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LCOE models: A comparison of the theoretical frameworks and key assumptions

Author

Listed:
  • John Foster

    (School of Economics, University of Queensland)

  • Liam Wagner

    (School of Economics, University of Queensland)

  • Alexandra Bratanova

    (School of Economics, University of Queensland)

Abstract
LCOE models are widely applied at national and regional levels for the energy systems design, energy generation projections and technology assessment. Although LCOE is a well developed and standard technique in the energy sector economics, authors approach model construction in different ways to ensure the model matches research tasks and data availability. The LCOE model is interdependent with the data availability – data determines the construction of LCOE model and vice-versa – LCOE model defines what data is required for calculations. However, adjustments made to the standard LCOE comes at a price of limited comparability of the outcomes from the different models. The following section introduces few well known LCOE models developed for national governments with further comparison of basic assumptions in order to determine theoretical framework and datasets to be allied in the project. The next section then will provide the results of comparative analysis of the LCOE models key assumptions, concentrating on capital costs, discount rates and technology learning curves.

Suggested Citation

  • John Foster & Liam Wagner & Alexandra Bratanova, 2014. "LCOE models: A comparison of the theoretical frameworks and key assumptions," Energy Economics and Management Group Working Papers 4-2014, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqeemg:4-2014
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    File URL: http://www.uq.edu.au/eemg/docs/workingpapers/2014-4.pdf
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    References listed on IDEAS

    as
    1. Andreas Schröder & Friedrich Kunz & Jan Meiss & Roman Mendelevitch & Christian von Hirschhausen, 2013. "Current and Prospective Costs of Electricity Generation until 2050," Data Documentation 68, DIW Berlin, German Institute for Economic Research.
    2. Liam Wagner & John Foster, 2011. "Is There an Optimal Entry Time for Carbon Capture and Storage? A Case Study for Australia's National Electricity Market," Energy Economics and Management Group Working Papers 07, School of Economics, University of Queensland, Australia.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    2. Bruck, Maira & Sandborn, Peter & Goudarzi, Navid, 2018. "A Levelized Cost of Energy (LCOE) model for wind farms that include Power Purchase Agreements (PPAs)," Renewable Energy, Elsevier, vol. 122(C), pages 131-139.
    3. Nalini Dookie & Xsitaaz T. Chadee & Ricardo M. Clarke, 2022. "A Prefeasibility Solar Photovoltaic Tool for Tropical Small Island Developing States," Energies, MDPI, vol. 15(22), pages 1-28, November.
    4. Shamachurn, Heman & Bholah, Rahul Dev, 2018. "Economic feasibility of a Dispatchable Standby Generator scheme for the island of Mauritius," Utilities Policy, Elsevier, vol. 53(C), pages 49-59.
    5. Byrnes, Liam & Brown, Colin & Wagner, Liam & Foster, John, 2016. "Reviewing the viability of renewable energy in community electrification: The case of remote Western Australian communities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 470-481.
    6. Mendicino, Luca & Menniti, Daniele & Pinnarelli, Anna & Sorrentino, Nicola, 2019. "Corporate power purchase agreement: Formulation of the related levelized cost of energy and its application to a real life case study," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    7. Foster, John & Wagner, Liam & Liebman, Ariel, 2015. "Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign," MPRA Paper 70114, University Library of Munich, Germany.
    8. Foster, John & Wagner, Liam & Liebman, Ariel, 2017. "Economic and investment models for future grids: Final Report Project 3," MPRA Paper 78866, University Library of Munich, Germany.
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    More about this item

    Keywords

    Energy Economics; Electricity Markets; Energy Policy; Renewable Energy; Levelised Cost of Energy;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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