Variable Factors Affecting the Trend of Photovoltaic LCOE

LCOE is the abbreviation of "Levelized Cost of Energy" in English and "Levelized Cost of Energy" in Chinese. It is generally measured in megawatt hours or kilowatt hours. As a quantitative indicator, LCOE was first used by foreign institutions to calculate the power generation costs of traditional energy projects such as thermal power, hydropower, and gas power, and was later expanded to the new energy industry.

This indicator is the power generation cost calculated after discounting the cost and power generation during the project life cycle at a certain discount rate, that is, the present value of the total cost during the project life cycle/the present value of the total power generation, which is usually compared with the electricity price. The comparison has certain guiding significance.

In the initial capital expenditure of the photovoltaic power generation system, in addition to the photovoltaic components, the hardware also includes brackets, inverters, feeders, etc. needed to build the power generation system, as well as non-system costs required in the initial stage of construction. Such as land development, various fees, and maintenance costs required during the system life cycle.

Due to the rapid decline in hardware costs, photovoltaics have reached parity or even lower LCOE with coal, natural gas and other petrochemical energy sources in many regions around the world.

In the future, the factors that will substantially affect the trend of photovoltaic LCOE in major markets are mainly divided into two aspects: one is the subsidy policy that affects the demand side; the other is the change in material prices on the supply side.