of the historical LCOE declines for wind and utility-scale solar technologies•

Illustration of how the LCOEs of utility-scale solar and wind compare to those of gas peaking and combined cycle•

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 expense, variable operations
and maintenance expense and fuel cost•

Overview of the methodology utilized to prepare Lazard’s LCOE analysis•

Considerations regarding the operating characteristics and applications of various generation technologies•

Summary of assumptions utilized in Lazard’s LCOE analysis•

Summary considerations in respect of Lazard’s approach to evaluating the LCOE of various conventional and renewable energy technologies

Other factors would also have a potentially significant effect on the results contained herein, but have not been examined in the scope of thiscurrent analysis. These additional factors, among others, could include: capacity value vs. energy value; network upgrades, transmission,congestion or other integration-related costs; significant permitting or other development costs, unless otherwise noted; and costs ofcomplying with various environmental regulations (e.g., carbon emissions offsets or emissions control systems). This analysis also does notaddress 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.)1
Copyright 2020 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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Unsubsidized Analysis

Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances
Solar PV–Rooftop Residential

$227

$150

Solar PV–Rooftop C&I

$179

$74

Solar PV–Community

$94

$63

Solar PV–Crystalline Utility Scale (1)$31Solar PV–Thin Film Utility Scale (1)

$29

$42

Renewable Energy$38

Solar Thermal Tower with Storage

$156

$126

Geothermal

$101

$59

Wind

$54

$26

$86(2)

Gas Peaking (3)

$198

$151

Nuclear (4)

$198

$129

$29(5)

Conventional

Coal (6)$28(5)

Gas Combined Cycle (3)$0Source:
Note:
(1)
(2)
(3)
(4)
(5)

(6)
(7)

Copyright 2020 Lazard

(8)

$25

$159

$65

$41(5)

$73

$44
$50

$75

$88(7)$100$127(8)
$125

$150

$175

$200

$225

$250

$275

Levelized Cost ($/MWh)

Lazard estimates.
Here and throughout this presentation, unless otherwise indicated, the analysis assumes 60% debt at 8% interest rate and 40% equity at 12% cost. Please see page titled “Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital” for cost ofcapital sensitivities. These results are not intended to represent any particular geography. Please see page titled “Solar PV versus Gas Peaking and Wind versus CCGT—Global Markets” for regional sensitivities to selected technologies.
Unless otherwise indicated herein, the low case represents a single-axis tracking system and the high case represents a fixed-tilt system.
Represents the estimated implied midpoint of the LCOE of offshore wind, assuming a capital cost range of approximately $2,600 – $3,675/kW.
The fuel cost assumption for Lazard’s global, unsubsidized analysis for gas-fired generation resources is $3.45/MMBTU.
Unless otherwise indicated, the analysis herein does not reflect decommissioning costs, ongoing maintenance-related capital expenditures or the potential economic impacts of federal loan guarantees or other subsidies.
Represents the midpoint of 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 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. Please see page titled “Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of Selected Existing Conventional
Generation” for additional details.
High end incorporates 90% carbon capture and storage. Does not include cost of transportation and storage.
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.
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.

2This 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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies(1)The Investment Tax Credit (“ITC”) and Production Tax Credit (“PTC”) remain important components of the levelized cost of renewable energy
generation technologies
Solar PV–Rooftop Residential

$150

$227

$135
Solar PV–Rooftop C&I

$205

$74

$179

$66
Solar PV–Community

$161

$63

$94

$60
Solar PV–Crystalline Utility Scale

$31
$26

Solar PV–Thin Film Utility Scale

$42
$35

$29
$24

$90

$38
$32

Solar Thermal Tower with Storage

$126
$117

Geothermal

$59
$94

$26
$9
$0

$143

$101

$49
Wind

$156

$54
$43

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

Levelized Cost ($/MWh)
Unsubsidized

Copyright 2020 Lazard

Subsidized

Source: Lazard estimates.
Note: The sensitivity analysis presented on this page also includes sensitivities related to the U.S. Tax Cuts and Jobs Act (“TCJA”) of 2017. The TCJA contains several provisions that impact the
LCOE of various generation technologies (e.g., a reduced federal corporate income tax rate, an ability to elect immediate bonus depreciation, limitations on the deductibility of interest
expense and restrictions on the utilization of past net operating losses). On balance the TCJA reduced the LCOE of conventional generation technologies and marginally increased the LCOE
of renewable energy technologies.
(1)
The sensitivity analysis presented on this page assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity, tax equity and debt.

