APRIL 2023

With support from

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 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.

APRIL 2023

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

APPENDIXA

Maturing Technologies

29

1

Carbon Capture & Storage Systems

30

2Long Duration Energy Storage

33

B

LCOE v16.0

36

C

LCOS v8.0

41

D

LCOH v3.0

43

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 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.

APRIL 2023

I

Lazard’s Levelized Cost of Energy Analysis—Version
16.0

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 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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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 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 thiscurrent 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 andrate consequences for those who cannot afford distributed generation solutions, as well as the long-term residual and societal consequencesof various conventional generation technologies that are difficult to measure (e.g., nuclear waste disposal, airborne pollutants, greenhousegases, etc.)
Copyright 2023 Lazard

Note:

This report has been compiled using U.S.-focused data.

1
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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—Unsubsidized Analysis
Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances
Solar
SolarPV—Rooftop
PV—RooftopResidential
Residential

$117

Solar
SolarPV—Community
PV—Community&&C&I
C&I

$49

PV—Utility
SolarSolar
PV—Utility-Scale

$185

$24

$96

Solar
Scale
SolarPV
PV+ +Storage—Utility
Storage—Utility-Scale
Renewable Energy

$46

$102

(1)

Geothermal(1)Geothermal$61

Wind—Onshore
Wind—Onshore

$102

$24

$75

Wind
Wind+ +Storage—Onshore
Storage—Onshore

$42

$114

Wind—Offshore
Wind—Offshore

$72

$140

(2)

Gas Peaking
Peaking(2)
Gas

$115

(3)

Nuclear(3)NuclearConventional(5)$52(4)(2)

Gas Combined
Combined Cycle
Cycle(2)
Gas

$39
$0

(1)
(2)
(3)
(4)

(5)
(6)
Copyright 2023 Lazard

(7)

$221
$141

$31(4)

Coal(5)
Coal

Source:
Note:

$282

$25

$68

$166
$101

$62(4)
$50

$221

$75

$100

$116(6)$156(7)

$125
$150
$175
Levelized Cost of Energy ($/MWh)

$200

$225

$250

$275

$300

Lazard and Roland Berger estimates and publicly available information.
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.
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.
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.
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).
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 thesalvage 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.
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 andstorage (“CCS”). 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, assuming ~$1.40/kg for Blue hydrogen.
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.
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.

2

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies
The Investment Tax Credit (“ITC”), Production Tax Credit (“PTC”) and domestic content adder, among other provisions in the IRA, are importantcomponents of the levelized cost of renewable energy generation technologies
SolarSolar
PV–Rooftop
Residential
PV—Rooftop
Residential

$117

$282

$74

$229

$49

PV—Community
SolarSolar
PV–Community& C&I & C&I

$185

$32

$155

$24

PV—Utility-Scale
SolarSolar
PV–Utility-Scale(ITC) (ITC)

$96

$16

$80
$24

PV—Utility-Scale
SolarSolar
PV–Utility-Scale(PTC) (PTC)

$96

$0(1)

$77
$46

Solar
Storage—Utility-Scale
SolarPV
PV ++ Storage–Utility-Scale(ITC)(ITC)

$102

$31
$61

(2)
(2)
Geothermal Geothermal

Wind—Onshore(PTC)
Wind—Onshore(PTC)
Wind++Storage—Onshore
Storage—Onshore(PTC/ITC)Wind(PTC/ITC)

$102

$37

$87

$24
$0

$75

(1)

$66
$42

$114

$12

$103
$72

Wind—Offshore(PTC)
Offshore
Wind
$0

$88

$140

$56
$25

$50

$114
$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

Levelized Cost of Energy ($/MWh)
Source:Note:(1)

Copyright 2023 Lazard

(2)
(3)
(4)

Unsubsidized

Subsidized (excl. Domestic Content)(3)Subsidized (incl. Domestic Content)(4)

Lazard and Roland Berger estimates and publicly available information.
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 tointerpretation—important elements of the IRA are not included in our analysis and could impact outcomes.
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).
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.
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.
This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
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.

3

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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. peaking or intermittent technologies)
Solar
PV—RooftopResidential
Residential
Solar
PV—Rooftop

$117

Solar
PV—Community& &C&I
C&I
Solar
PV—Community

$282

$49

SolarSolar
PV—Utility-Scale
PV—Utility

$185

$24

$96

Solar
+ Storage—Utility-Scale
Solar
PVPV+ Storage—Utility
Scale

$46

$102

Renewable Energy

Geothermal (1)$61

Wind—Onshore
Wind—Onshore

$102

$24

$75

Wind
+ Storage—Onshore
Wind+ Storage—Onshore

$42

$114

Wind—Offshore
Wind—Offshore

$72

$140

Gas Peaking (2)

$105

$229

(1)(3)
Nuclear
NuclearConventional$138(1)(4)
Coal
Coal

$223

$64

Gas Combined Cycle (2)

$171

$33
$0

$25

$108
$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

Levelized Cost of Energy ($/MWh)
Source:Note:(1)

Copyright 2023 Lazard

(2)
(3)
(4)

Unsubsidized± 25% Fuel Price Adjustment

Lazard and Roland Berger estimates and publicly available information.
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”.
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.
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).
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).
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).

4This 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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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
SolarSolar
PV—Rooftop
Residential
PV—Rooftop
Residential
Solar
PV—Community
& C&I
Solar
PV—Community& C&I
PV—Utility
SolarSolar
PV—Utility-Scale
Renewable Energy

$185

$49
$96

$24

SolarSolar
PV +PV
Storage—Utility
Scale+ Storage—Utility-Scale

$102

$46

Geothermal
Geothermal(1)Wind—Onshore
Wind—Onshore

$102

$61
$75

$24

Wind
+ Storage—Onshore
Wind+ Storage—Onshore

$114

$42

Wind—Offshore
Wind—Offshore

$140

$72

Conventional$0Source:
Note:
(1)
(2)
(3)
(4)

Copyright 2023 Lazard

(5)
(6)

$240

$126
$31(4)$221$141$52(4)(1)(2)
Coal(1)(3)Coal

Gas Combined Cycle(2)Gas Combined Cycle(1)(4)

$221

$115

Gas Peaking(2)Gas Peaking(1)Nuclear(1)(3)
Nuclear

$282

$117

$68

$166
$82(5)$39

Unsubsidized

$171
$101

$62(4)

$46
$25

$86

$99(6)
$50

$75

$100

$118
$125
$150
$175
Levelized Cost of Energy ($/MWh)Marginal Cost without Carbon Pricing$200

Unsubsidized with Carbon Pricing

$225

$250

$275

$300

Marginal Cost with Carbon Pricing

Lazard and Roland Berger estimates and publicly available information.
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”.
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.
The low and high ranges reflect the LCOE of selected conventional generation technologies including illustrative carbon prices of $20/Ton and $40/Ton, respectively.
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.
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 thesalvage 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.
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.
Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle facilities with illustrative carbon pricing.
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

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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 v16.0

LCOE($/MWh)

$222

$225
$201

200

Gas Peaking

$180
175
150
125
100

$146

$136
$124

$87
$85
$66

50

$61
$45

$157
$160

$93
$71
$49

$64

$192
$179

$168

$117
$106
$99
$76

$106
$82

Coal
$140

$128

$142
$95

75

$114
$88
$74

$122
$94
$77

Wind—Offshore
Geothermal
Gas Combined
Cycle

$72

Solar PV—
Utility-Scale

$53

$57

Wind—Onshore$54 $67

$70
$60

$66

$41

$44

$47

$50

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%

25

Nuclear0

Copyright 2023 Lazard

Source:
Note:
(1)
(2)

Lazard and Roland Berger estimates and publicly available information.
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”.
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.
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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of
Selected Existing Conventional Generation Technologies
Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of existing conventional
generation
Solar PV—Utility-Scale

$96

$24

Solar PV + Storage—Utility-Scale
Solar PV—Utility-Scale (ITC)(2)

$80

$16

Solar PV—Utility-Scale (PTC)(2)
Levelized Cost of
New-Build Wind and
Solar

$0

(3)

$77

Solar PV + Storage—Utility-Scale(ITC)(2)$75$24Wind + Storage—Onshore$0Wind + Storage—Onshore(PTC/ITC)(2)

(3)

$66
$103

$12
$29 $31

Nuclear(4)Copyright 2023 Lazard

(4)

$34
$52

$29

Coal

$51

Gas Combined Cycle
$0

(2)
(3)

$114

$42

Wind—Onshore (PTC)(2)

Source:
Note:
(1)

$88

$31

Wind—Onshore

Marginal Cost of
Selected Existing
Conventional
Generation(1)

$102

$46

$10

$20

$30

Unsubsidized

$40

$74
$62

$50
$60
$70
Levelized Cost of Energy ($/MWh)

Subsidized

Marginal Cost

$73
$80

$90

$100

$110

$120

Marginal Cost Midpoint without Carbon Pricing

Lazard and Roland Berger estimates and publicly available information.
Unless otherwise noted, the assumptions used in this sensitivity correspond to those used on page titled “Levelized Cost of Energy Comparison—Unsubsidized Analysis”.
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 adecommissioned 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.
See page titled “Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies” for additional details.
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).
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.

