June 2015

Levelized Cost and Levelized Avoided Cost of New
Generation Resources in the Annual Energy Outlook 2015
This paper presents average values of levelized costs for generating technologies that are brought online
in 2020 1 as represented in the National Energy Modeling System (NEMS) for the Annual Energy Outlook
2015 (AEO2015) Reference case. 2 Both national values and the minimum and maximum values acrossthe 22 U.S. regions of the NEMS electricity market module are presented.
Levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall
competiveness of different generating technologies. It represents the per-kilowatthour cost (in real
dollars) of building and operating a generating plant over an assumed financial life and duty cycle. Key
inputs to calculating LCOE include capital costs, fuel costs, fixed and variable operations andmaintenance (O&M) costs, financing costs, and an assumed utilization rate for each plant type. 3 The
importance of the factors varies among the technologies. For technologies such as solar and wind
generation that have no fuel costs and relatively small variable O&M costs, LCOE changes in roughproportion to the estimated capital cost of generation capacity. For technologies with significant fuelcost, both fuel cost and overnight cost estimates significantly affect LCOE. The availability of various
incentives, including state or federal tax credits, can also impact the calculation of LCOE. As with any
projection, there is uncertainty about all of these factors and their values can vary regionally and acrosstime as technologies evolve and fuel prices change.
It is important to note that, while LCOE is a convenient summary measure of the overall competivenessof different generating technologies, actual plant investment decisions are affected by the specifictechnological and regional characteristics of a project, which involve numerous other factors. The
projected utilization rate, which depends on the load shape and the existing resource mix in an area
where additional capacity is needed, is one such factor. The existing resource mix in a region candirectly impact the economic viability of a new investment through its effect on the economics
surrounding the displacement of existing resources. For example, a wind resource that would primarily
displace existing natural gas generation will usually have a different economic value than one that would
displace existing coal generation.
A related factor is the capacity value, which depends on both the existing capacity mix and load
characteristics in a region. Since load must be balanced on a continuous basis, units whose output canbe varied to follow demand (dispatchable technologies) generally have more value to a system than less1

2020 is shown for all technologies except for the advanced nuclear plant type. Because of additional licensing requirements
for new, unplanned nuclear units, the AEO2015 assumes 2022 is the first year a new nuclear plant, not already underconstruction, could come online and the LCOE/LACE in tables 1-4 represent data consistent with the 2022 online date.
2
The full report is available at http://www.eia.gov/forecasts/aeo/index.cfm.
3
The specific assumptions for each of these factors are given in the Assumptions to the Annual Energy Outlook, available at
http://www.eia.gov/forecasts/aeo/assumptions/.

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20151

flexible units (non-dispatchable technologies), or those whose operation is tied to the availability of anintermittent resource. The LCOE values for dispatchable and nondispatchable technologies are listed
separately in the tables, because caution should be used when comparing them to one another.
Since projected utilization rates, the existing resource mix, and capacity values can all vary dramatically
across regions where new generation capacity may be needed, the direct comparison of LCOE acrosstechnologies is often problematic and can be misleading as a method to assess the economic
competitiveness of various generation alternatives. Conceptually, a better assessment of economic
competitiveness can be gained through consideration of avoided cost, a measure of what it would cost
the grid to generate the electricity that is otherwise displaced by a new generation project, as well as its
levelized cost. Avoided cost, which provides a proxy measure for the annual economic value of acandidate project, may be summed over its financial life and converted to a stream of equal annual
payments. The avoided cost is divided by average annual output of the project to develop the“levelized” avoided cost of electricity (LACE) for the project. 4 The LACE value may then be comparedwith the LCOE value for the candidate project to provide an indication of whether or not the project’s
value exceeds its cost. If multiple technologies are available to meet load, comparisons of each project’s
LACE to its LCOE may be used to determine which project provides the best net economic value.
Estimating avoided costs is more complex than estimating levelized costs because it requires
information about how the system would have operated without the option under evaluation. In this
discussion, the calculation of avoided costs is based on the marginal value of energy and capacity thatwould result from adding a unit of a given technology and represents the potential revenue available tothe project owner from the sale of energy and generating capacity. While the economic decisions forcapacity additions in EIA’s long-term projections use neither LACE nor LCOE concepts, the LACE and net
value estimates presented in this report are generally more representative of the factors contributing to
the projections than looking at LCOE alone. However, both the LACE and LCOE estimates are
simplifications of modeled decisions, and may not fully capture all decision factors or match modeled
results.
Policy-related factors, such as environmental regulations and investment or production tax credits for
specified generation sources, can also impact investment decisions. Finally, although levelized costcalculations are generally made using an assumed set of capital and operating costs, the inherent
uncertainty about future fuel prices and future policies may cause plant owners or investors who
finance plants to place a value on portfolio diversification. While EIA considers many of these factors in
its analysis of technology choice in the electricity sector, these concepts are not included in LCOE or
LACE calculations.
The LCOE values shown for each utility-scale generation technology in Table 1 and Table 2 in this
discussion are calculated based on a 30-year cost recovery period, using a real after tax weighted
average cost of capital (WACC) of 6.1% 5. In reality, the cost recovery period and cost of capital can vary
4