3

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices
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. those of peaking or intermittent technologies)

Solar PV–Rooftop Residential

$227

$150

Solar PV–Rooftop C&I

$179

$74

Solar PV–Community

$94

$63

Solar PV–Crystalline Utility Scale$31

Solar PV–Thin Film Utility Scale

$29

$42

Renewable Energy$38

Solar Thermal Tower with Storage

$156

$126

Geothermal

$101

$59

Wind

$54

$26

Gas Peaking (1)

$206

$142

Nuclear (2)

$200

$125

Conventional

Coal (3)
Gas Combined Cycle (1)
$0

$164

$61
$80

$38
$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

Levelized Cost ($/MWh)
Source:Note:

Copyright 2020 Lazard

(1)
(2)
(3)

Unsubsidized± 25% Fuel Price Adjustment
Lazard estimates.
Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized
Analysis”.
Assumes a fuel cost range for gas-fired generation resources of $2.59/MMBTU – $4.31/MMBTU (representing a range of ± 25% of the standard assumption of $3.45/MMBTU).
Assumes a fuel cost range for nuclear generation resources of $0.64/MMBTU – $1.06/MMBTU (representing a range of ± 25% of the standard assumption of $0.85MMBTU).
Assumes a fuel cost range for coal-fired generation resources of $1.10/MMBTU – $1.84/MMBTU (representing a range of ± 25% of the standard assumption of $1.47/MMBTU).
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 orother 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.

4

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Sensitivity to Carbon Pricing
Carbon pricing is one avenue for policymakers to address carbon emissions via a market-based mechanism; a carbon price range of $20 – $40/Tonof carbon would increase the LCOE for certain conventional generation technologies to levels above those of onshore wind and utility-scale solar$150

Solar PV–Rooftop Residential$74

Solar PV–Rooftop C&I

$179

$63

Solar PV–Community
Renewable Energy

Solar PV–Crystalline Utility Scale$31

Solar PV–Thin Film Utility Scale

$29

$94

$42
$38

Solar Thermal Tower with Storage$126

Geothermal

$59

Wind
Gas Peaking

$26

$156

$101
$54
$151

(1)

$198
$165

$29(2)

Nuclear$198$65(1)(3)$159$86

Gas Combined Cycle (1)(4)$0$28(2)

$44

$165

$73
$53

$25

$220

$129

$41(2)

Conventional

Coal

$227

$50

$92
$75

$100

$125

$150

$175

$200

$225

$250

$275

Levelized Cost ($/MWh)
Source:
Note:
(1)
(2)
(3)
Copyright 2020 Lazard(4)

Unsubsidized

Marginal Cost without Carbon Pricing

Unsubsidized with Carbon Pricing

Lazard estimates.
Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
The low and high ranges reflect the LCOE of selected conventional generation technologies including illustrative carbon prices of $20/Ton and $40/Ton, respectively.
Reflects the midpoint of the marginal cost of operating fully depreciated gas combined cycle and coal facilities as shown on the page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
The narrow spread between the high end of new build coal with and without carbon pricing results from the incorporation of 90% carbon capture and compression. The midpoint of the marginal cost of operating fully depreciatedcoal facilities with the illustrative carbon pricing presented herein is $167/MWh. Operating coal facilities are not assumed to employ carbon capture and storage technology.
The midpoint of the marginal cost of operating fully depreciated gas combined cycle facilities with the illustrative carbon pricing presented herein is $59/MWh, reflecting the relatively higher heat rate for existing plants compared to
new build facilities.
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 orother 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.

