Source
https://www.lazard.com/media/gjyffoqd/lazards-lcoeplus-june-2024.pdf — original source (opens in a new tab; the file is not redistributed)
Companion to OT_021 (Fraunhofer ISE, which cites Lazard as a CAPEX source), RD_003 (IRENA global costs), and RD_005 (MBIE NZ LCOE tool). US-focused data — every figure requires NZ recalibration before use in NI calculations (see RT_110/RT_111).
Summary
Lazard’s Levelized Cost of Energy+ (LCOE+) v17.0, published June 2024 with support from Roland Berger, is the most widely cited investment-bank benchmark for unsubsidised levelised energy costs across generation, storage and hydrogen. The report bundles three analyses: Levelized Cost of Energy (LCOE) v17.0, Levelized Cost of Storage (LCOS) v9.0, and Levelized Cost of Hydrogen (LCOH) v4.0. The data is explicitly U.S.-focused and modelled on a 20-year IRR basis using an illustrative power-plant model that solves for the $/MWh value yielding a levered IRR equal to the assumed cost of equity (p4 footnote 1; p34). For NI the report supplies (a) a current US bookend set of unsubsidised LCOE ranges by technology, (b) per-kW and per-kWh CAPEX assumption tables, and (c) an explicit, fully-worked WACC/capital-structure methodology that can be re-parameterised to NZ debt and equity costs. The headline finding for v17.0 is that the low end of renewable LCOE rose for the first time ever (driven by high interest rates), tightening ranges rather than continuing the historic decline (p4). It is a snapshot, not a forecast (p8), and excludes grid-integration, transmission, curtailment and intermittency costs.
Key claims
key_claims:
- id: KC1
claim: "Unsubsidised utility-scale solar PV LCOE is USD 29-92/MWh; community & C&I rooftop solar USD 54-191/MWh; residential rooftop solar USD 122-284/MWh (all $/MWh, U.S., 2024)."
source_location: "p9, 'Levelized Cost of Energy Comparison—Version 17.0' bar chart, Renewable Energy rows"
- id: KC2
claim: "Unsubsidised onshore wind LCOE is USD 27-73/MWh; offshore wind USD 74-139/MWh; geothermal USD 64-106/MWh."
source_location: "p9, LCOE Comparison v17.0 bar chart, Renewable Energy rows"
- id: KC3
claim: "Unsubsidised utility-scale Solar PV + Storage LCOE is USD 60-210/MWh; Wind + Storage (onshore) USD 45-133/MWh (4-hour storage configurations)."
source_location: "p9 bar chart; storage config confirmed p37 hybrid key-assumptions (4-hour duration, 50 MW / 200 MWh storage on 100 MW generation)"
- id: KC4
claim: "Conventional generation unsubsidised LCOE: Gas Combined Cycle USD 45-108/MWh; Gas Peaking USD 110-228/MWh; Coal USD 69-168/MWh; U.S. Nuclear USD 142-222/MWh (new build)."
source_location: "p9 bar chart, Conventional Energy rows; new-build assumptions p38"
- id: KC5
claim: "Utility-scale solar PV total capital cost is USD 850-1,400/kW; community & C&I USD 1,300-2,900/kW; rooftop residential USD 2,300-4,150/kW."
source_location: "p35, 'LCOE—Key Assumptions' Solar PV table, Total Capital Cost ($/kW) row"
- id: KC6
claim: "Onshore wind total capital cost is USD 1,300-1,900/kW; offshore wind USD 3,750-5,750/kW; geothermal USD 4,860-6,280/kW."
source_location: "p36, 'LCOE—Key Assumptions (cont'd)' Geothermal / Wind table, Total Capital Cost ($/kW) row"
- id: KC7
claim: "Standalone battery storage initial capital cost (DC): utility-scale 4-hour USD 160-282/kWh; C&I (1 MW/2 MWh) USD 318-430/kWh; residential (0.006 MW/0.025 MWh) USD 984-1,406/kWh — residential per-kWh CAPEX is roughly 3-6x the utility-scale figure."
source_location: "p44, 'LCOS—Key Assumptions' table, Initial Capital Cost—DC ($/kWh) row"
- id: KC8
claim: "Standalone storage LCOS ($/MWh): utility-scale 4-hour USD 170-296; utility-scale 1-hour USD 222-352; C&I 2-hour USD 373-518; residential 4-hour USD 882-1,101."
source_location: "p20, 'LCOS Comparison—Version 9.0 ($/MWh)' bar chart"
- id: KC9
claim: "The LCOE base case assumes a capital structure of 60% debt at an 8% interest rate and 40% equity at a 12% cost, implying a 7.7% after-tax WACC, on a 20-year IRR basis."
source_location: "p9 source note; p13 'Sensitivity to Cost of Capital' (LCOE v17.0 column: after-tax IRR/WACC 7.7%, cost of equity 12.0%, cost of debt 8.0%); p34 methodology key assumptions"
- id: KC10
claim: "The LCOS analysis uses a different capital structure from the LCOE: 20% debt at 8% and 80% equity at 12% cost."
source_location: "p20 source note; p43 LCOS methodology key assumptions (Debt 20.0%, Equity 80.0%, Cost of Equity 12.0%, Cost of Debt 8.0%)"
- id: KC11
claim: "Hybrid PV+storage / wind+storage modelling assumes 4-hour duration, 350 90%-DoD cycles/year, roundtrip efficiency 91% (PV+storage) and 88% (wind+storage), and storage total capital cost (excl. inverter) of USD 249-421/kWh."
