Concept 1 / 3
LCOE — Levelized Cost of Electricity
LCOE = s [ct/kWh] = sᵢ + s_fuel + s_o
1. Capital-related costs:
sᵢ = a · K_I / (P_el · z)
2. Annuity factor:
a = p·(1+p)ⁿ / ((1+p)ⁿ − 1)
- p = interest rate (e.g., 0.07 for 7%)
- n = lifetime in years
- Higher n → lower a (capital spread over more years)
3. Fuel cost:
s_fuel = K_f / (η_el · H_u)
- K_f = fuel price [€/kg]
- H_u = lower heating value [kWh/kg or MJ/kg]
4. O&M costs:
s_o = (K_personnel + K_service + K_insurance) / (P_el · z)
Key variable: z = full load hours [h/year]
- Higher z → lower LCOE (fixed costs spread over more kWh)
- Wind onshore Germany: ~1,800 h/year
- Wind offshore: ~3,500 h/year
- Solar Germany: ~1,000 h/year
- Hydro: ~4,000 h/year