Further discussion of the levelized avoided cost concept and its use in assessing economic competitiveness can be found in
this article: http://www.eia.gov/renewable/workshop/gencosts/.
5
The real WACC for plants entering service in 2020 is 6.1%; nuclear plants are assumed to enter service in 2022 and have a real
WACC of 6.2%. The real WACC corresponds to a nominal after tax rate of 8.1% for both plants entering service in 2020 and
2022. An overview of the WACC assumptions and methodology can be found in the Electricity Market Module of the National

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20152

by technology and project type. In the AEO2015 reference case, 3 percentage points are added to thecost of capital when evaluating investments in greenhouse gas (GHG) intensive technologies like coalfired power and coal-to-liquids (CTL) plants without carbon control and sequestration (CCS). In LCOE
terms, the impact of the cost of capital adder is similar to that of an emissions fee of $15 per metric tonof carbon dioxide (CO2) when investing in a new coal plant without CCS, which is representative of thecosts used by utilities and regulators in their resource planning. 6 The adjustment should not be seen as
an increase in the actual cost of financing, but rather as representing the implicit hurdle being added to
GHG-intensive projects to account for the possibility that they may eventually have to purchaseallowances or invest in other GHG-emission-reducing projects to offset their emissions. As a result, the
LCOE values for coal-fired plants without CCS are higher than would otherwise be expected.
The levelized capital component reflects costs calculated using tax depreciation schedules consistent
with permanent tax law, which vary by technology. Although the capital and operating components do
not incorporate the production or investment tax credits available to some technologies, a subsidy
column is included in Table 1 to reflect the estimated value of these tax credits, where available, in
2020. In the reference case, tax credits are assumed to expire based on current laws and regulations.
Some technologies, notably solar photovoltaic (PV), are used in both utility-scale generating plants anddistributed end-use residential and commercial applications. As noted above, the LCOE (and also
subsequent LACE) calculations presented in the tables apply only to the utility-scale use of thosetechnologies.
In Table 1 and Table 2, the LCOE for each technology is evaluated based on the capacity factor indicated,which generally corresponds to the high end of its likely utilization range. Simple combustion turbines(conventional or advanced technology) that are typically used for peak load duty cycles are evaluated at
a 30% capacity factor. The duty cycle for intermittent renewable resources, wind and solar, is notoperator controlled, but dependent on the weather or solar cycle (that is, sunrise/sunset) and so will notnecessarily correspond to operator dispatched duty cycles. As a result, their LCOE values are not directlycomparable to those for other technologies (even where the average annual capacity factor may besimilar) and therefore are shown in separate sections within each of the tables. The capacity factors
shown for solar, wind, and hydroelectric resources in Table 1 are simple averages of the capacity factor
for the marginal site in each region. These capacity factors can vary significantly by region and canrepresent resources that may or may not get built in EIA capacity projections. Projected capacity factors
for these resources in the AEO 2015 or other EIA analyses will not necessarily correspond to these levels.
As mentioned above, the LCOE values shown in Table 1 are national averages. However, as shown in
Table 2, there is significant regional variation in LCOE values based on local labor markets and the costand availability of fuel or energy resources such as windy sites. For example, LCOE for incremental windcapacity coming online in 2020 ranges from $65.6/MWh in the region with the best available resourcesin 2020 to $81.6/MWh in regions where LCOE values are highest due to lower quality wind resources
Energy Modeling System: Model Documentation. This report can be found at
http://www.eia.gov/forecasts/aeo/nems/documentation/electricity/pdf/m068%282014%29.pdf.
6
Morgan Stanley, “Leading Wall Street Banks Establish The Carbon Principles” (Press Release, February 4, 2008),
www.morganstanley.com/about/press/articles/6017.html.