7This 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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—Cost of Firming Intermittency
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
LCOE v16.0 Levelized Firming Cost ($/MWh)(3)$225

Levelized Cost of Energy ($/MWh)200

Gas Peaking LCOE v16.0($115 – $221/MWh)

175

$141

150

$126

125
100

$117

$82

$110

$102

$54

$47

$43

$42

$35

25

$60

$67

$41

$60
$43

$88

$55
$42

$51

$30

$62

$57

$55
$46

$37

$36

$33

$28

$18

Gas Combined Cycle
LCOE v16.0 ($39 –$84$77 $101/MWh)

$82

$64

$63

0

$115
$97

75
50

$132

$24

$11

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

Lazard’s Unsubsidized LCOE
Source:
(1)

(2)
(3)
(4)
Copyright 2023 Lazard

SPP
(3)

Lazard’s Subsidized LCOE

PJM
(3)

Firming Cost

(1)

Lazard and Roland Berger estimates and publicly available information.
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 (capitaland 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.
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 windresource 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.
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.
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 thatcan 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 thesolar ELCC. ELCC values for storage range from 90% – 95% for CAISO and PJM.
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.

8

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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
Nuclear
47%

$275

260

Gas Peaking
(39%)

$248
$243

$227

$216

$205

$192

200
$168

140

$135
$123
$111

80

$83
$76

20
LCOE Version

2009
3.0

Copyright 2023 Lazard

Solar Thermal
Tower(2)
(16%)

$205
$191

$183

$174
$157

$159
$157

$124
$111
$107
$96
$82

2010
4.0
Source:
(1)
(2)
(3)

$125
$111
$104
$95
$83
$71

2011
5.0

$150

$145
$116

$124
$116

$96
$75

$105
$104
$98
$74

$112
$109
$79

$72

$70

$116
$102

2012
6.0

2013
7.0

$74
$59

2014
8.0

$151

$148

$179
$151

$155
$141
$109

$117
$102

$140

$140

$108

$102

$102

$100

$98

$97

$64

$63
$55

$60
$50

$47

2016
10.0

$117

$65
$55

2015
9.0

$175

$175
$163

$112

$80

$180

$173
$167

$168

$108

$117

$75

$82
$70
$60

$91

$91

$58
$43

$56

$59

$60

$41

$40

$38

$45

$42

$40

$37

$36

2017
11.0

2018
12.0

2019
13.0

2020
14.0

2021
15.0

$50

//

Lazard and Roland Berger estimates and publicly available information.
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.
The LCOE no longer analyzes solar thermal costs; percent decrease is as of Lazard’s LCOE v13.0.
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.

Coal
5%
Geothermal
8%
Gas Combined
Cycle
(15%)
Solar PV—
Utility-Scale(3)(83%)
Wind—Onshore
(63%)

2023
16.0

9

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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE
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 thelow-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
Unsubsidized Onshore Wind LCOE

Unsubsidized Solar PV LCOE

LCOE($/MWh)LCOE($/MWh)Onshore Wind 2009 – 2023 Percentage Decrease/CAGR: (66%)(1) (8%)(2)
Onshore Wind 2016 – 2023 Percentage Decrease/CAGR: (2)%(1) (1%)(2)

$250

200

300 $323 $270

$148

150

250

$101 $99$92 $95 $95$81 $7750$50 $48
$45

$75

$37

$56 $54 $54

Copyright 2023 Lazard

4.0

5.0

Source:
(1)
(2)

6.0

7.0

8.0

$50

$149
$104

$148

100

$101

50

$32 $32 $30 $29 $28$26 $26 $24//

9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0

$166

150

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
3.0

$226

200

$62 $60

LCOE
Version

$394

350
$169

0

Utility-Scale Solar 2016 – 2023 Percentage Increase/CAGR: 3%(1) (2%)(2)

$450
400

100

Utility-Scale Solar 2009 – 2023 Percentage Decrease/CAGR: (84%)(1) (13%)(2)

LCOE
Version

$91

$86
$72

$70
$58

$96
$61

$53 $46$44 $42 $41$49 $46$40 $36 $31

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023
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

Onshore Wind LCOE Midpoint

Utility-Scale Solar LCOE Midpoint

Onshore Wind LCOE Range

Utility-Scale Solar LCOE Range

Lazard and Roland Berger estimates and publicly available information.
Represents the average percentage decrease/increase of the high end and low end of the LCOE range.
Represents the average compounded annual rate of decline of the high end and low end of the LCOE range.

$30 $24//

10

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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Comparison—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
Solar PV—Rooftop Residential$2,230

Solar PV—Community & C&I
Solar PV—Community & C&I
Solar Solar
PV—Utility-Scale
PV—Utility

Renewable Energy$4,150$1,200$2,850$700

SolarPV
PV++Storage—Utility
Storage—Utility-Scale
Solar
Scale

$1,400$1,075$1,600(1)
Geothermal
Geothermal$4,700

Wind—Onshore
Wind—Onshore$1,025Wind++Storage—Onshore
Storage—OnshoreWind$1,700$1,375$2,250

Wind—Offshore
Wind—Offshore$3,000GasPeaking
Peaking
Gas$700$6,075$5,000$1,150

Nuclear
Nuclear(1)$13,925$8,475

Conventional

Coal(1)Coal$3,200Gas
GasCombined
CombinedCycle
Cycle $650
$0$6,775$1,300$1,500$3,000$4,500$6,000$7,500$9,000$10,500$12,000$13,500$15,000

Capital Cost ($/kW)
Source:Notes:(1)
Copyright 2023 Lazard

Lazard and Roland Berger estimates and publicly available information.
Figures may not sum due to rounding.
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

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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Components—Low End
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
SolarPV—Rooftop
PV—RooftopResidential
Residential
Solar

$109

SolarPV—Community
PV—Community&&C&I
C&I
Solar

$44

SolarSolar
PV—Utility-Scale
PV—Utility

$117

$49

$5

$3 $24$21

SolarPV
PV++Storage—Utility
Storage—Utility-Scale
Solar
Scale

$9

$37

$46

$8

Renewable Energy

Geothermal(1)Geothermal

51

Wind—Onshore
Wind—Onshore

$61

$9

$4 $24$20

Wind
Wind++Storage—Onshore
Storage—Onshore

$2

$33

$8

Wind—Offshore
Wind—Offshore

$42

$59

Gas
GasPeaking
Peaking

$12
$72

$72
$5 $4

Nuclear(1)Nuclear

$34

$113

$115
$15

$4

$9

$141

Conventional

Coal(1)
Coal

$47

Gas
GasCombined
CombinedCycle
Cycle

$14
$0

$1$3

$5 $3
$21

$25

Copyright 2023 Lazard

$68

$39
$50
Capital Cost

Source:Notes:
(1)

$13

$75
Levelized Cost ($/MWh)$100

Fixed O&M

Fuel Cost

Variable O&M$125

Lazard and Roland Berger estimates and publicly available information.
Figures may not sum due to rounding.
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.