5

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital
A key consideration in determining the LCOE values for utility-scale generation technologies is the cost, and availability, of capital(1); thisdynamic is particularly significant for renewable energy generation technologies
Midpoint of Unsubsidized LCOE(2)LCOE v14

LCOE($/MWh)
$220

$200

200

$186
$175

180
160

$143

140
120
100
80
60
40

$153
$128

$113
$103
$82
$65
$53
$34

$114
$92
$70

$164
$145

$163
$141

$127
$102
$75

$181
$156

$198
$172

Gas Peaker
Solar Thermal
Tower

$134
$123

Coal

$112

$80

$86

$93

Geothermal
Gas—Combined
Cycle
Wind

$55

$57

$59

$61

$63

$36

$38

$40

$43

$45

$33

$37

$40

$44

$28

$30

After-Tax
IRR/WACC

4.2%

5.4%

6.5%

7.7%

8.8%

10.0%

Cost of Equity

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Cost of Debt

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

20

Nuclear

Solar PV–
Crystalline

0

Copyright 2020 Lazard

Source: Lazard estimates.
Note:
Analysis assumes 60% debt and 40% equity. Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented 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.

6

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of
Selected Existing Conventional Generation
Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of existing conventional
generation$70

Marginal Cost of Selected Existing
Conventional Generation(1)Levelized Cost of New-Build Wind and Solar
60
$54
50

$48

Cost of Energy ($/MWh)

$43
$38

40

$32
30

$34

$32

$32

$29
$26

$25

$24

20

Unsubsidized
Wind

$23

Subsidized
Wind

10
$9

0

Onshore Wind

Onshore Wind
(Subsidized)(2)

Unsubsidized
Solar PV
Subsidized
Solar PV

Solar PV–Thin Film Utility
Scale

Solar PV–Thin Film Utility
Scale (Subsidized) (2)

Coal

NuclearGas—Combined Cycle

Source: Lazard estimates.
Note:
Unless otherwise noted, the assumptions used in this sensitivity correspond to those used in the global, unsubsidized analysis as presented on the 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 or coal asset is equivalent to its decommissioning and site restoration costs. Inputs are derived from a benchmark of operating gas combined cycle,
7coal 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.
Copyright 2020 Lazard (2)The subsidized analysis includes sensitivities related to the TCJA and U.S. federal tax subsidies. Please see page titled “Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax
Subsidies” for additional details.
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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Historical Utility-Scale Generation
Comparison

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
Selected Historical Mean Unsubsidized LCOE Values(1)Mean LCOE($/MWh)
$380

$359

320
$275

260

Gas Peaker
(36%)

$248
$243

$227

$216

Nuclear
33%
$205

$205
$192

200
$168

140

$135
$123
$111

80

$83
$76

20
LCOE Version

2009
3.0

Copyright 2020 Lazard

$191

$183

$174
$157

$159

$124
$111
$107
$96
$82

2010
4.0

$125
$111
$104
$95

$116
$102

$83

$96
$75

$71

$72

2011
5.0

$150

$145

$157

2012
6.0

$116

$124
$116

$105
$104
$98
$74

$112
$109
$79

$70

2013
7.0

$74
$59

2014
8.0

$117

$151

$117

$148

$151

$140

$140
$102

$108

$102

$102

$100

$98

$97

$64

$63
$55

$60

$65
$55

2015
9.0

$179

$91

$175
$155

$141
$109

$91

$175
$163
$141
$112

$80

$50

$58
$43

$56

$59

$41

$40

$47

$45

$42

$40

$37

2016
10.0

2017
11.0

2018
12.0

2019
13.0

2020
14.0

Source: Lazard estimates.
(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—
Version 3.0.

Solar Thermal
Tower
(16%)
Coal
1%
Geothermal
6%
Gas—Combined
Cycle
(29%)
Wind
(70%)
Solar PV—
Crystalline
(90%)

8

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE
Declines

In light of material declines in the pricing of system components and improvements in efficiency, among other factors, wind and utility-scalesolar PV have exhibited dramatic LCOE declines; however, as these industries have matured, the rates of decline have diminishedUnsubsidized Wind LCOE

Unsubsidized Solar PV LCOE

LCOE($/MWh)LCOE($/MWh)Wind 2009 – 2020 Percentage Decrease: (71%)(1)Wind 2009 – 2020 CAGR: (11%)(2)$250

Utility-Scale Solar 2009 – 2020 Percentage Decrease: (90%)(1)
Utility-Scale Solar 2009 – 2020 CAGR: (19%)(2)$450Wind 2015 – 2020 CAGR: (5%)(2)400
200

