eere.energy.gov 

Water Power Technologies Office Peer Review 

Marine and Hydrokinetics Program 

MHK Levelized Cost of Energy 

(LCOE) Analysis 

Foundation of Technology 

Development 

Al LiVecchi 

National Renewable Energy Laboratory 

al.livecchi@nrel.gov 303.384.7138 

February 14-17, 2017

Washington, D.C.

NREL/PR-5000-68364

NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC
2 | Water Program Technologies Office eere.energy.gov

Project Overview

MHK Levelized Cost of Energy (LCOE) Analysis:

MHK technology development and adoption will be accelerated both 

domestically and internationally through research and development (R&D) 

programs targeted utilization of baseline cost scenarios, and standardized 

reporting methodologies and assumptions.

The Challenge: 

Prototype MHK technologies require significant cost reduction before they can 

compete with other forms of energy. Limited technology and project cost data 

exist for the different technology types, making it challenging to assess 

baseline costs and identify high-impact R&D opportunities.

Partners: 

• MHK Industry members

• Pacific Northwest National Laboratory (PNNL) – Desalination, Reference 

Models

• Oak Ridge National Laboratory (ORNL) – System Cost Breakdown 

Structure, LCOE Methodology

• Sandia National Laboratories (SNL) – Reference Models

• ReVision – Reference Models
3 | Water Program Technologies Office eere.energy.gov

Technology 

Maturity

Deployment 

Barriers

Crosscutting 

Approaches

• Enable access to testing 

facilities that help 

accelerate the pace of 

technology development

• Improve resource 

characterization to 

optimize technologies, 

reduce deployment risks 

and identify promising 

markets

• Exchange of data 

information and 

expertise

• Identify potential 

improvements to 

regulatory processes 

and requirements

• Support research 

focused on retiring or 

mitigating environmental 

risks and reducing costs

• Build awareness of 

MHK technologies

• Ensure MHK interests 

are considered in 

coastal and marine 

planning processes

• Evaluate deployment 

infrastructure needs and 

possible approaches to 

bridge gaps

• Support project 

demonstrations to 

reduce risk and build 

investor confidence

• Assess and 

communicate 

potential MHK market 

opportunities, 

including off-grid and 

non-electric

• Inform incentives and 

policy measures

• Develop, maintain and 

communicate our 

national strategy

• Support development of 

standards 

• Expand MHK technical 

and research 

community

Program Strategic Priorities

• Test and demonstrate 

prototypes

• Develop cost effective 

approaches for 

installation, grid 

integration, operations 

and maintenance

• Conduct R&D for 

Innovative MHK systems 

and components 

• Develop tools to optimize 

device and array 

performance and 

reliability

• Develop and apply 

quantitative metrics to 

advance MHK 

technologies

Market 

Development
4 | Water Program Technologies Office eere.energy.gov

Technology 

Maturity

• Test and demonstrate prototypes

• Develop cost-effective 

approaches for installation, grid 

integration, operations and 

maintenance

• Conduct R&D for innovative MHK 

systems and components

• Develop tools to optimize device 

and array performance and 

reliability

• Develop and apply quantitative 

metrics to advance MHK 

technologies

Project Strategic Alignment

The Impact

Reference Model 

• 3 current energy converter (CEC) designs 

(1 tidal, 1 ocean current, and 1 riverine) 

and 3 wave energy converter (WEC) 

designs, and corresponding economic 

analysis made publicly available to enable 

baseline comparison

Wave Prize Metric Development

• LCOE analyses used to develop baseline 

ACE metric used in the wave prize, 

resulting in technology acceleration and 

broadening of the wave energy industry 
5 | Water Program Technologies Office eere.energy.gov