$150

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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

Levelized Cost of Energy Components—High End
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
SolarPV—Rooftop
PV—RooftopResidential
Residential
Solar

$268

SolarPV—Community
PV—Community&&C&I
C&I
Solar

$14

$172

SolarSolar
PV—Utility-Scale
PV—Utility$76

Geothermal(1)Geothermal

$76

$185

$19

$5

$11 $96$85

SolarPV
PV++Storage—Utility
Storage—Utility-Scale
Solar
Scale

$14

$282

$26

$102

$24

$102

Renewable Energy

Wind—Onshore
Wind—Onshore

$2

$62

Wind
Wind++Storage—Onshore
Storage—Onshore

$13

$75

$84

$114

$30

Wind—Offshore
Wind—Offshore

$120

$20

Gas
GasPeaking
Peaking

$140

$169

Nuclear(1)Nuclear

$190

$28

$221

$17 $5 $9$221

Conventional

Coal(1)
Coal

$127

Gas
GasCombined
CombinedCycle
Cycle
$0

$66
$25

$16 $6

$6 $5
$50

$75

$24

Copyright 2023 Lazard

$166

$101
$100

$125
$150
$175
Levelized Cost ($/MWh)Capital Cost
Source:Notes:(1)$18

Fixed O&M

Variable O&M

$200

$225

$250

$275

$300

Fuel Cost

Lazard and Roland Berger estimates and publicly available information.
Figures may not sum due to rounding.
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

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.

I

LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0

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. peaking or intermittent technologies)

Renewable
EnergyCarbonNeutral/REC
Potential

Distributed

Centralized

Geography

Intermittent

Peaking

Solar PV(1)







UniversalSolar PV + Storage







Universal

Geothermal

VariesOnshore Wind





Rural



Onshore Wind + Storage





Rural



Offshore Wind

Coastal

Gas Peaking



Universal

Nuclear





Rural



Coal





Co-located or rural



Gas
Combined Cycle

Universal

Location

Dispatch
LoadFollowing

Baseload









Conventional

Copyright 2023 Lazard

Source:(1)

Lazard and Roland Berger estimates and publicly available information.
Represents the full range of solar PV technologies.




14

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.

APRIL 2023

II

Lazard’s Levelized Cost of Storage Analysis—Version
8.0

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 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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

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 thiscurrent 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.)

Copyright 2023 Lazard

Note:

This report has been compiled using U.S.-focused data.

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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

Energy Storage Use Cases—Overview

In-Front-of-the-Meter

By identifying and evaluating selected energy storage applications, Lazard’s LCOS analyzes the cost of energy storage for in-front-of-themeter and behind-the-meter use cases
Technologies Assessed• Lithium Iron Phosphate (LFP)• Lithium Nickel Manganese
Cobalt Oxide (NMC)

1

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)2Utility-Scale(PV + Storage)• Energy storage system designed to be paired with large solar PV facilities to better aligntiming of PV generation with system demand, reduce curtailment and provide grid support• Lithium Iron Phosphate (LFP)• Lithium Nickel Manganese
Cobalt Oxide (NMC)

3

Utility-Scale(Wind + Storage)• Energy storage system designed to be paired with large wind generation facilities to betteralign timing of wind generation with system demand, reduce curtailment and provide gridsupport• Lithium Iron Phosphate (LFP)• Lithium Nickel Manganese
Cobalt Oxide (NMC)

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 andprovide optionality for the system to provide grid services to a utility or the wholesalemarket, as appropriate, in a given region• Lithium Iron Phosphate (LFP)• Lithium Nickel Manganese
Cobalt Oxide (NMC)

5

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)

6

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 gridfrom distributed PV applications• Lithium Iron Phosphate (LFP)• Lithium Nickel Manganese
Cobalt Oxide (NMC)

4

Behind-the-Meter

Use Case Description

7

Source:(1)
Copyright 2023 Lazard(2)

Lazard and Roland Berger estimates and publicly available information.
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.
The Value Snapshot analysis only evaluates the 4 hour utility-scale use case.
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.

16

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

Energy Storage Use Cases—Illustrative Operational Parameters
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
B

In-Front-of-the-Meter
Behind-the-Meter

1

Utility-Scale(Standalone)

C

=

x E

x F

=

A

x

G

C

D

E

F

G

H

Battery
Degradation(per annum)

Storage
Duration(Hours)Nameplate
Capacity(MWh)(4)90% DOD
Cycles/Day(5)Days/
Year(6)

AnnualMWh(7)

Project
MWh

–

2.6%

1

100

1

350

31,500630,000

100

–

2.6%

2

200

1

350

63,0001,260,000

20

100

–

2.6%

4

400

1

350

126,000

2,520,000

A

B

Project
Life(Years)Storage(MW)(3)

Solar/
Wind
(MW)

a

20

100

b

20

c

= “Usable Energy”(2)

x

D

2

Utility-Scale(PV + Storage)(8)

20

50

100

2.6%

4

200

1

350

191,000

3,820,000

3

Utility-Scale(Wind + Storage)(8)

20

50

100

2.6%

4

200

1

350

366,000

7,320,000

4Commercial &Industrial(Standalone)

20

1

–

2.6%

2

2

1

350

630

12,6005Commercial &Industrial(PV + Storage)(8)

20

0.50

1

2.6%

4

2

1

350

1,690

33,8006

Residential(Standalone)

20

0.006

–

1.9%

4

0.025

1

350

8

158

7

Residential(PV + Storage)(8)

20

0.006

0.010

1.9%

4

0.025

1

350

15

300

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

Copyright 2023 Lazard

(6)
(7)
(8)

Lazard and Roland Berger estimates and publicly available information.
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.
The use cases herein represent illustrative current and contemplated energy storage applications.
Usable energy indicates energy stored and available to be dispatched from the battery.
Indicates power rating of system (i.e., system size).
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).
“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.
Indicates number of days of system operation per calendar year.
Augmented to nameplate MWh capacity as needed to ensure usable energy is maintained at the nameplate capacity, based on Year 1 storage module cost.
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.

=

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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 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$0

In-Front-ofthe-Meter

1aUtility-Scale Standalone(100 MW, 1 hour)1bUtility-Scale Standalone(100 MW, 2 hour)1cUtility-Scale Standalone(100 MW, 4 hour)2Behind-theMeter

Utility-Scale Wind + Storage(1)(50 MW, 4 hour) (100 MW Wind)

4

C&I Standalone(1 MW, 2 hour)

5

C&I PV + Storage(1)(0.5 MW, 4 hour) (1 MW PV)

7

$79
$59

(1)
(2)
(3)
Copyright 2023 Lazard

(4)

$150

$200

$250

$300

$350

$400

$450

$80
$180

$104

$143
$252

$323

$194

$258
$210

$125

$247

$171
$251

$120

$288

$161
$256
$197

$282

$229
$380
$224

$402

$277
$1,769$1,595Residential Standalone(2)(0.006 MW, 4 hour)$1,408$1,172$989

Residential PV + Storage(1)(2)(0.006 MW, 4 hour) (0.01 MW PV)

Unsubsidized$400$1,055

$735

$584
$200

$500

$102
$135

$0

Source:
Note:

$100

Utility-Scale PV + Storage(1)(50 MW, 4 hour) (100 MW PV)

3

6

$50

$600

$800

$1,000$1,200$1,400$1,600$1,800$2,000Levelized Cost of Capacity ($/kW-year)
Subsidized (incl. Domestic Content)(4)Subsidized (excl. Domestic Content)(3)Lazard and Roland Berger estimates and publicly available information.
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 andtherefore 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 (whereapplicable) 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 assessedat 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.
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.
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.
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 systemutilizes the PTC.
This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
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.