Utility-Scale Solar 2015 – 2020 CAGR: (11%)(2)

$394

350
$169
300

$148

150

250

$92

100

$95

$81

$77
$62

$60

LCOE
Version

$48

$45

$56

$54

$54

Copyright 2020 Lazard

4.0

5.0

6.0

7.0

$149
$104

$148
100
$101

$37

$32

$32

$30

50
$29

$28

8.0

9.0

$91

$86
$72

$26

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
3.0

$166

150

50
$50

$226

200

$95

$101 $99

0$323 $270

10.0 11.0 12.0 13.0 14.0

0
LCOE
Version

$70
$58

$61
$49

$53

$46

$44

$42

$46

$40

$36

$31

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0 11.0 12.0 13.0 14.0

Wind LCOE Mean

Crystalline Utility-Scale Solar LCOE MeanWind LCOE Range

Crystalline Utility-Scale Solar LCOE Range

Source: Lazard estimates.
(1)
Represents the average percentage decrease 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.

9This 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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Solar PV versus Gas Peaking and Wind versus CCGT—Global Markets(1)Solar PV and wind have become increasingly competitive with conventional technologies with similar generation profiles; without storage,
however, these resources lack the dispatch characteristics, and associated benefits, of such conventional technologies

Solar PV(2)versusGas Peaker(3)LCOE v14

$31

U.S.

$29

Australia

$30

$98

Brazil

$188

$125

$26

U.S.

$44

$23

Australia

$41

$27

Brazil

$31

$47

India

$49

South Africa

$47

Japan

$36

Europe

$34
$0

$25

$46

$53

$172

$186
$200

$70

$77

$95

$71
$70

$50

$158

$242

$73
$61
$61

$65
$54
$60

$255

$200

$164

$54

$248

$210

$136

$50

LCOE v14

$209

$162

$40

EuropeCopyright 2020 Lazard

$146
$130

$45

Japan

$198

$162

$55

South Africa

Wind(4)versusGas Combined
Cycle(5)

$107
$124

$43

India

$179

$151

$77
$72

$107
$103

$100
$87
$84

$75

$100

$125

$150

$175

$200

$225

$250

$275

Unsubsidized LCOE
Solar PV
Gas Peaker
Levelized Cost ($/MWh)
Wind
CCGT
Source: Lazard estimates.
Note: The analysis presented on this page assumes country-specific or regionally applicable tax rates.
(1)
Equity IRRs are assumed to be 10.0% – 12.0% for Australia, 15.0% for Brazil and South Africa, 13.0% – 15.0% for India, 8.0% – 10.0% for Japan, 7.5% – 12.0% for Europe and 7.5% – 9.0% for
the U.S. Cost of debt is assumed to be 5.0% – 5.5% for Australia, 10.0% – 12.0% for Brazil, 12.0% – 13.0% for India, 3.0% for Japan, 4.5% – 5.5% for Europe, 12.0% for South Africa and 4.0% –4.5% for the U.S.
(2)
Low end assumes crystalline utility-scale solar with a single-axis tracker. High end assumes rooftop C&I solar. Solar projects assume illustrative capacity factors of 21% – 28% for the U.S., 26% –30% for Australia, 26% – 28% for Brazil, 22% – 23% for India, 27% – 29% for South Africa, 16% – 18% for Japan and 13% – 16% for Europe.
(3)
Assumes natural gas prices of $3.45 for the U.S., $4.00 for Australia, $8.00 for Brazil, $7.00 for India, South Africa and Japan and $6.00 for Europe (all in U.S.$ per MMBtu). Assumes a capacity
factor of 10% for all geographies.
(4)
Wind projects assume illustrative capacity factors of 38% – 55% for the U.S., 29% – 46% for Australia, 45% – 55% for Brazil, 25% – 35% for India, 31% – 36% for South Africa, 22% – 30% forJapan and 33% – 38% for Europe.
10(5)
Assumes natural gas prices of $3.45 for the U.S., $4.00 for Australia, $8.00 for Brazil, $7.00 for India, South Africa and Japan and $6.00 for Europe (all in U.S.$ per MMBtu). Assumes capacity
factors of 55% – 70% on the high and low ends, respectively, for all geographies.