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20153

and/or higher capital costs for the best sites that can accommodate additional wind capacity. Costs
shown for wind may include additional costs associated with transmission upgrades needed to accessremote resources, as well as other factors that markets may or may not internalize into the market pricefor wind power.
As previously indicated, LACE provides an estimate of the cost of generation and capacity resources
displaced by a marginal unit of new capacity of a particular type, thus providing an estimate of the valueof building such new capacity. This is especially important to consider for intermittent resources, such as
wind or solar, that have substantially different duty cycles than the baseload, intermediate and peaking
duty cycles of conventional generators. Table 3 provides the range of LACE estimates for different
capacity types. The LACE estimates in this table have been calculated assuming the same maximum
capacity factor as in the LCOE. A subset of the full list of technologies in Table 1 is shown because the
LACE value for similar technologies with the same capacity factor would have the same value (forexample, conventional and advanced combined cycle plants will have the same avoided cost ofelectricity). Values are not shown for combustion turbines, because turbines are more often built for
their capacity value to meet a reserve margin rather than to meet generation requirements and avoid
energy costs.
When the LACE of a particular technology exceeds its LCOE at a given time and place, that technology
would generally be economically attractive to build. While the build decisions in the real world, and asmodeled in the AEO, are somewhat more complex than a simple LACE to LCOE comparison, including
such factors as policy and non-economic drivers, the net economic value (LACE minus LCOE, including
subsidy, for a given technology, region and year) shown in Table 4 provides a reasonable point ofcomparison of first-order economic competitiveness among a wider variety of technologies than ispossible using either the LCOE or LACE tables individually. In Table 4, a negative difference indicates thatthe cost of the marginal new unit of capacity exceeds its value to the system, as measured by LACE; apositive difference indicates that the marginal new unit brings in value in excess of its cost by displacing
more expensive generation and capacity options. The range of differences columns represent thevariation in the calculation of the difference for each region. For example, in the region where theadvanced combined cycle appears most economic in 2020, the LCOE is $74.6/MWh and the LACE is$75.8/MWh, resulting in a net difference of $1.2/MWh. This range of differences is not based on the
difference between the minimum values shown in Table 2 and Table 3, but represents the lower andupper bound resulting from the LACE minus LCOE calculations for each of the 22 regions.
The average net differences shown in Table 4 are for plants coming online in 2020, consistent with
Tables 1-3, as well as for plants that could come online in 2040, to show how the relativecompetitiveness changes over the projection period. Additional tables showing the LCOE cost
components and regional variation in LCOE and LACE for 2040 can be found in the Appendix. In 2020,
the average net differences are negative for all technologies except geothermal, reflecting the fact thaton average, new capacity is not needed in 2020. However, the upper value for the advanced combined
cycle technology is above zero, indicating competiveness in a particular region. Geothermal cost data issite-specific, and the relatively large positive value for that technology results because there may be
individual sites that are very cost competitive, leading to new builds, but there is a limited amount ofcapacity available at that cost. By 2040, the LCOE values for most technologies are lower, typically