18

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 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$0

In-Front-ofthe-Meter

1aUtility-Scale Standalone(100 MW, 1 hour)1bUtility-Scale Standalone(100 MW, 2 hour)1cUtility-Scale Standalone(100 MW, 4 hour)2Behind-theMeter

Utility-Scale Wind + Storage(1)(50 MW, 4 hour) (100 MW Wind)

4

C&I Standalone(1 MW, 2 hour)

5

C&I PV + Storage(1)(0.5 MW, 4 hour) (1 MW PV)

7

(1)
(2)
(3)
Copyright 2023 Lazard

(4)

$150

$200

$250

$300

$500

$227
$200

$257

$154

$205

$131

$91

$69
$33

$450

$285

$166

$65

$400

$252
$215

$110

$350
$323

$186

$79

$44
$407
$313
$225
$133

$893
$663
$392
$200
Unsubsidized

$400

$363

$241

$1,215Residential PV + Storage(1)(2)(0.006 MW, 4 hour) (0.01 MW PV)

$448

$166

Residential Standalone(2)(0.006 MW, 4 hour)$0Source:
Note:

$100

$249

Utility-Scale PV + Storage(1)(50 MW, 4 hour) (100 MW PV)

3

6

$50

$1,348$1,072

$730

$508
$600

$800
$1,000$1,200Levelized Cost of Energy ($/MWh)

Subsidized (excl. Domestic Content)(3)$1,400$1,600$1,800$2,000Subsidized (incl. Domestic Content)(4)

Lazard and Roland Berger estimates and publicly available information.
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 andtherefore 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 (whereapplicable) 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 assessedat 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.
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.
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.
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 systemutilizes the PTC.
This sensitivity analysis assumes the above and also includes a 10% domestic content adder.
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.

19

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

Value Snapshots—Revenue Potential for Relevant Use Cases
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 thatare not clearly identifiable or without publicly available data have not been analyzed
Use Cases(1)Customer

Utility

Wholesale

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)

DemandResponse—
Wholesale• Manages high wholesale price or emergency
conditions on the grid by calling on users to
reduce or shift electricity demand

EnergyArbitrage• Storage of inexpensive electricity to sell later athigher prices (only evaluated in the context of awholesale market)







Frequency
Regulation• Provides immediate (four-second) power tomaintain generation-load balance and prevent
frequency fluctuations







Resource
Adequacy• Provides capacity to meet generation
requirements at peak load







Spinning/
Nonspinning
Reserves• Maintains electricity output during unexpected
contingency events (e.g., outages) immediately(spinning reserve) or within a short period of time(non-spinning reserve)







DemandResponse—
Utility• Manages high wholesale price or emergency
conditions on the grid by calling on users to
reduce or shift electricity demand









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









BackupPower• Provides backup power for use by Residential
and Commercial customers during grid outages









Copyright 2023 Lazard

Source:(1)

Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Represents the universe of potential revenue streams available to the various use cases. Does not represent the use cases analyzed in the Value Snapshots.

20

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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

Value Snapshot Case Studies—Overview

In-Front-of-theMeter

Lazard’s Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases
Description

CAISO(1)(SP-15)Large-scale energy storage system

1

Utility-Scale(Standalone)2

Utility-Scale(PV + Storage)

ERCOT(2)Energy storage system designed to be(South Texas) paired with large solar PV facilities

3

Utility-Scale(Wind + Storage)

Energy storage system designed to be
ERCOT(2)paired with large wind generation(South Texas)
facilities

4

Behind-the-Meter

Location

Commercial &Industrial(Standalone)

Commercial &5
Industrial(PV + Storage)

Residential(Standalone)

6

7

Residential(PV + Storage)

Copyright 2023 Lazard

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

PG&E(3)(California)

Energy storage system designed forbehind-the-meter peak shaving anddemand charge reduction for C&I energy
users

Storage(MW)

Generation(MW)

Storage
Duration(hours)

100

–

4

50

100

4

50

100

4

1

–

2

Revenue Streams• Energy Arbitrage• Frequency Regulation• Resource Adequacy• Spinning/Non-spinning
Reserves• Demand Response—Utility• Bill Management• Incentives

PG&E(3)(California)

Energy storage system designed forbehind-the-meter peak shaving anddemand charge reduction services for
C&I energy users

0.5

1

4

HECO(4)(Hawaii)

Energy storage system designed forbehind-the-meter residential home use—
provides backup power and power quality
improvements

0.006

–

4

HECO(4)(Hawaii)

Energy storage system designed forbehind-the-meter residential home use—
provides backup power, power quality
improvements and extends usefulness of
self-generation

0.006• Tariff Settlement, DR
Participation, Avoided Costs toCommercial Customer, Local
Capacity Resource Programsand Incentives• Demand Response—Utility• Bill Management/Tariff
Settlement

Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Actual project returns may vary due to differences in location-specific costs, revenue streams and owner/developer risk preferences.
Refers to the California Independent System Operator.
Refers to the Electricity Reliability Council of Texas.
Refers to Pacific Gas & Electric Company.
Refers to Hawaiian Electric Company.

0.01

4

• Incentives

21

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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

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
San Francisco, California

Los Angeles, California

C&I Standalone(1)
PG&E
Project size: 1 MW / 2 MWh
4

1

Utility-Scale
CAISO
Project size: 100 MW / 400 MWh

5

C&I PV + Storage(1)
PG&E

Project size: 0.5 MW / 2 MWh
1 MW PV

Corpus Christi, Texas
2

Project size: 50 MW / 200 MWh
100 MW PV

Honolulu, Hawaii
6

Residential Standalone(2)HECO

Project size: 0.006 MW / 0.025 MWh
7Utility-Scale PV + Storage
ERCOT

Utility-Scale Wind + Storage
ERCOT
Project size: 50 MW / 200 MWh
100 MW Wind
3

Residential PV + Storage(2)HECO

Project size: 0.006 MW / 0.025 MWh
0.010 MW PV

Copyright 2023 Lazard

Source:
Note:
(1)
(2)

Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
Project parameters (i.e., battery size, duration, etc.) presented above correspond to the inputs used in the LCOS analysis.
Assumes the project provides services under contract with PG&E.
Assumes the project provides services under contract with HECO.

22

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.

II

LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0

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

In-Front-of-the-Meter Revenue
$/MWh
$350

Behind-the-Meter Revenue

1

2

3

34.1%

16.2%

24.6%

$/MWh
$1,400

300

1,200

250

1,000

200

800

150

600

100

400

50

200

0

Utility-Scale(Standalone)(CAISO)

Utility-Scale(PV + Storage)(ERCOT)

Wholesale Energy Sales
Demand Response—Utility

Source:Note:

Copyright 2023 Lazard

Utility-Scale(Wind + Storage)(ERCOT)
Frequency Regulation
Bill Management

0

4

5

6

7

30.9%

27.6%

<0.0%

49.2%

C&I
(Standalone)(PG&E)C&I(PV+Storage)(PG&E)

Residential(Standalone)(HECO)

Residential(PV+Storage)(HECO)

Spinning/Non-spinning Reserves
Local Incentive Payments

Resource Adequacy
Subsidized IRR

Lazard and Roland Berger estimates, Enovation Analytics and publicly available information.
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 locationspecific. 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 fromstate 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 themost recent tariffs, programs and incentives available as of December 2022.

23

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.

APRIL 2023

III

Lazard’s Levelized Cost of Hydrogen Analysis—
Version 3.0

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 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.

III

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0

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 andPink 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 thiscurrent 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 tofacilitate 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 natureof the LCOH (and related limited historical market experience and current market depth). In that regard, we are aware that, as a result of ourdata collection methodology, some will have a view that electrolyzer cost and efficiency, plus electricity costs, suggest a different LCOH thanwhat is presented herein. The sensitivities presented in our study are intended to address, in part, such views
Copyright 2023 Lazard

Note:

This report has been compiled using U.S.-focused data.

24
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.

III

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0

Lazard’s Levelized Cost of Hydrogen (“LCOH”) Analysis—Executive Summary

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 ofdevelopment 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 offgrid 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 sometesting 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•••
Future Perspectives

Overview of Analysis

•

•
•
•
•

Copyright 2023 Lazard

Source: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
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 throughcombustion, feedstock for ammonia, refining processes and e-fuels

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 andaccounting 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 tointerpretation—important elements of the IRA are not included in our analysis and could impact outcomes

Lazard and Roland Berger estimates and publicly available information.

25
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.