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Capital Cost Comparison
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 aconvergence in LCOE between the respective technologies

Solar PV–Rooftop Residential$2,525

Solar PV–Rooftop C&I$1,600

Solar PV–Community

Renewable Energy$2,825$1,300$2,825$1,500

Solar PV–Crystalline Utility Scale

$825

$975

Solar PV–Thin Film Utility Scale

$825

$975

Solar Thermal Tower with Storage$6,000

Geothermal$4,500Wind
Gas Peaking$1,050$700$1,450$925$7,675Coal
Gas Combined Cycle$2,900$700$0Copyright 2020 Lazard$6,050$3,138(1)NuclearConventional$9,090$12,500$6,225$1,250$1,500$3,000Source: Lazard estimates.
(1)
Represents the estimated midpoint of the total capital cost for offshore wind.

$4,500$6,000$7,500Capital Cost ($/kW)$9,000$10,500$12,000$13,500

11

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Components—Low End
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; a key factor
regarding the continued cost decline of renewable energy generation technologies is the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies

Solar PV–Rooftop Residential$140

Solar PV–Rooftop C&I$68

Solar PV–Community

Renewable Energy

$6

$56
$26

$5

Solar PV–Thin Film Utility Scale$25$4 $29
$113
$49

Wind

Conventional

$21

$6

$2 $9

$59

$26
$105

$8 $4

Nuclear

$101

$15

Coal

$44
$18
$0

$2$3
$25

$6 $3
$21

$13

$151

$34
$4

$9

$129

$65

$44
$50

$75
$100
Levelized Cost ($/MWh)Capital Cost

Source: Lazard estimates.

$126

$13

Gas Peaking

Gas Combined Cycle

Copyright 2020 Lazard

$74

$31

Solar Thermal Tower with Storage
Geothermal

$150

$63

$7

Solar PV–Crystalline Utility Scale$10

Fixed O&M

Variable O&M

$125

$150

$175

Fuel Cost

12
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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Components—High End
Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; a key factor
regarding the continued cost decline of renewable energy generation technologies is the ability of technological development and industry
scale to continue lowering operating expenses and capital costs for renewable energy generation technologies

Solar PV–Rooftop Residential$211

Solar PV–Rooftop C&I$167

Solar PV–Community

Renewable Energy$83

Solar PV–Crystalline Utility Scale$37

Solar PV–Thin Film Utility Scale

$33

$12

$11

$5 $38

Geothermal

$75
$42

$12

$101

$24

$54
$139

$26

Nuclear
Coal

$121
$40
$25

$4$5
$50

$24

$15 $5$198$17 $4 $9

$198

$159

$73
$75

$100
Capital Cost

Source: Lazard estimates.

$18

$28

$6

$168

$0

Copyright 2020 Lazard

$156

$23
$2

Gas Peaking

Gas Combined Cycle

$179

$94

$132

Wind

$227

$5 $42

Solar Thermal Tower with Storage

Conventional

$16

$125
$150
Levelized Cost ($/MWh)
Fixed O&M

$175

Variable O&M

$200

$225

$250

$275

Fuel Cost

13
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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy Comparison—Methodology($ in millions, unless otherwise noted)

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)
Year

Unsubsidized Wind — High Case Sample Illustrative Calculations

(1)

0

1

2

3

4

5

Key Assum ptions

20

(4)

Capacity (MW)

(A)

175

175

175

175

175

175

Capacity (MW)

175

Capacity Factor

(B)

38%

38%

38%

38%

38%

38%

Capacity Factor

38%

Total Generation ('000 MWh)(A) x (B) = (C)*

583

583

583

583

583

583

Fuel Cost ($/MMBtu)$0.00

Levelized Energy Cost ($/M Wh)

(D)

$53.7

$53.7

$53.7

$53.7

$53.7

$53.7

Heat Rate (Btu/kWh)Total Revenues(C) x (D) = (E)*

$31.3

$31.3

$31.3

$31.3

$31.3

$31.3

Fixed O&M ($/kW-year)

Total Fuel Cost

(F)

