LCOE, what does it mean?

LCOE “Levelized Cost of Energy” or “actualized cost of energy” represents all the costs of the installation (initial investment: CAPEX and annual operating expenses: OPEX) compared to the energy produced by the installation on a given period of time (duration of the contract or lifetime for example). This cost is usually given in monetary unit per kilowatt hour or megawatt hour.

The LCOE varies greatly depending on the technology and depending on the country, a difference of 1 to 8 for photovoltaic energy can result from a maximum which concerns installations combining a particularly expensive investment and a very low load factor, compared to a minimum. benefiting from an opposite situation (low cost of the investment, strong sunshine).

Note that the LCOE is the result of a forecast calculation based on several assumptions. It is not a cost actually recorded after a well-established period of operation; this real cost generally remains confidential. The LCOE is nevertheless used by investors to decide on the interest of a project, given the expected selling price of the electricity produced.