Project Strategic Alignment

The Impact

Funding Opportunity Announcement 

(FOA) LCOE Support

• Robust and uniform technology baseline 

assessment

• Provides insight into cost composition to 

inform industry and DOE R&D efforts

Market 

Development

• Support project 

demonstrations to reduce risk 

and build investor confidence

• Assess and communicate 

potential MHK market 

opportunities, including off-grid 

and non-electric

• Inform incentives and policy 

measures

• Develop, maintain and 

communicate our national 

strategy

• Support development of 

standards 

• Expand MHK technical and 

research community
6 | Water Program Technologies Office eere.energy.gov

Project Strategic Alignment

The Impact

MHK-powered Desalination

• Determined baseline estimate for the cost 

of clean water produced through WEC 

powered Desalination

• Identification of market potential for MHK 

technologies that expand the MHK industry 

into non-electric sectors that are end-use 

markets and have synergistic technology 

and market development aspects

Market 

Development

• Support project demonstrations to 

reduce risk and build investor 

confidence

• Assess and communicate 

potential MHK market 

opportunities, including offgrid and non-electric

• Inform incentives and policy 

measures

• Develop, maintain and 

communicate our national 

strategy

• Support development of 

standards 

• Expand MHK technical and 

research community
7 | Water Program Technologies Office eere.energy.gov

Project Strategic Alignment

The Impact

LCOE Analysis, Guidance and Cost Breakdown 

Structure (CBS)

• MHK-specific LCOE methodologies and 

reporting formats enable uniform analysis across 

U.S. and international MHK stakeholders 

• Methodology used by industry stakeholders, 

university partners, and international researchers

to create a common format for data exchange 

• LCOE analysis used to target cost reduction 

pathways

• Focusing R&D development on high-impact 

areas will accelerate technology maturation 

through performance increases and cost 

reductions

Crosscutting 

Approaches

• Enable access to testing facilities 

that help accelerate the pace of 

technology development

• Improve resource 

characterization to optimize 

technologies, reduce deployment 

risks and identify promising 

markets

• Exchange of data information 

and expertise
8 | Water Program Technologies Office eere.energy.gov

Technical Approach

Approach:

• Engage technology-agnostic, neutral third-party national laboratories that have the 

ability to collaborate with a wide range of industry players and stakeholders and deliver 

objective analyses across a range of renewable energy technologies

• Leverage existing renewable energy technology analysis methodologies developed for 

EERE and develop MHK-specific LCOE methodology

• Compile and translate international and domestic LCOE data to assess the existing 

state-of-the-art (see below); determine LCOE benchmarks, targets, and cost reduction 

opportunities using a standardized methodology and assumptions 

• Publicly disseminate LCOE methodology, framework, and analyses

• Evaluate the potential of non-electric markets in the United States, starting with wavepowered desalination

o MHK LCOE estimates have 

high levels of uncertainty

o Standardized reporting 

methodology, assumptions, 

and cost reporting framework 

enables LCOE comparisons 

across domestic and 

international entities
9 | Water Program Technologies Office eere.energy.gov

Accomplishments and Progress

• LCOE analysis and benchmarks used by the Program to target high priority R&D 

activities that reduce installed capital costs and increase annual energy production.

• Efforts have led to the definition of the primary Wave Energy Prize metric (ACE 

Metric).

• Exploration of non-electricity end uses (e.g. desalination) have suggested synergistic 

near-term market opportunities for MHK technologies.

• As technology benchmarks mature, data reevaluated and used to further advance the 

MHK R&D and LCOE targets.
10 | Water Program Technologies Office eere.energy.gov

Project Plan & Schedule

• LCOE work originated in FY10 under the Reference Model Project 

(FY10), which was completed in FY15

• Wave Energy Prize Metric Development completed in FY15

• LCOE methodology development, cost and performance data collection 

and composition and trend analysis and alternate end-use analysis 

continuing

FY14 FY15 FY16

IEA Cost 

Methodology 

Review

Wave Prize 

Performance Metric 

Development

Reference Model Project 

and LCOE analysis

LCOE Guidance and Reporting 

Methodology (Dissemination on OpenEI)

LCOE Task (Strategic Planning, Baseline 

Evaluation, LCOE Data Translation, Desalination...)