--

--

--

--

--

--

0
$39.5

Variable O&M ($/MWh)$0.0

O&M Escalation Rate

2.25%

Total O&M

(G)*

6.9

7.0

7.2

7.3

7.5

10.7

Capital Structure

Total Operating Costs(F) + (G) = (H)

$6.9

$7.0

$7.2

$7.3

$7.5

$10.7

Debt

60.0%

Cost of Debt

8.0%

Equity40.0%

Cost of Equity

12.0%

EBITDA(E) - (H) = (I)

$24.4

$24.3

$24.1

$23.9

$23.8

$20.6

Debt Outstanding - Beginning of Period(J)$152.3$149.2$146.0$142.4$138.6$14.1

Debt - Interest Expense(K)(12.2)(11.9)(11.7)(11.4)(11.1)(1.1)

Debt - Principal Payment(L)

Levelized Debt Service(K) + (L) = (M)

(3.0)

(3.3)

(3.5)

(3.8)

(4.1)

(14.1)

Combined Tax Rate($15.2)($15.2)($15.2)($15.2)($15.2)($15.2)

Economic Life (years) (5)20

MACRS Depreciation (Year Schedule)

5

EBITDA

(I)

$24.4

$24.3

$24.1

$23.9

$23.8

$20.6

Depreciation (MACRS)(N)(50.8)(81.2)(48.7)(29.2)(29.2)--

Interest Expense(K)(12.2)(11.9)(11.7)(11.4)(11.1)(1.1)

Taxable Incom e(I) + (N) + (K) = (O)($38.5)($68.9)($36.3)($16.7)($16.5)$19.4(O) x (tax rate) = (P)

$15.4

$27.6

$14.5

$6.7

$6.6

($7.8)

$24.6

$36.6

$23.4

$15.4

$15.2

($2.4)Tax Benefit (Liability)(2)

After-Tax Net Equity Cash Flow
IRR For Equity Investors

Copyright 2020 Lazard

Source:
Note:
*
(1)
(2)
(3)
(4)
(5)

(I) + (M) + (P) = (Q)(3)($101.5)

Taxes and Tax Incentives:
40%

Capex
EPC Costs ($/kW)$1,450Additional Ow ner's Costs ($/kW)$0

Transmission Costs ($/kW)$0

Total Capital Costs ($/kW)$1,450Total Capex ($m m )

$254

12.0%

Lazard estimates.
Technology-dependent
Wind—High LCOE case presented for illustrative purposes only.
Denotes unit conversion.
Levelized
Assumes half-year convention for discounting purposes.
Assumes full monetization of tax benefits or losses immediately.
Reflects initial cash outflow from equity investors.
Reflects a “key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
Economic life sets debt amortization schedule. For comparison purposes, all technologies calculate LCOE on a 20-year IRR basis.
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 orother 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.

14

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Energy Resources—Matrix of Applications
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. those of peaking or intermittent technologies)•

This analysis does not take into account potential social and environmental externalities or reliability-related considerations

Renewable
EnergyLocation

Dispatch

CarbonNeutral/REC
Potential

Distributed

Centralized

Geography

Intermittent

Peaking

Solar PV(1)







Universal(2)Solar Thermal





Rural





Geothermal

VariesOnshore Wind





Rural

Gas Peaking



Universal

Nuclear





Rural



Coal





Co-located or rural



Gas
Combined Cycle

Universal



LoadFollowing

Baseload









Conventional

Copyright 2020 Lazard

Source: Lazard estimates.
(1)
Represents the full range of solar PV technologies.
(2)
Qualification for RPS requirements varies by location.





15
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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy—Key Assumptions
Solar PV
Rooftop—Residential

Rooftop—C&I

Units

Low
Case

High
Case

Low
Case

MW

0.005

0.005

1

EPC Cost$/kW$2,525$2,825$1,600Capital Cost During Construction

$/kW

––

Total Capital Cost$/kW

$2,525$2,825

Fixed O&M$/kW-yr$15.00

Variable O&M$/MWhHeat Rate

Community

Utility Scale—
Crystalline (1)Utility Scale—Thin Film (1)