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20154reflecting declining capital costs over time. All technologies receive cost reductions from learning overtime, with newer, advanced technologies receiving larger cost reductions, while conventional
technologies will see smaller learning effects. Capital costs are also adjusted over time based oncommodity prices, through a factor based on the metals and metal products index, which declines inreal terms over the projection. However, the LCOE for natural gas-fired technologies rises over time,
because rising fuel costs more than offset any decline in capital costs. The LACE values for alltechnologies increase by 2040 relative to 2020, reflecting higher energy costs and a greater value for
new capacity. As a result, the difference between LACE and LCOE for almost all technologies gets closer
to a net positive value in 2040, and there are several technologies (advanced combined cycle, wind,solar PV, and geothermal) that have regions with positive net differences.

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20155

Table 1. Estimated levelized cost of electricity (LCOE) for new generation resources, 2020

1

U.S. Average Levelized Costs (2013 $/MWh) for Plants Entering Service in 2020

Fixed
O&M

Variable
O&M(including
fuel)Transmission
Investment

Total
System
LCOE

60.4

4.2

29.4

1.2

95.1

85

76.9

6.9

30.7

1.2

115.7

85

97.3

9.8

36.1

1.2

144.4

Conventional Combined Cycle

87

14.4

1.7

57.8

1.2

75.2

Advanced Combined Cycle

87

15.9

2.0

53.6

1.2

72.6

Advanced CC with CCS

87

30.1

4.2

64.7

1.2

100.2

Conventional Combustion
TurbineAdvanced Combustion Turbine

30

40.7

2.8

94.6

3.5

141.5

30

27.8

2.7

79.6

3.5

113.5

Advanced Nuclear

90

70.1

11.8

12.2

1.1

95.2

Geothermal

92

34.1

12.3

0.0

1.4

47.8

Biomass

83

47.1

14.5

37.6

1.2

100.5

Non-Dispatchable
Technologies
Wind

36

57.7

12.8

0.0

3.1

73.6

Wind – Offshore

38

168.6

22.5

0.0

5.8

196.9

3

25

109.8

11.4

0.0

4.1

Solar Thermal

20

191.6

42.1

0.0

4

54

70.7

3.9

7.0

Capacity
Factor(%)

Levelized
Capital
Cost

Conventional Coal

85

Advanced Coal
Advanced Coal with CCS

Plant Type
Dispatchable Technologies

Subsidy

2

Total
LCOE
including
Subsidy

Natural Gas-fired

Solar PV

Hydroelectric

-3.4

44.4

125.3

-11.0

114.3

6.0

239.7

-19.2

220.6

2.0

83.5

1

Costs for the advanced nuclear technology reflect an online date of 2022.
The subsidy component is based on targeted tax credits such as the production or investment tax credit available for sometechnologies. It only reflects subsidies available in 2020, which include a permanent 10% investment tax credit for geothermaland solar technologies. EIA models tax credit expiration as follows: new solar thermal and PV plants are eligible to receive a
30% investment tax credit on capital expenditures if placed in service before the end of 2016, and 10% thereafter. New wind,geothermal, biomass, hydroelectric, and landfill gas plants are eligible to receive either: (1) a $23.0/MWh ($11.0/MWh fortechnologies other than wind, geothermal and closed-loop biomass) inflation-adjusted production tax credit over the plant’s
first ten years of service or (2) a 30% investment tax credit, if they are under construction before the end of 2013. Up to 6 GWof new nuclear plants are eligible to receive an $18/MWh production tax credit if in service by 2020; nuclear plants shown inthis table have an in-service date of 2022.
3
Costs are expressed in terms of net AC power available to the grid for the installed capacity.
4
As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall
operation is limited by resources available by site and season.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2015, April 2015, DOE/EIA-0383(2015).
2

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20156

Table 2. Regional variation in levelized cost of electricity (LCOE) for new generation resources, 20201
Range for Total System LCOE
(2013 $/MWh)
Plant Type
Dispatchable Technologies
Conventional Coal
Advanced Coal
Advanced Coal with CCS
Natural Gas-fired
Conventional Combined Cycle
Advanced Combined Cycle
Advanced CC with CCS
Conventional Combustion
TurbineAdvanced Combustion Turbine
Advanced Nuclear
Geothermal
Biomass