III

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 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, butclean (i.e., Blue, Green or Pink) hydrogen is expected to play an important role in several new growth sectors, including power generation
Key Hydrogen Terms and Implications for the Power Sector

Forecasted U.S. Hydrogen Demand (million tons)
CAGR ‘21–‘40

30

30

1.2
1.2
1.3

Shipping Fuel

23%

Aviation Fuel

31%

Road Transport

284%

4.8

LDC Blending

21%• Hydrogen production can be divided into “conventional” and “clean” hydrogen:• Conventional:

25

20

16
0.2

15

12
0.9

10

5

0.1

0.5
0.7
1.2

0.1

1.6

6.8

Power
Generation

30%

0.3

Steelmaking

12%

2.7

Methanol

6%

Overview of
Hydrogen
Color
Spectrum−

Gray: Almost all hydrogen produced in the U.S. today is through steammethane 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 gridelectricity• “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

2.9

3.2

3.5

Ammonia1%• Other novel production processes include Turquoise hydrogen frommethane pyrolysis, which uses thermal splitting of methane into hydrogenand solid carbon and is considered carbon-free if using electricity fromrenewable sources

8.5

8.1

7.8

Petroleum
Refining0%• Several utilities and developers have started exploring co-firing clean hydrogenwith natural gas in combustion turbines to reduce emissions

Implications
for thePower
Sector0
2021

Copyright 2023 Lazard

2030E

Source:2040E

Lazard and Roland Berger estimates and publicly available information.

• 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 ofintermittent renewable resources, while also impacting capacity market prices
and seasonal pricing peaks

26
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.

III

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0

Levelized Cost of Hydrogen Analysis—Illustrative Results

Subsidized Green and Pink hydrogen can reach levelized production costs under $2/kg—fully depreciated operating nuclear plants yieldhigher capacity factors and, when only accounting for operating expenses, Pink can reach production levels lower than Green hydrogen

$7.37

$4.77
PEM
(20 – 100 MW)
$4.28

$1.68
Green
Hydrogen

$5.78

$3.79
Alkaline(20 – 100 MW)
$2.83

$0.83

$5.29

$3.47
PEM
(20 – 100 MW)
$2.99

$1.16
Pink
Hydrogen

$4.08

$2.75
Alkaline(20 – 100 MW)
$1.81

$0.48
$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Levelized Cost of Hydrogen ($/kg)
Unsubsidized
Source:Note:

Copyright 2023 Lazard(1)

Subsidized (excl. Domestic Content)(1)

Lazard and Roland Berger estimates and publicly available information.
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 forhydrogen 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).
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 andremains subject to interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.

27This 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.

III

LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0

Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend

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
Lazard’s LCOE v16.0 Gas Peaking Range:$115 – $221/MWh
Reference LCOE Gas Peaking
at 0% H2 blend ($173/MWh)

$235

$220

PEM (20 MW)
$208

$193
Green
Hydrogen

$221

$210
Alkaline (20 MW)
$195

$184

$217

$206
PEM (20 MW)
$196

$185
Pink
Hydrogen

$206

$198
Alkaline (20 MW)
$178
$0

$25

$50

$75

$100

$125

$150

$175

$186
$200

$225

$250

$275

$300

Levelized Cost of Energy ($/MWh)
Unsubsidized
Source:Note:

Copyright 2023 Lazard(1)

Subsidized (excl. Domestic Content)(1)

Lazard and Roland Berger estimates and publicly available information.
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 fora maximum of 7 days per year, resulting in additional costs of $120/kW (Green) and $190/kW (Pink).
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 andremains subject to interpretation—important elements of the IRA are not included in our analysis and could impact outcomes.

28This 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.

APRIL 2023

Appendix

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 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.

APRIL 2023

A

Maturing Technologies

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 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.

A

MATURING TECHNOLOGIESIntroduction
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 thiscurrent 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 theCO2 once past the project site; costs to upgrade existing infrastructure to facilitate the transportation of CO2; potential value associated withcarbon-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 orlabor 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 thetechnologies analyzed herein
Copyright 2023 Lazard

Note:

This report has been compiled using U.S.-focused data.

29
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.

APRIL 2023

1

Carbon Capture & Storage Systems

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 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.

1

CARBON CAPTURE & STORAGE SYSTEMS

Lazard’s Carbon Capture & Storage Analysis—Executive Summary•••
Technology Overview& Commercial
Readiness

Market Activity &Policy Support

•
•
•
•
•
•
•
•
•
•
•
•

Future Perspectives

•
•
•
•

•
•
Overview of Analysis

Copyright 2023 Lazard

Source:••

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 aclaimed 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
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 becompleted by the middle of the decade
Natural gas power generation will continue to play an important role in grid reliability, especially as renewable penetration increases and more coalretires
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 insolvents 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)
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 tointerpretation—important elements of the IRA are not included in our analysis and could impact outcomes

Lazard and Roland Berger estimates and publicly available information.

30
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.

1

CARBON CAPTURE & STORAGE SYSTEMS

Levelized Cost of Energy—Gas Combined Cycle + CCS System

CCS systems benefit from federal subsidies through the IRA, making the LCOE of a gas combined cycle plant plus a CCS system costcompetitive with a standalone gas combined cycle plant in both a retrofit and new-build scenario
Lazard’s LCOE v16.0 Gas Combined Cycle Range:$39 – $101/MWh
Reference LCOE of Gas Combined
Cycle plus CCS
50% Capacity Factor ($74/MWh)Retrofitted CCGT with CCS

$84

$128

Retrofitted Gas Combined
Cycle(1) with CCS(2)
$59

LCOE
550 MW Gas
Combined Cycle
Plus CCS System

$103

(2)

New Build Power Plant with CCS

$66

$110

New-Build Gas Combined
Cycle(3) with CCS(2)
$40

$0

$25

$86

$50

$75

$100

$125

$150

Levelized Cost of Energy ($/MWh)
Source:
Note:
(1)
(2)
(3)
(4)
Copyright 2023 Lazard

Unsubsidized
Subsidized (excl. Domestic Content)(4)
Lazard and Roland Berger estimates and publicly available information.
The fuel cost assumption for Lazard’s analysis for gas-fired generation resources is $3.45/MMBTU.
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.
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.
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 highcase represents a Gas Combined Cycle + CCS with a capacity factor of 50% and a $2.50/MWh benefit for industrial gas sales.
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.

31This 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.

1

CARBON CAPTURE & STORAGE SYSTEMS

Carbon Capture & Storage Systems—Capital Cost Comparison (Unsubsidized)

CCS costs are still high and the majority of the capital cost of a CCS system consists of balance-of-system components
Lazard’s LCOE v16.0 Gas Combined Cycle Capital Cost Range:$650 – $1,300/kW

Retrofitted
CCGT
CCS Cost
Retrofitted
Gas- Combined
OnlyCost Only(1)(2)
Cycle—CCS$1,042$1,965550 MW Gas
Combined Cycle
Plus CCS System

New-Build Power Plant with
New Build Power Plant with(1)(3)(4)CCS
CCS$1,547$0$500$1,000$1,500$3,086$2,000$2,500$3,000$3,500Capital Cost ($/kW)

Copyright 2023 Lazard

Source:
(1)
(2)
(3)
(4)

Lazard and Roland Berger estimates and publicly available information.
Represents an assumed 2-million-ton CO2 plant and 550 MW Gas Combined Cycle generation at 85% capacity factor.
Represents an assumed $440 – $550/ton CO2 of nameplate capacity CCS system.
Represents an assumed $700 – $1,300/kW for Gas Combined Cycle and $400 – $500/ton CO2 of nameplate capacity for CCS.
New-build range also includes a capital expenditure estimate for a 280 MW oxycombustion project.

32

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.

APRIL 2023

2

Long Duration Energy Storage

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 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.

2

LONG DURATION ENERGY STORAGE

Lazard’s Long Duration Energy Storage Analysis—Executive Summary••
Technology Overview &Commercial Readiness

•
•
•
•
•
•

Market Activity & Policy
Support•••••Future Perspectives•••
Overview of Analysis••

Copyright 2023 Lazard

Source: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 noneof the emerging LDES technologies have achieved the track record for performance required to be fully bankable
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 andsignals
At increasingly high wind and solar penetrations, there will be a need for resources that can provide capacity over longer durations in order tomeet overall capacity and reliability requirements
LDES technologies could potentially serve this function and enable higher levels of decarbonized power generation as a substitute fortraditional "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 therelevant LDES technologies)
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 tointerpretation—important elements of the IRA are not included in our analysis and could impact outcomes

Lazard and Roland Berger estimates and publicly available information.

33
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.