High
Case

Low
Case

High
Case

Low
Case

High
Case

Low
Case

High
Case

1

5

5

150

150

150

150

$2,825$1,300$1,500

$975

$825

$975

$825

––

––

––

––

––

––

––

$1,600$2,825$1,300$1,500

$975

$825

$975

$825

$18.00$11.75$18.00$12.00$16.00$13.50

$9.50

$9.50

$13.50

––

––

––

––

––

––

––

––

––

––

Btu/kWh

––

––

––

––

––

––

––

––

––

––

%

18%

13%

23%

17%

21%

17%

34%

21%

36%

23%

Fuel Price$/MMBtu

––

––

––

––

––

––

––

––

––

––

Construction Time

Months

3

3

3

3

4

4

9

9

9

9

Facility Life

Years

25

25

25

25

30

30

30

30

30

30

CO2 Emissions

lb/MWh

––

––

––

––

––

––

––

––

––

––

Levelized Cost of Energy

$/MWh

$150

$227

$74

$179

$63

$94

$31

$42

$29

$38

Net Facility Output

Capacity Factor

Copyright 2020 Lazard––––

Source: Lazard estimates.
(1)
The “Low Case” represents assumptions used to calculate the low end of the LCOE range, representing a project with single-axis tracking. The “High Case” represents assumptions used to
calculate the high end of the LCOE range, representing a project with fixed-tilt design.

16

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy—Key Assumptions (cont’d)Solar Thermal Tower with
Storage(1)Geothermal

Wind—Onshore

Wind—Offshore

Units

Low
Case

High
Case

Low
Case

High
Case

Low
Case

High
Case

Low
Case

High
Case

MW

110

150

20

50

175

175

210

385

EPC Cost$/kW$7,950$5,250$3,950$5,300$1,050$1,450$2,600$3,675

Capital Cost During Construction$/kW$1,150

$750

$550

$750

––

––

––

––

Total Capital Cost(2)$/kW$9,090$6,000$4,500$6,050$1,050$1,450$2,600$3,675

Fixed O&M$/kW-yr$75.00$80.00$13.00$14.00$27.00$39.50$67.25$81.75

Variable O&M

$/MWh

––

––

$9.00

$24.00

––

––

––

––

Heat Rate

Btu/kWh

––

––

––

––

––

––

––

––

%

68%

39%

90%

80%

55%

38%

52%

48%

Fuel Price$/MMBtu

––

––

––

––

––

––

––

––

Construction Time

Months

36

36

36

36

12

12

12

12

Facility Life

Years

35

35

25

25

20

20

20

20

CO2 Emissions

lb/MWh

––

––

––

––

––

––

––

––

Levelized Cost of Energy

$/MWh

$126

$156

$59

$101

$26

$54

$69

$104

Net Facility Output

Capacity Factor

Copyright 2020 Lazard

Source: Lazard estimates.
(1)
The “Low Case” represents assumptions used to calculate the low end of the LCOE range, representing a project with 18 hours of storage capacity. The “High Case” represents
assumptions used to calculate the high end of the LCOE range, representing a project with eight hours of storage.
(2)
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.

17

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

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(3)

Low
Case

High
Case

MW

240

50

2,200

2,200

600

600

550

550

EPC Cost

$/kW

$675

$875

$6,025$9,800$2,350$4,925$650$1,150Capital Cost During Construction

$/kW

$25

$50

$1,650$2,700$550$1,300$50$100

Total Capital Cost(1)

$/kW

$700

$925

$7,675$12,500$2,900$6,225$700$1,250

Fixed O&M$/kW-yr$7.25$22.75$119.00$133.25$39.75$83.00$14.50$18.50

Variable O&M

$/MWh

$4.25

$5.75

$3.75

$4.25

$2.75

$5.00

$2.75

$5.00

Heat Rate

Btu/kWh

9,800

8,000

10,45010,4508,750

12,000

6,150

6,900

%

10%

10%

92%

89%

83%

63%

70%

50%

Fuel Price$/MMBtu

$3.45

$3.45

$0.85

$0.85

$1.45

$1.45

$3.45

$3.45

Construction Time

Months

12

18

69

69

60

66

24

24

Facility Life

Years

20

20

40

40

40

40

20

20

CO2 Emissions(2)lb/MWh

1,147

936

––

––

1,839

252(3)

720

807

Levelized Cost of Energy

$/MWh

$151

$198

$129

$198

$65

$159

$44

$73

Net Facility Output

Capacity Factor

Copyright 2020 Lazard

Source: Lazard estimates.
(1)
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.
(2)CO2 emissions calculated based on U.S. Energy Information Administration estimates of CO2 emission coefficients by fuel type and the plant heat rates indicated above.
(3)
Reflects a coal plant with 2,522 lb/MWh of CO2 emissions operating with a 90% carbon capture and storage system.