Range for Total LCOE with Subsidies(2013 $/MWh)

Minimum

Average

Maximum

87.1
106.1
132.9

95.1
115.7
144.4

119.0
136.1
160.4

70.4
68.6
93.3
107.3

75.2
72.6
100.2
141.5

85.5
81.7
110.8
156.4

94.6
91.8
43.8
90.0

113.5
95.2
47.8
100.5

126.8
101.0
52.1
117.4

2

Minimum

Average

Maximum

41.0

44.4

48.0

Non-Dispatchable Technologies
Wind
65.6
73.6
81.6
Wind – Offshore
169.5
196.9
269.8
3
Solar PV
97.8
125.3
193.3
89.3
114.3
175.8
Solar Thermal
174.4
239.7
382.5
160.4
220.6
351.7
4
Hydroelectric
69.3
83.5
107.2
1
Costs for the advanced nuclear technology reflect an online date of 2022.
2
Levelized cost with subsidies reflects subsidies available in 2020, which include a permanent 10% investment tax credit for
geothermal and solar technologies.
3
Costs are expressed in terms of net AC power available to the grid for the installed capacity.
4
As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall
operation is limited by resources available by site and season.
Note: The levelized costs for non-dispatchable technologies are calculated based on the capacity factor for the marginal sitemodeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as follows:
Wind – 31% to 40%, Wind Offshore – 33% to 42%, Solar PV- 22% to 32%, Solar Thermal – 11% to 26%, and Hydroelectric – 35%
to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as
resource availability.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2015, April 2015, DOE/EIA-0383(2015).

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20157

Table 3: Regional variation in levelized avoided costs of electricity (LACE) for new generation
resources, 20201

Plant Type
Dispatchable Technologies
Coal without CCS

Range for LACE (2013$/MWh)
Minimum
Average Maximum
65.9

70.9

80.8

IGCC with CCS

65.9

71.0

80.8

Natural Gas-fired Combined Cycle

65.8

71.4

80.7

Advanced Nuclear

68.4

72.1

82.0

Geothermal

70.7

70.9

71.0

Biomass

66.0

71.7

80.9

Wind

60.6

64.6

69.0

Wind – Offshore

64.6

71.5

78.1

Solar PV

61.6

80.4

92.3

Solar Thermal

59.4

83.0

89.4

Hydroelectric

64.8

69.5

80.0

2

Non-Dispatchable Technologies

1

Costs for the advanced nuclear technology reflect an online date of 2022.
Coal without CCS cannot be built in California, therefore the average LACE for coaltechnologies without CCS is computed over fewer regions than the LACE for IGCC with CCS.
Otherwise, the LACE for any given region is the same across coal technologies, with or without CCS.

2

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20158

Table 4: Difference between levelized avoided costs of electricity (LACE) and levelized costs ofelectricity (LCOE), 20201 and 2040

Plant Type2020
Dispatchable Technologies
Conventional Coal
Advanced Coal
Advanced Coal with CCS
Natural Gas-fired
Conventional Combined Cycle
Advanced Combined Cycle
Advanced CC with CCS
Advanced Nuclear
Geothermal
Biomass
Non-Dispatchable Technologies
Wind
Wind – Offshore
Solar PV
Solar Thermal
Hydroelectric
2040
Dispatchable Technologies
Conventional Coal
Advanced Coal
Advanced Coal with CCS
Natural Gas-fired
Conventional Combined Cycle
Advanced Combined Cycle
Advanced CC with CCS
Advanced Nuclear
Geothermal
Biomass
Non-Dispatchable Technologies
Wind
Wind – Offshore
Solar PV
Solar Thermal
HydroelectricComparison of LCOE and LACE (2013 $/MWh)
Average
Average
Average
Range of Differences
LCOE
LACE Difference Minimum of Maximum of
Range
Range