2

LONG DURATION ENERGY STORAGE

Long Duration Energy Storage Technologies—Overview

LDES technologies typically fall into three main technological categories that provide unique advantages and disadvantages and also makethem suitable (or not) across a variety of use cases
Electrochemical

Description

Typical Technologies

Mechanical•Energy storage systems generating
electrical energy from chemical
reactions•

Solutions that store energy as a kinetic,
gravitational potential orcompression/pressure medium•

Flow batteries (vanadium, zincbromide)
Sodium-sulfur
Iron-air•

Adiabatic and cryogenic compressedliquids (change in internal energy)
Geo-mechanical pumped hydroGravitational

•
•

•
•

Thermal•Solutions stocking thermal energy byheating or cooling a storage medium••

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 matureindustrial cryogenic technology 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 membranes
required due to voltage and electrolyte
stress• Less compact (lower energy density)• Geographic limitations of some subtechnologies• Low efficiency of diabatic systems• Visibility into peak and off-peak• Climate impact on effectiveness• Scale of application (e.g., bestfor district heating)

Copyright 2023 Lazard

Source:Lazard and Roland Berger estimates and publicly available information.

34
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.

2

LONG DURATION ENERGY STORAGE

Levelized Cost of Energy—Illustrative LDES at Scale

The LCOE of LDES technologies is expected to be competitive with lithium-ion for large-scale 8 hour systems in the second half of thedecade, with anticipated unit cost advantages at longer durations overcoming lower round-trip efficiency
Lazard’s LCOS v8.0 Utility-Scale (100 MW, 4 hour) Subsidized:$154 – $205/MWh
$221

$127
Electrochemical(1)100 MW, 8 hour

$188

$99

$215

$158
Mechanical(2)100 MW, 8 hour

$176

$126

$253

$178
Thermal(3)100 MW, 8 hour

$211

$142

$0

$50

$100

$150

$200

$250

$300

$350

$400

Levelized Cost of Storage ($/MWh)

Copyright 2023 Lazard

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

Unsubsidized

Subsidized(4)Subsidized with Domestic Content Adder(5)Lazard and Roland Berger estimates and publicly available information.
All cases assume a 20-year system life and 1 cycle per day at maximum depth-of-discharge.
Electrochemical includes flow batteries (vanadium redox, zinc bromine) and non-flow (liquid metal).
Mechanical includes CAES and liquified air energy storage (”LAES”).
Thermal includes sensible heat storage solutions (molten salt).
This sensitivity analysis assumes that projects qualify for the full standalone storage ITC.
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—importantelements of the IRA are not included in our analysis and could impact outcomes.
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.

35

APRIL 2023

B

LCOE v16.0

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 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.

B

LCOE V16.0

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 andsolving for the $/MWh value that results in a levered IRR equal to the assumed cost of equity (see subsequent “Key Assumptions” pages fordetailed assumptions by technology)
Unsubsidized Onshore Wind — Low Case Sample Illustrative Calculations

Year (1)

0

1

2

3

4

5

6

7

Key Assumptions

20

(4)

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%
$0.00

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

843

843

843

843

843

843

843

843

Fuel Cost ($/MMBtu)

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)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)

Total Fuel Cost

(F)

--

--

--

--

--

--

--

--

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

0
$20.0

Variable O&M ($/MWh)$0.0

O&M Escalation Rate

2.25%

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

Equity40.0%

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)

Taxes and Tax Incentives:

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

(2.1)

(2.3)

(2.5)

(2.7)

(2.9)

(3.1)

(3.4)

(9.9)

($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)

Combined Tax Rate
Economic Life (years)

(5)

40%
20

EBITDA

(I)

$17.1

$17.0

$16.9

$16.8

$16.7

$16.7

$16.6

$15.1

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

PTC Escalation Rate

1.5%Interest Expense(K)

Taxable Income(I) + (N) + (K) = (O)Federal Production Tax Credit ValueMACRS Depreciation (Year Schedule)

5

(8.6)

(8.4)

(8.3)

(8.1)

(7.8)

6.3

16.6

(0.8)

($27.4)($48.8)($25.8)($11.9)($11.8)($7.6)($7.4)

$14.3

(P)

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Additional Owner's Costs ($/kW)

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($71.8)($107.6)

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Total Capex ($mm)

Capex
EPC Costs ($/kW)

Capital Expenditures
After-Tax Net Equity Cash Flow (2)(I) + (M) + (R) = (S)($71.8) (3)

$17.3

$25.8

$16.5

$10.8

$10.7

$0.0

$0.0

($1.4)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)$1,025$0$179

Cash Flow Distribution

IRR For Equity Investors

Copyright 2023 Lazard

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

Portion to Tax Investors (After Return is Met)

1%

12.0%

Lazard and Roland Berger estimates and publicly available information.
Technology-dependent
Onshore Wind—Low LCOE case presented for illustrative purposes only.
Denotes unit conversion.
Assumes half-year convention for discounting purposes.
Levelized
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.

36

B

LCOE V16.0

Levelized Cost of Energy—Key Assumptions
Solar PVUnits
Net Facility Output

Rooftop—Residential

Community and C&I

Low Case

Low Case

MW(1)High Case

0.005

High Case

Utility-Scale
Low Case

5

High Case

Utility Scale + Storage
Low Case

150

High Case
100

Total Capital Costs$/kW$2,230–$4,150$1,200–$2,850$700–$1,400$1,075–$1,600

Fixed O&M$/kW-yr$15.00–$18.00$12.00–$18.00$7.00–$14.00$20.00–$45.00

Variable O&M

$/MWh

––

––

––

––

Heat Rate

Btu/kWh

––

––

––

––

Capacity Factor

%

20%

–

Fuel Price$/MMBTU––

Construction Time

Months3

Facility Life

Years

25

Levelized Cost of Energy$/MWhCopyright 2023 Lazard

Source:
(1)

$117

–

15%

25%

–

15%

30%

––
4

–

6

30
$282

$49

–

Lazard and Roland Berger estimates and publicly available information.
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.

$185

$24

–

15%

27%

–

––

––

9

9

30

30

–

$96

$46

–

20%

$102

37

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.

B

LCOE V16.0

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

Low Case

MW
(2)

(1)

High Case

Wind—Onshore
Low Case

250

High Case

Wind—Onshore +Storage

Wind—Offshore

Low Case

Low Case

175

High Case100

High Case

1000

Total Capital Costs$/kW$4,700–$6,075$1,025–$1,700$1,375–$2,250$3,000–$5,000

Fixed O&M$/kW-yr$14.00–$15.25$20.00–$35.00$32.00–$80.00$60.00–$80.00

Variable O&M

$/MWh

$8.75

–

$24.00Heat Rate

Btu/kWh

Capacity Factor

%

––
90%

–

80%

55%

––

––

––

––

––

––

–

30%

45%

–

30%

55%

–

Fuel Price$/MMBTU

––

––

––

––

Construction Time

Months

36

12

12

12

Facility Life

Years

25

20

20

20

Levelized Cost of Energy$/MWhCopyright 2023 Lazard

Source:
(1)
(2)

$61

–

$102

$24

–

$75

$42

Lazard and Roland Berger estimates and publicly available information.
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.
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.

–

$114

$72

–

45%

$140

38

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.

B

LCOE V16.0

Levelized Cost of Energy—Key Assumptions (cont’d)
Gas Peaking

240

–

50

Total Capital Costs (3)

$/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

–

$3.00

–

$5.50

$2.75

–

$5.00

Heat Rate

Btu/kWh

––

8,750

–

12,000

6,150

–

6,900

85%

–

65%

90%

–

30%

2,200

92%

–

Fuel Price$/MMBTU––$0.85

Construction Time

Months

12

69

Facility Life

Years

20

40

Levelized Cost of Energy$/MWhSource:(1)(2)
Copyright 2023 Lazard

(3)

$115

–

$221

$141

–

Low Case

600

$5.00

10,45010%High Case

Gas Combined Cycle(New Build)MW–

Low Case(2)

Net Facility Output

15%

High Case

Coal (New Build)

Low Case%

Low Case

(1)

Units

Capacity Factor

High Case

Nuclear (New Build)

89%

550

$1.47
60

–

$3.45
66

24

40
$221

$68

–

High Case

20
$166

$39

Lazard and Roland Berger estimates and publicly available information.
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).
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.
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.