18

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Levelized Cost of Energy—Key Assumptions (cont’d)
Nuclear (Operating)Units
Net Facility Output

MW

Gas Combined Cycle(Operating)Coal (Operating)

Low
Case

High
Case

Low
Case

High
Case

Low
Case

High
Case

2,200

2,200

600

600

550

550

EPC Cost

$/kW

––

––

––

––

––

––

Capital Cost During Construction

$/kW

––

––

––

––

––

––

Total Capital Cost

$/kW

––

––

––

––

––

––

Fixed O&M$/kW-yr$82.80$103.10$23.20$40.30$9.40$11.70

Variable O&M

$/MWh

$2.50

$3.50

$2.70

$6.00

$0.70

$1.50

Heat Rate

Btu/kWh

10,40010,40010,075

11,275

6,900

7,475

%

97%

89%

35%

65%

69%

45%

Fuel Price$/MMBtu

$0.70

$0.80

$1.90

$2.50

$2.60

$3.20

Construction Time

Months

––

––

––

––

––

––

Facility Life

Years

40

40

40

40

20

20

CO2 Emissions(1)lb/MWh

––

––

2,118

2,370

807

875

Levelized Cost of Energy

$/MWh

$25

$32

$34

$48

$23

$32

Capacity Factor

Copyright 2020 Lazard

Source: Lazard estimates.
(1)CO2 emissions calculated based on U.S. Energy Information Administration estimates of CO2 emission coefficients by fuel type and the plant heat rates indicated above.

19

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 orother 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 LEVELIZED COST OF ENERGY ANALYSIS—VERSION 14.0

Summary Considerations
Lazard has conducted this analysis comparing the LCOE for various conventional and renewable energy generation technologies in order tounderstand which renewable energy generation technologies may be cost-competitive with conventional generation technologies, either now
or in the future, and under various operating assumptions. We find that renewable energy technologies are complementary to conventional
generation technologies, and believe that their use will be increasingly prevalent for a variety of reasons, including to mitigate theenvironmental and social consequences of various conventional generation technologies, RPS requirements, carbon regulations, continually
improving economics as underlying technologies improve and production volumes increase, and supportive regulatory frameworks in certain
regions.
In this analysis, Lazard’s approach was to determine the LCOE, on a $/MWh basis, that would provide an after-tax IRR to equity holders equal
to an assumed cost of equity capital. Certain assumptions (e.g., required debt and equity returns, capital structure, etc.) were identical for alltechnologies in order to isolate the effects of key differentiated inputs such as investment costs, capacity factors, operating costs, fuel costs(where relevant) and other important metrics. These inputs were originally developed with a leading consulting and engineering firm to thePower & Energy Industry, augmented with Lazard’s commercial knowledge where relevant. This analysis (as well as previous versions) has
benefited from additional input from a wide variety of Industry participants and is informed by Lazard’s many client interactions on this topic.
Lazard has not manipulated the cost of capital or capital structure for various technologies, as the goal of this analysis is to compare thecurrent levelized cost of various generation technologies, rather than the benefits of financial engineering. The results contained herein would
be altered by different assumptions regarding capital structure (e.g., increased use of leverage) or the cost of capital (e.g., a willingness toaccept lower returns than those assumed herein).
Key sensitivities examined included fuel costs, tax subsidies, carbon pricing and costs of capital. Other factors would also have a potentiallysignificant 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: capacity value vs. energy value; network upgrades, transmission, congestion or other integration-related costs;
significant permitting or other development costs, unless otherwise noted; and other costs of complying with various environmental
regulations (e.g., carbon emissions offsets or emissions control systems). This analysis also does not address potential social andenvironmental 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.).
20
Copyright 2020 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 orother 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.