Baseline Reporting and 

Strategic Planning 

(waterfall)
11 | Water Program Technologies Office eere.energy.gov

Project Budget

* $150k was transferred from Field Measurement Campaign to FOA 

1310 support; this was carryover funding, but is counted here as new 

BA since it is new funding to the project

** $320k of $410k BA funds planned for effort in FY17 (Desalination 

and Market Study)

45% of total funding was costed by the end of FY16

Budget History

FY2014 FY2015 FY2016

DOE Cost-share DOE Cost-share DOE Cost-share

$0k $0k $377k* $0k $410k** $0k
12 | Water Program Technologies Office eere.energy.gov

Research Integration & Collaboration

Partners, Subcontractors, and Collaborators: 

• SNL—Reference Model Project lead

• PNNL—Reference Models, Desalination, Non-Electric Market Opportunities

• FOA recipients—LCOE cost and performance data

• Marine Energy Council of the National Hydropower Association—Annual 

LCOE review

Communications and Technology Transfer:

• LCOE guidance and System Cost Breakdown Structure (SCBS) developed in 

collaboration with the Wind Energy Technologies Office, ORNL, and industry 

stakeholders

• As guidance and SCBS have been utilized, industry feedback has been 

employed to refine guidance documents and deliver direction on how to 

effectively use and modify the MHK SCBS

• Reference Model project has also provided detailed cost analysis and LCOE 

methodology reports, which serve as technology and economic baselines

• The Reference Model LCOE analysis was performed in collaboration between 

NREL and ReVision
13 | Water Program Technologies Office eere.energy.gov

Research Integration & Collaboration

Communications and Technology Transfer:

LCOE Documentation

• OpenEI: Water Power Page – DOE Guidance and 

Frameworkhttp://en.openei.org/wiki/Gateway:Water_Power#Water_Power_Databases_.26_Tools

• MHK LCOE Reporting 

Guidancehttp://en.openei.org/community/files/doe_lcoe_reporting_guidance_2015_10_09.docx

• MHK System Cost Breakdown 

Structurehttp://en.openei.org/community/files/generalized.cbs_.draft_mhk_aug.1.2014_0.xlsx

• LCOE Reference Resource 

http://en.openei.org/community/files/lcoe_reference_resource_2016_01_27.xlsx

• LCOE Reporting Guidance Presentation with Example Case and Audio http://prod-http-80-

800498448.us-east1.elb.amazonaws.com/w/images/0/05/MHK_LCOE_Guidance_Presentation_w_Audio_.pptx

• NREL Risk Register http://www.nrel.gov/docs/fy15osti/63258_template.xlsx

• Reference Model Cost Models http://energy.sandia.gov/rmp

 RM1 (http://energy.sandia.gov/download/21275/)

 RM2 (http://energy.sandia.gov/download/23279/)

 RM3 (http://energy.sandia.gov/download/23667/)

 RM4 (http://energy.sandia.gov/download/23669/)

 RM5 (http://energy.sandia.gov/download/23713/)

 RM6 (http://energy.sandia.gov/download/23739/)
14 | Water Program Technologies Office eere.energy.gov

Next Steps and Future Research

FY17/Current research: 

LCOE effort will continue to assess the status of MHK technology costs and drivers and 

identify significant cost reduction opportunities and areas of significant uncertainty through 

detailed analysis and cost modeling. Opportunities in applications other than utility 

electricity generation will be assessed.

In FY 17, the team will:

• Complete more detailed assessment of WEC-powered desalination

• Develop MHK technology operations and maintenance cost assessment tool to 

empower more accurate cost assessment

• Support DOE FOA 1310 recipients in LCOE assessment and risk management

• Complete initial assessment of high-potential end-use markets beyond utility-scale 

electricity generation

• Work with DOE to develop graphics representing LCOE trends and R&D impact

Proposed future research: 

• Detailed analyses of opportunities and R&D pathways for alternate end-use markets 

synergistic to utility scale electricity generation

• Once O&M cost assessment tool is complete, detailed analyses can be performed on 

MHK technologies that previously used lower fidelity analysis techniques to elucidate 

high-impact R&D opportunities