–

$101

39

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.

B

LCOE V16.0

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

Low Case

High Case

Coal (Operating)
Low Case

High Case

Gas Combined Cycle(Operating)
Low Case

High Case

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

10,075–

11,075

6,925

–

7,450

65%

–

35%

70%

–

45%

$6.00

–

$7.69

(1)

Capacity Factor%

10,40095%–

90%

Fuel Price$/MMBTU

$0.79

$1.89

–

$4.33

Construction Time

Months

69

60

–

66

Facility Life

Years

40

Levelized Cost of Energy$/MWhCopyright 2023 Lazard

Source:
(1)

$29

–

24

40
$34

Lazard and Roland Berger estimates and publicly available information.
Includes capitalized financing costs during construction for generation types with over 12 months of construction time.

$29

–

20
$74

$51

–

$73

40

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.

APRIL 2023

C

LCOS v8.0

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 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.

C

LCOS V8.0

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)
Subsidized Utility-Scale (100 MW / 200 MWh)—Low Case Sample Calculations

Year (1)0Capacity (MW)1

(A)

Available Capacity (MW)
Total Generation ('000 MWh)

110
(2)

(B)*

2

3

4

5

Key Assumptions(5)

20

100

100

100

100

100

100

Power Rating (MW)

109

106

103

100

110

102

Duration (Hours)

63

63

63

63

63

63

Usable Energy (MWh)

100
2
200

Levelized Storage Cost ($/MWh)

(C)

$178

$178

$178

$178

$178

$178

90% Depth of Discharge Cycles/Day

Total Revenues(B) x (C) = (D)*

$11.2

$11.2

$11.2

$11.2

$11.2

$11.2

Operating Days/Year

350

1

Charging Cost ($/kWh)$0.064

Total Charging Cost (3)

(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 (4)

(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%

EBITDA(D) - (G) = (H)

$6.5

$6.4

$5.9

$5.8

$2.1

$4.1

Debt Outstanding - Beginning of Period

(I)

$11.7

$11.4

$11.2

$10.9

$10.5

$1.1

Debt

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)

Equity80.0%

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

Interest Expense

(J)

(0.9)

2.8

0.0

(0.0)

0.0

0.0

Contract Term / Project Life (years)

Taxable Income(H) + (M) + (J) = (N)($4.4)($6.6)($3.6)$0.1($3.6)$4.1

MACRS Depreciation ScheduleTax Benefit (Liability)(N) x (Tax Rate) = (O)

$0.9

$1.4

$0.8

($0.0)$0.8($0.9)

Federal Investment Tax Credit (ITC)

(P)

$17.5

$0.0

$0.0

$0.0

$0.0

$0.0

Efficiency (%)

91%

Capital Structure
20.0%

21.0%
20
5 Years

Federal ITC - BESS

30%

Capex

Capital Expenditures
After-Tax Net Equity Cash Flow
IRR For Equity Investors
Source:

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

Copyright 2023 Lazard

(5)
(6)
(7)

(H) + (L) + (O) + (P) = (Q)Total Initial Installed Cost ($/kWh) (6)$292

Extended Warranty (% of Capital Cost)

0.7%($46.7)($11.7)

$0.0

$0.0

$0.0

$0.0

$0.0

Extended Warranty Start Year($46.7) (7)

$23.7

$6.6

$5.5

$4.6

$1.7

$2.1

Total Capex ($mm)

3
$58

12.0%

Lazard and Roland Berger estimates and publicly available information.

Use-case specific

Subsidized Utility-Scale (100 MW / 200 MWh)—Low LCOS case presented for illustrative purposes only.
Denotes unit conversion.
Global assumptions
Assumes half-year convention for discounting purposes.
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.
Charging Cost reflects (Total Generation) / [(Efficiency) x (Charging Cost) x (1 + Charging Cost Escalator)].
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).
Reflects a ”key” subset of all assumptions for methodology illustration purposes only. Does not reflect all assumptions.
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.
Reflects initial cash outflow from equity sponsor.

41

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.

C

LCOS V8.0

Levelized Cost of Storage—Key Assumptions
Utility-Scale(Standalone)

Utility-Scale(PV + Storage)

Utility-Scale(Wind + Storage)

C&I(Standalone)

C&I(PV + Storage)

Residential(Standalone)

Residential(PV + Storage)(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)

Units

(100 MW / 100 MWh)(100 MW / 200 MWh)(100 MW / 400 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

0.025

MWh

100

200

400

200

200

2

2

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

MWh31,50063,000126,000

63,00063,000

630

630

8

8

Lifetime Storage Output

MWh630,000

1,260,000

2,520,000

1,260,000

1,260,000

12,60012,600158

158

Initial Capital Cost—DC

$/kWh

$280

–

$359

$223

–

$315

$225

–

$304

$200

–

$279

$200

–

$279

$429

–

$469

$326

–

$362

$1,261– $1,429$1,150– $1,286

Initial Capital Cost—AC

$/kW

$35

–

$80

$35

–

$80

$35

–

$80

$20

–

$60

$20

–

$60

$50

–

$80

$50

–

$80

$101

–

$114

$92

–

$103

EPC Costs

$/kWh

$30

–

$70

$30

–

$70

$30

–

$70

$30

–

$70

$30

–

$70

$59

–

$106

$47

–

$89

$0

–

$0

$0

–

$0

Solar / Wind Capital Cost

$/kW

$0

–

$0

$0

–

$0

$0

–

$0

$1,050– $1,050$1,350– $1,350

$0

–

$0

$2,025– $2,025

$0

–

$0

$3,175

Total Initial Installed Cost

$

$35

–

$51

$54

–

$85

$106

–

$158

$47

–

$73

$47

–

$73

$1

–

$1

$1

–

$1

$0

–

$0

$0

–

$0

Storage O&M

$/kWh

$1.7

–

$9.7

$1.3

–

$7.7

$1.2

–

$6.7

$1.2

–

$6.7

$1.2

–

$6.7

$2.5

–

$11.2

$1.9

–

$8.8

$0.0

–

$0.0

$0.0

–

$0.0

Extended Warranty Start

Year

Warranty Expense % of Capital Costs%

Investment Tax Credit (Solar)%

Investment Tax Credit (Storage)

%

3
0.50%

–

3
0.80%

0.50%

0%
30%

–

–

3
0.80%

0.50%

0%
40%

30%

–

–

3
0.80%

0%
40%

30%

–

40%

3

0.50%

–

0.80%

30%

–

40%

30%

–

40%

Production Tax Credit

$/MWh

$0

$0

$0

$0

Charging Cost

$/MWh

$61

$64

$59

$0

0.50%

–

3
0.80%

0.50%

0%
30%
$26

–

3
0.80%

0%

–

40%

–

$29

30%

$0

–

40%

3

0.50%

–

0.80%

30%

–

40%

30%

–

40%

0.00%

–

3
0.00%

0%
30%

–

– $3,175

40%

0.00%

–

0.00%

30%

–

40%

30%

–

40%

$0

$0

$0

$0

$117

$0

$325

$0

Charging Cost Escalator%

Efficiency of Storage Technology

%

91%

–

88%

91%

–

88%

91%

–

88%

91%

–

88%

91%

–

88%

91%

–

88%

91%

–

88%

95%

–

90%

95%

–

90%

$/MWh

$249

–

$323

$215

–

$285

$200

–

$257

$110

–

$131

$69

–

$79

$407

–

$448

$225

–

$241

$1,215–$1,348

$663

–

$730

Unsubsidized LCOS

1.87%

1.87%

1.87%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

x

Source:Note:
Copyright 2023 Lazard

Lazard and Roland Berger estimates and publicly available information.
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.

42This 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.

APRIL 2023

D

LCOH v3.0

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 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.

