LCOE represents the average net present cost of electricity generation for a power plant over its entire lifetime. It is effectively the minimum price at which a plant must sell its electricity to break even. The LCOE Formula
The calculation involves dividing the total lifecycle costs of a project by its total expected energy output, with both values discounted to their present value: levelized cost of energy
The is the primary metric used by energy economists and policymakers to compare the cost-competitiveness of different electricity generation technologies. LCOE represents the average net present cost of
As of 2025, LCOE data shows that renewables like solar and onshore wind have become the cheapest sources of new electricity generation globally, often outperforming traditional fossil fuels. 1. Understanding the LCOE Concept levelized cost of energy