95.1
115.7
144.4

70.9
70.9
71.0

-24.1
-44.7
-73.4

-43.0
-60.0
-88.9

-15.5
-34.6
-61.4

75.2
72.6
100.2
95.2
44.4
100.5

71.4
71.4
71.4
72.1
70.9
71.7

-3.8
-1.2
-28.8
-23.2
26.5
-28.8

-10.8
-7.6
-35.9
-31.4
22.7
-44.4

-1.8
1.2
-22.5
-10.6
30.0
-16.9

73.6
196.9
114.3
220.6
83.5

64.6
71.5
80.4
83.0
69.5

-9.0
-125.5-33.9-137.5-14.0-19.6-191.6-83.5-266.0
-33.9

0.1
-98.3
-10.5
-74.3
-1.4

91.7
105.5
127.6

78.9
78.9
79.2

-12.8
-26.6
-48.4

-34.6
-43.3
-58.9

-3.5
-17.1
-38.7

82.6
79.3
106.3
88.9
56.9
93.5

79.3
79.3
79.3
78.7
80.6
79.6

-3.3
-0.1
-27.0
-10.3
23.7
-13.9

-9.9
-5.6
-32.8
-19.3
-2.8
-34.0

-1.2
2.1
-21.9
-0.2
50.2
-1.6

75.1
175.6
107.1
197.1
89.9

71.7
79.3
91.0
95.6
77.7

-3.4
-96.3
-16.1
-101.5-12.2-47.9-155.6-70.1-210.9
-30.4

8.6
-69.9
3.0
-49.1
-0.5

1

Costs for the advanced nuclear technology reflect an online date of 2022.

U.S. Energy Information Administration | 2020 Levelized Costs AEO 20159

Appendix: Tables for 2040
Table A5. Estimated levelized cost of electricity (LCOE) for new generation resources, 2040

1

U.S. Average Levelized Costs (2013 $/MWh) for Plants Entering Service in 2020

Fixed
O&M

Variable
O&M(including
fuel)Transmission
Investment

Total
System
LCOE

56.8

4.2

29.5

1.1

91.7

85

69.1

6.9

28.4

1.1

105.5

85

84.9

9.8

31.8

1.2

127.6

Conventional Combined Cycle

87

13.7

1.7

66.0

1.2

82.6

Advanced Combined Cycle

87

14.3

2.0

61.9

1.2

79.3

Advanced CC with CCS

87

25.8

4.2

75.2

1.2

106.3

Conventional Combustion
TurbineAdvanced Combustion Turbine

30

38.4

2.8

110.3

3.4

154.9

30

24.1

2.7

88.4

3.4

118.6

Advanced Nuclear

90

62.5

11.8

13.5

1.1

88.9

Geothermal

94

38.2

21.2

0.0

1.4

60.8

Biomass

83

43.0

14.5

34.8

1.2

93.5

Non-Dispatchable
Technologies
Wind

35

58.9

13.0

0.0

3.1

75.1

Wind – Offshore

38

147.4

22.5

0.0

5.7

175.6

3

25

101.8

11.4

0.0

4.1

Solar Thermal

20

165.6

42.1

0.0

4

52

76.1

4.4

7.3

Capacity
Factor(%)

Levelized
Capital
Cost

Conventional Coal

85

Advanced Coal
Advanced Coal with CCS

Plant Type
Dispatchable Technologies

Subsidy

2

Total
LCOE
including
Subsidy

Natural Gas-fired

Solar PV

Hydroelectric

-3.8

56.9

117.3

-10.2

107.1

5.9

213.6

-16.6

197.1

2.0

89.9

1

The subsidy component is based on targeted tax credits such as the production or investment tax credit available for sometechnologies. It only reflects subsidies available in 2020, which include a permanent 10% investment tax credit for geothermaland solar technologies. EIA models tax credit expiration as follows: new solar thermal and PV plants are eligible to receive a
30% investment tax credit on capital expenditures if placed in service before the end of 2016, and 10% thereafter. New wind,geothermal, biomass, hydroelectric, and landfill gas plants are eligible to receive either: (1) a $23.0/MWh ($11.0/MWh fortechnologies other than wind, geothermal and closed-loop biomass) inflation-adjusted production tax credit over the plant’s
first ten years of service or (2) a 30% investment tax credit, if they are under construction before the end of 2013. Up to 6 GWof new nuclear plants are eligible to receive an $18/MWh production tax credit if in service by 2020; nuclear plants shown inthis table have an in-service date of 2022.
2
Costs are expressed in terms of net AC power available to the grid for the installed capacity.
3
As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall
operation is limited by resources available by site and season.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2015, April 2015, DOE/EIA-0383(2015).

