A review of solar photovoltaic levelized cost of electricity
As the solar photovoltaic (PV) matures, the economic feasibility of PV projects is increasingly being evaluated using the levelized cost of electricity (LCOE) generation in order to be compared to other electricity generation technologies. Unfortunately, there is lack of clarity of reporting assumptions, justifications and degree of completeness in LCOE calculations, which produces widely varying and contradictory results. This paper reviews the methodology of properly calculating the LCOE for solar PV, correcting the misconceptions made in the assumptions found throughout the literature. Then a template is provided for better reporting of LCOE results for PV needed to influence policy mandates or make invest decisions. A numerical example is provided with variable ranges to test sensitivity, allowing for conclusions to be drawn on the most important variables. Grid parity is considered when the LCOE of solar PV is comparable with grid electrical prices of conventional technologies and is the industry target for cost-effectiveness. Given the state of the art in the technology and favourable financing terms it is clear that PV has already obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices continue to escalate, and industry experience increases, PV will become an increasingly economically advantageous source of electricity over expanding geographical regions.
Volume (Year): 15 (2011)
Issue (Month): 9 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/bibliographic|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jacob Funk Kirkegaard & Thilo Hanemann & Lutz Weischer & Matt Miller, 2010. "Toward a Sunny Future? Global Integration in the Solar PV Industry," Working Paper Series WP10-6, Peterson Institute for International Economics.
- Beck, Thorsten & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2007.
"Reaching out: Access to and use of banking services across countries,"
Journal of Financial Economics,
Elsevier, vol. 85(1), pages 234-266, July.
- Beck, Thorsten & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2005. "Reaching out : access to and use of banking services across countries," Policy Research Working Paper Series 3754, The World Bank.
- Pearce, Joshua M., 2008. "Industrial symbiosis of very large-scale photovoltaic manufacturing," Renewable Energy, Elsevier, vol. 33(5), pages 1101-1108.
- Banerjee, Abhijit & Duflo, Esther, 2006.
"The Economic Lives of the Poor,"
CEPR Discussion Papers
5968, C.E.P.R. Discussion Papers.
- Zelenika-Zovko, I. & Pearce, J.M., 2011. "Diverting indirect subsidies from the nuclear industry to the photovoltaic industry: Energy and financial returns," Energy Policy, Elsevier, vol. 39(5), pages 2626-2632, May.
- Sovacool, Benjamin K. & Watts, Charmaine, 2009. "Going Completely Renewable: Is It Possible (Let Alone Desirable)?," The Electricity Journal, Elsevier, vol. 22(4), pages 95-111, May.
- Pearce, Joshua M. & Harris, Paul J., 2007. "Reducing greenhouse gas emissions by inducing energy conservation and distributed generation from elimination of electric utility customer charges," Energy Policy, Elsevier, vol. 35(12), pages 6514-6525, December.
- Yang, Chi-Jen, 2010. "Reconsidering solar grid parity," Energy Policy, Elsevier, vol. 38(7), pages 3270-3273, July.
- Taylor, Margaret, 2008. "Beyond technology-push and demand-pull: Lessons from California's solar policy," Energy Economics, Elsevier, vol. 30(6), pages 2829-2854, November.
- Sims, Ralph E. H. & Rogner, Hans-Holger & Gregory, Ken, 2003. "Carbon emission and mitigation cost comparisons between fossil fuel, nuclear and renewable energy resources for electricity generation," Energy Policy, Elsevier, vol. 31(13), pages 1315-1326, October.
- Singh, Parm Pal & Singh, Sukhmeet, 2010. "Realistic generation cost of solar photovoltaic electricity," Renewable Energy, Elsevier, vol. 35(3), pages 563-569.
- Fthenakis, Vasilis & Mason, James E. & Zweibel, Ken, 2009. "The technical, geographical, and economic feasibility for solar energy to supply the energy needs of the US," Energy Policy, Elsevier, vol. 37(2), pages 387-399, February.
- Rao, P. Sharath Chandra & Miller, Jeffrey B. & Wang, Young Doo & Byrne, John B., 2009. "Energy-microfinance intervention for below poverty line households in India," Energy Policy, Elsevier, vol. 37(5), pages 1694-1712, May.
- Corrado Di Maria & Susana Ferreira & Emiliya Lazarova, 2010. "Shedding Light On The Light Bulb Puzzle: The Role Of Attitudes And Perceptions In The Adoption Of Energy Efficient Light Bulbs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(1), pages 48-67, 02.
- Branker, K. & Pearce, J.M., 2010. "Financial return for government support of large-scale thin-film solar photovoltaic manufacturing in Canada," Energy Policy, Elsevier, vol. 38(8), pages 4291-4303, August.
When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:15:y:2011:i:9:p:4470-4482. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.