source_location: "p37, 'LCOE—Key Assumptions (cont'd)' Hybrid Generation + Storage table, Storage section"
- id: KC12
claim: "Cost-of-capital sensitivity: average utility-scale solar PV LCOE moves from USD 40/MWh (4.2% WACC) to USD 59/MWh (10% WACC); onshore wind USD 46 to USD 74/MWh — confirming WACC is a primary LCOE driver."
source_location: "p13, 'Sensitivity to Cost of Capital' average-LCOE chart, Solar PV—Utility and Wind—Onshore series across the six WACC columns"
- id: KC13
claim: "Historically, average utility-scale solar PV LCOE has fallen 83% since Lazard v3.0 (2009: USD 359/MWh → 2024); average onshore wind has fallen 65% — but both rose slightly in v17.0 versus prior year."
source_location: "p16, 'Historical LCOE Comparison' (Solar PV—Utility 83%, Wind—Onshore 65% labels); p4 takeaway 1 ('Low End LCOE Values Increase')"
- id: KC14
claim: "The cost of firming intermittency varies sharply by region: e.g. solar effective load carrying capability (ELCC) ranges from 8% (CAISO) to 57% (SPP); a 1 MW wind resource at 15% ELCC contributes 0.15 MW of firm capacity and requires 0.85 MW of additional firm capacity to deliver 1 MW of firm system capacity."
source_location: "p15, 'Cost of Firming Intermittency' chart and footnote 2; ELCC row of the regional table (MISO/CAISO/SPP/PJM/ERCOT)"
- id: KC15
claim: "The analysis excludes grid-integration, transmission, congestion, curtailment, intermittency, permitting and environmental-externality costs; it is a U.S. snapshot and explicitly not a forecasting tool."
source_location: "p8, Introduction, 'Other factors...' caveat paragraph"Neobiome Intelligence relevance
What this source adds. Lazard LCOE+ v17.0 is the global investment-bank reference set that sits one tier above the NI energy skill’s NZ-recalibrated cost layer. It does three jobs:
-
Bookend validation of CAPEX assumptions. The per-kW generation CAPEX (utility PV USD 850-1,400/kW; onshore wind USD 1,300-1,900/kW OT_033 p35-36) and per-kWh storage CAPEX (utility 4-hour USD 160-282/kWh; residential USD 984-1,406/kWh OT_033 p44) give the NI energy skill an independent US bound to cross-check against the IRENA Oceania anchor (RD_003) and NZ installer quotes (CR_008). The residential-vs-utility per-kWh spread (~3-6x OT_033 p44) is the same household-scale penalty the interviewee flagged qualitatively in INT_002 — Lazard quantifies it.
-
A reusable WACC/capital-structure methodology. Lazard’s fully-worked sample calculation (p34) and its explicit base-case capital structure — 60% debt at 8%, 40% equity at 12%, 7.7% after-tax WACC for generation; 20% debt / 80% equity for storage OT_033 p9, p20, p43 — is directly transplantable. The NI Lower Moutere worked example needs only to swap NZ debt rates (~6-7%) and equity expectations into this structure. The cost-of-capital sensitivity table (p13) shows the magnitude of that swap: utility PV LCOE swings from USD 40 to USD 59/MWh across a 4.2%-10% WACC range OT_033 p13 — i.e. the WACC choice dominates the result, which is precisely the gap RT_110 flags for NZ.
-
Conventional-vs-renewable comparison frame. The unsubsidised ranges (utility PV USD 29-92/MWh vs gas combined cycle USD 45-108/MWh OT_033 p9) and the firming-cost analysis (p15) provide the “is community renewable competitive?” benchmark that lit_002 (NZ microgrids) and cr_007 (Totarabank) answer in NZ-specific terms.
Critical caveats for the NI tool. (a) All figures are U.S. unsubsidised dollars — they exclude the IRA tax credits Lazard models separately (p10) and have no NZ equivalence; do not paste any /MWh or /kW figure into an NZ calculation without recalibration. (b) The report excludes intermittency, grid-integration, transmission and curtailment costs (p8) — these are exactly the costs that dominate a self-sufficient off-grid or weak-grid community, so Lazard LCOE understates true community-system cost. (c) It is a snapshot, not a forecast (p8). (d) The storage CAPEX is a 90%-DoD, 350-cycle/year, 20-year-life utility duty cycle OT_033 p42-44 — a community island microgrid may cycle differently, changing the per-MWh economics.
Research targets
Documents to retrieve
- (none new) — Lazard publishes the underlying model assumptions inline (p34-44); no separate methodology document is referenced that warrants retrieval.
Research gaps
- NZ recalibration of the Lazard WACC structure (extends RT_110): apply Lazard’s 60/40 debt-equity generation structure and 20/80 storage structure to NZ-actual debt costs (~6-7%) and confirm the resulting LCOE delta against the p13 sensitivity band. Currently open under RT_110.
- NZ community-scale storage duty cycle vs Lazard’s 350-cycle/90%-DoD utility assumption (RT_150) — an islanded community microgrid may cycle batteries more deeply/frequently than Lazard’s utility profile, which would raise per-MWh LCOS above the USD 170-296/MWh utility band.
- Quantified cost of firming intermittency for a NZ weak-grid or off-grid community (RT_151) — Lazard’s ELCC/Net CONE firming framework (p15) is US-ISO specific; NZ has no equivalent ELCC publication, leaving the single largest excluded cost category unquantified for NI community designs.
Connections
Links to
Referenced by
EDT domains (1): D01: Renewable Energy & Storage Systems
Sources (1): OT_115
SSI indicators (1): I01: Financial & Economic Self-Sufficiency