U.S. Energy Information Administration | 2020 Levelized Costs AEO 201510

Table A6. Regional variation in levelized cost of electricity (LCOE) for new generation resources, 2040

Range for Total System LCOE
(2013 $/MWh)

Range for Total LCOE with Subsidies(2013 $/MWh)

Minimum

Average

Maximum

Conventional Coal

83.2

91.7

114.8

Advanced Coal

96.4

105.5

123.6

Advanced Coal with CCS

117.1

127.6

141.6

Conventional Combined Cycle

76.8

82.6

93.2

Advanced Combined Cycle

74.0

79.3

88.4

Advanced CC with CCS

97.5

106.3

117.5

Conventional Combustion Turbine

143.0

154.9

168.5

Advanced Combustion Turbine

111.1

118.6

129.8

Advanced Nuclear

85.9

88.9

94.1

Geothermal

36.6

60.8

85.0

Biomass

82.9

93.5

116.2

61.1

75.1

122.8

Wind – Offshore

151.1

175.6

239.5

2

91.5

117.3

Solar Thermal

155.4

3

78.0

Plant Type1

Minimum

Average

Maximum

34.4

56.9

79.4

180.5

83.7

107.1

164.2

213.6

340.6

143.3

197.1

314.0

89.9

107.7

Dispatchable Technologies

Natural Gas-fired

Non-Dispatchable Technologies
Wind
Solar PV

Hydroelectric1

Levelized cost with subsidies reflects subsidies available in 2040, which includes a permanent 10% investment tax credit for
geothermal and solar technologies, based on the Energy Policy Act of 1992.
2
Costs are expressed in terms of net AC power available to the grid for the installed capacity.
3
As modeled, hydroelectric is assumed to have seasonal storage so that it can be dispatched within a season, but overall
operation is limited by resources available by site and season.
Note: The levelized costs for non-dispatchable technologies are calculated based on the capacity factor for the marginal sitemodeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as follows:
Wind – 32% to 41%, Wind Offshore – 33% to 42%, Solar PV- 22% to 32%, Solar Thermal – 11% to 26%, and Hydroelectric – 35%
to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as
resource availability.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2015, April 2015, DOE/EIA-0383(2015).

U.S. Energy Information Administration | 2020 Levelized Costs AEO 201511

Table A7: Regional variation in levelized avoided costs of electricity (LACE) for new generation
resources, 2040

Plant Type
Dispatchable Technologies
Coal without CCS

Range for Levelized Avoided Costs(2013$/MWh)
Minimum
Average
Maximum
72.8

78.9

86.4

IGCC with CCS

72.8

79.2

86.4

Natural Gas-fired Combined Cycle

72.6

79.3

86.3

Advanced Nuclear

72.4

78.7

86.4

Geothermal

76.7

80.6

84.6

Biomass

72.9

79.6

86.4

Wind

66.5

71.7

77.2

Wind – Offshore

71.1

79.3

85.2

Solar PV

70.4

91.0

99.4

Solar Thermal

66.3

95.6

114.7

Hydroelectric

71.5

77.7

85.5

1

Non-Dispatchable Technologies

1

Coal without CCS cannot be built in California, therefore the average LACE for coaltechnologies without CCS is computed over fewer regions than the LACE for IGCC with CCS.
Otherwise, the LACE for any given region is the same across coal technologies, with or without CCS.

U.S. Energy Information Administration | 2020 Levelized Costs AEO 201512