Changing Renewable LCOE Dynamics To Favour Big Companies: Report

Changing LCOE Dynamics To Favour Big Companies: Report

A latest report by Lazard on the Levelized Cost of Energy (LCOE) claimed that the changing dynamics of LCOE is the United States (US) is likely to benefit the larger companies. It said that the results of its LCOE analysis hinted that sizable and well capitlized companies can take advantage of the supply chain and other economies of scale. 

“The results of our Levelized Cost of Energy (“LCOE”) analysis reinforce what we observe across the Power, Energy & Infrastructure Industry—sizable and well-capitalized companies that can take advantage of supply chain and other economies of scale, and that have strong balance sheet support to weather fluctuations in the macro environment, will continue leading the build-out of new renewable energy assets. This is particularly true in a rising LCOE environment like what we have observed in this year’s analysis,” the Lazard report said. 

The report said that despite high end LCOE declines for selected renewable energy technologies, the low ends of our LCOE have increased for the first time ever, driven by the persistence of certain cost pressures (e.g., high interest rates, etc.). 

“These two phenomena result in tighter LCOE ranges (offsetting the significant range expansion observed last year) and relatively stable LCOE averages year-over-year. The persistence of elevated costs continues to reinforce the central theme noted above—sizable and well-capitalized companies that can take advantage of supply chain and other economies of scale, and that have strong balance sheet support to weather fluctuations in the macro environment, will continue leading the build-out of new renewable energy assets,” the report said.

The report said that despite the sustained cost-competitiveness of renewable energy technologies, diverse generation fleets will be required to meet baseload power needs over the long term. 

“This is particularly evident in today’s increasing power demand environment driven by, among other things, the rapid growth of artificial intelligence, data center deployment, reindustrialization, onshoring and electrification.”

Changing LCOE Dynamics To Favour Big Companies: Report