Global LCOE projection by key country 2015-2020

The levelized cost of electricity (LCOE) varies around the world and was about 23 U.S. cents in 2015 in the United Kingdom, compared to 10 cents in India. The LCOE is calculated by using the average cost to build and operate a power plant divided by its total power output over its lifetime. It is a measure of comparison between different electricity generation methods that have varying life spans, sizes, costs, and capacities. LCOEs are used to make an informed decision on the economic feasibility of energy projects in comparison to utility rates. For example, most renewable energy projects have no fuel costs (with the exception of biomass).

Cost of renewables

The falling cost of renewables has prompted a global shift towards using renewable sources for energy generation. Most notably, the average cost of solar and wind power technologies is expected to continue to decrease. The costs of installing offshore wind are also encouraging countries with the resource potential to put more into the market. Other less mainstream energy sources, like geothermal energy have experienced more of a fluctuation in costs as development spending varies.