D

LCOH V3.0

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

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)
Unsubsidized Green PEM—High Case Sample Illustrative Calculations

Year (1)

1

2

3

4

5

Key Assumptions(5)25Electrolyzer size (MW)

(A)

20

20

20

20

20

20

Electrolyzer input capacity factor (%)

(B)

55%

55%

55%

55%

55%

55%

Total electric demand (MWh) (2)(A) x (B) = (C)*96,36096,36096,36096,36096,36096,360Lower heating value of hydrogen (kWh/kgH2)

(D)

61.87

61.87

61.87

61.87

61.87

61.87

Electrolyzer efficiency (%)

Electric consumption of H2 (kWh/kg)(3)Electrolyzer size (MW)20.00

Electrolyzer input capacity factor (%)

55%
33
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)

Levelized Cost of Hydrogen ($/kg)

(F)

$7.37

$7.37

$7.37

$7.37

$7.37

$7.37

Electric consumption of H2 (kWh/kg)

61.87
57.47

Total Revenues(E) x (F) = (G)*$11.47$11.47$11.47$11.47$11.47$11.47Warranty / insurance

1.0%

Warranty / insurance

(H)

--

--

($0.5)($0.5)($0.5)($0.6)

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)EBITDA(G) - (J) = (K)

$6.1

$6.1

$5.6

$5.6

$5.6

$5.1

4.4

Total O&M

5.34

O&M escalation

2.00%

Capital Structure

Debt Outstanding - Beginning of Period

(L)

$18.1

$17.9

$17.6

$17.3

$17.0

Debt

40.0%

Cost of Debt

8.0%

$1.6

Equity60.0%

Cost of Equity

12.0%

Debt - Interest Expense(M)($1.4)($1.4)($1.4)($1.4)($1.4)($0.1)

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)(6)Depreciation (MACRS)

(P)

(6.5)

(11.1)

(7.9)

(5.7)

(4.0)

0.0

MACRS Depreciation (Year Schedule)

Combined Tax Rate

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

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)

21%
25

EPC Costs ($/kW)($27)(4)Capital Expenditures
After-Tax Net Equity Cash Flow
IRR For Equity Investors

Copyright 2023 Lazard

Source:
Note:
*
(1)
(2)
(3)
(4)
(5)
(6)

(K) + (O) + (R) = (S)

7-Year MACRS$2,265$0Transmission Costs ($/kW)$0$2,265($18.1)

$0.0

$0.0

$0.0

$0.0

$0.0

Total Capital Costs ($/kW)

$4.8

$5.8

$4.7

$4.2

$3.9

$6.3

Total Capex ($mm)

$45

12.0%

Lazard and Roland Berger estimates and publicly available information.
Unsubsidized Green PEM—High LCOH case presented for illustrative purposes only.
Denotes unit conversion.
Assumes half-year convention for discounting purposes.
Total Electric Demand reflects (Electrolyzer Size) x (Electrolyzer Capacity Factor) x (8,760 hours/year).
Electric Consumption reflects (Heating Value of Hydrogen) x (Electrolyzer Efficiency) + (Levelized Degradation).
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.

Technology-dependent
Levelized

43

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.

D

LCOH V3.0

Levelized Cost of Hydrogen—Key Assumptions
Pink Hydrogen

Green Hydrogen
Alkaline

PEM
High Case
20$2,265$1,052

Low Case
100
$740
$203

–
$0.005

1,558

8,902

–
$48.00$30.5696,360481,800

Alkaline

PEM
High Case
20$1,984$652

Low Case
100$1,013$341–$0.005

1,780

12,744–$48.00$30.5696,360788,400

High Case
20$2,054$652

High Case
20$2,335$1,052

Low Case
100
$810
$203

–
$0.0052,549

14,568–$0.0052,914–$35.00$30.31

157,680

788,400–$35.00$30.31

157,680

Capacity
Total Capex
Electrolyzer Stack Capex
Plant Lifetime
Stack Lifetime
Heating Value
Electrolyzer Utilization
Electrolyzer Capacity Factor
Electrolyzer Efficiency

Units
MW
$/kW
$/kW
Years
Hours
kWh/kg H2
%
%
% LHV

Low Case
100
$943
$341

Operating Costs:
Annual H2 Produced
Process Water Costs

MT$/kg H2

7,788

Annual Energy Consumption
Net Electricity Cost (Unsubsidized)
Net Electricity Cost (subsidized)

MWh
$/MWh
$/MWh

481,800

Warranty & Insurance (% of Capex)
Warranty & Insurance Escalation

%
%

1.0%
1.0%

1.0%
1.0%

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
Cost of Debt
EquityCost of Equity
Tax Rate
WACC

%
%
%
%
%
%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

Unsubsidized Levelized Cost of Hydrogen
Subsidized Levelized Cost of Hydrogen

$/kg
$/kg

$4.77
$1.68

$7.37
$4.28

$3.79
$0.83

$5.78
$2.83

$3.47
$1.16

$5.29
$2.99

$2.75
$0.48

$4.08
$1.81

$/MMBTU$/MMBTU$41.90$14.80$64.65$37.55$33.30$7.30$50.70$24.80$30.40$10.20$46.45$26.25$24.15$4.25$35.80$15.90

Memo: Unsubsidized Natural Gas Equivalent Cost
Memo: Subsidized Natural Gas Equivalent Cost

Copyright 2023 Lazard

Source:–––25
60,000
33
90%
55%
58%

Lazard and Roland Berger estimates and publicly available information.

–
–
–
25
67,500
33
90%
55%
67%

–
–
–
25
60,000
33
90%
95%
58%

–
–
–
25
67,500
33
90%
95%
67%

44
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.

D

LCOH V3.0

Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend Key
Assumptions
Green Hydrogen

Alkaline

PEM
Low Case

Pink Hydrogen$1,984$652$1,482$479

Low Case$2,335$1,052$1,300$186

1,558$0.0051,780$0.0052,549$0.0052,914$0.005

Annual Energy Consumption
Net Electricity Cost (Unsubsidized)
Net Electricity Cost (subsidized)

MWh
$/MWh
$/MWh

96,360$48.00$30.5696,360$48.00$30.56

157,680$35.00$30.31

157,680$35.00$30.31

Warranty & Insurance (% of Capex)
Warranty & Insurance Escalation

%
%

1.0%
1.0%

1.0%
1.0%

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
Cost of Debt
EquityCost of Equity
Tax Rate
WACC

%
%
%
%
%
%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

40.0%
8.0%
60.0%
12.0%
21.0%
9.7%

Unsubsidized Levelized Cost of Hydrogen
Subsidized Levelized Cost of Hydrogen

$/kg
$/kg

Natural gas pricePeaker LCOE at 0% H2 blend by vol. (unsubsidized)$/mmbtu$/MWhPeaker LCOE at 25% H2 blend by vol. (unsubsidized)
Peaker LCOE at 25% H2 blend by vol. (subsidized)

$/MWh
$/MWh

$220
$193

Memo: Unsubsidized Natural Gas Equivalent Cost
Memo: Subsidized Natural Gas Equivalent Cost$/MMBTU$/MMBTU$49.55$22.40

Copyright 2023 Lazard

Source:$1,230$186

Alkaline
High Case

MT$/kg H2

$5.65
$2.55

$2,265$1,052

PEM

Operating Costs:
Annual H2 Produced
Process Water Costs$1,412$479

Low Case

Low Case

Capacity
Total Capex
Electrolyzer Stack Capex
Plant Lifetime
Stack Lifetime
Heating Value
Electrolyzer Utilization
Electrolyzer Capacity Factor
Electrolyzer Efficiency

20
–
–
25
60,000
33
90%
55%
58%

High CaseHigh Case

Units
MW
$/kW
$/kW
Years
Hours
kWh/kg H2
%
%
% LHV

$7.37
$4.28

$4.53
$1.57

$3.45
$173.00––

Lazard and Roland Berger estimates and publicly available information.

20
–
–
25
67,500
33
90%
55%
67%

$5.78
$2.83

$4.05
$1.74

$3.45
$173.00
$235
$208

$210
$184

$64.65$37.55$39.75$13.75

–
–

20
–
–
25
60,000
33
90%
95%
58%

$5.29
$2.99

$3.20
$0.93

$3.45
$173.00
$221
$195

$206
$185

$50.70$24.80$35.50$15.30

–
–

20
–
–
25
67,500
33
90%
95%
67%

High Case$2,054
$652

$4.08
$1.81
$3.45
$173.00

$217
$196

$198
$178

$46.45$26.25$28.05
$8.15

–
–

$206
$186
$35.80$15.9045This 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.