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Levelized Cost of Energy

Levelized cost of energy (LCOE) is a summary metric that combines the primary technology cost and performance parameters: capital expendituresoperating expenditures, and capacity factor. It is useful for discussing technology advances that yield future projections because it illustrates the combined effect of the primary cost and performance parameters in each of the Annual Technology Baseline (ATB) technology innovation scenarios. The Electricity ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons of technologies are made. LCOE accounts for the energy component of electric system planning and operation. It uses an assumed annual average capacity factor when spreading costs over the anticipated energy generation. Although LCOE accounts for many variables important to determining the competitiveness of building and operating a specific technology (e.g., upfront capital costs, capacity factor, and cost of financing), it does not necessarily demonstrate which technology in a given place and time would provide the lowest-cost option for the electric grid. Importantly, LCOE does not capture the economic value of a particular generation type to the system and therefore may not serve as an appropriate basis for comparing technologies. For example, LCOE ignores attributes that can vary significantly across different technologies—in terms of both capability and cost (e.g., ramping, startup, and shutdown)—that could be relevant for more-detailed evaluations of generator cost and value to the system. Such analysis is performed using electric sector models such as the Regional Energy Deployment System (ReEDS) model and corresponding analysis results such as the National Renewable Energy Laboratory's Standard Scenarios. The ATB calculates a before-tax LCOE, meaning the costs include both taxes and tax benefits. For more details, see the LCOE equations or (Short et al., 1995)

The 2024 ATB does not include calculation of LCOE or other related financial parameters for fossil-fueled technologies. Refer to the techno-economic studies of electricity generating plants described in the U.S. Department of Energy's Office of Fossil Energy and Carbon Management's Quality Guidelines for Energy Systems Studies documents (Theis, 2021) for analytic metrics it recommends as more appropriate to fossil energy technologies, applications, and industries.

Capital Expenditures

The following cost items are included in capital expenditures (CAPEX) for all technologies, unless otherwise noted. Individual technologies may include additional items as explained on the technology pages.

Inclusions in CAPEX

Balance-of-system/balance-of-plant costsAll other major plant components within the facility fence line needed to deliver electricity to the bulk power system 
Electrical infrastructure and interconnection costs (electrical interconnection, electronic, electrical infrastructure, and electrical)

Internal and control connections

On-site electrical equipment (e.g., switchyard)*

Power electronics

Generation equipment and infrastructure costs (civil works, generation equipment, other equipment, and support structure)

Plant construction

Power plant equipment

Grid connection costs

Distance-based spur line cost*

Transmission substation upgrades*

Network upgrades*

Installation and indirect costs

Distributable labor and materials


Startup and commissioning

Owners' costs

Development costs

Environmental studies and permitting


Legal fees

Preliminary feasibility and engineering studies

Property taxes during construction*

Site costs

Access roads*

Buildings for operation and maintenance*


Land acquisition*

Site preparation*


Underground utilities*

* Not included in distributed technologies (residential or commercial)

Specific components of CAPEX are defined as follows:

Overnight Capital Cost

Capital expenditures excluding construction period financing and excluding grid connection costs. Includes on-site electrical equipment (e.g., switchyard).

Grid Connection Costs

Starting in 2024, the ATB assumes grid connection costs (GCC) of $100/kilowatt (kW), in 2022$, for utility-scale technologies. The default GCC include typical costs for a spur line (short, radial transmission lines from generator to the bulk grid), point of interconnection, and nominal network upgrades. This is equal to the sum of the typical estimated cost to connect a new natural gas plant in most market regions in the United States reported in (Seel et al., 2023) (for completed and active projects), plus a 1-mile spur line (Ramasamy et al., 2022). These values are typical for a plant located near a load center. These costs have significant regional and site-specific variation, including within resource classes. These variations for wind and solar projects are modeled within the Renewable Energy Potential (reV) and ReEDS tools and are used to inform Standard Scenarios. ReEDS also includes a distance-based interconnection cost for pumped storage hydropower. The assumed GCC value in the 2024 ATB does not vary by resource class for all technologies except offshore wind. The ATB focuses on core technology improvements and does not incorporate these site-specific considerations for GCC. 

Offshore wind includes additional distance-based costs of spur lines over land, offshore wind plant export cable costs, and construction period transit costs.

Construction Finance Factor

Also referred to as construction finance cost. Portion of all-in capital cost associated with construction period financing. It is a function of construction duration, capital fraction during construction, and interest during construction.

Operating Expenditures

The following operating expenditures are included in operation and maintenance (O&M) expenditures for all technologies, unless otherwise noted. Individual technologies may include additional items as explained on the individual technology pages. For nuclear energy, see the technology page for what is specifically included in fixed and variable costs.

Inclusions in O&M

Fixed costs

Administrative fees

Administrative labor


Land lease payments*

Legal fees

Operating labor


Property taxes

Site security


Fixed cost componentsProject management
Maintenance costs

General maintenance

Scheduled maintenance over technical life

Unscheduled maintenance over technical life

Variable cost components

Consumables (e.g., water, chemicals, and catalysts)

Waste disposal (e.g., ash, slag, process wastes, and process byproducts not otherwise sold)

Maintenance componentsTransformers*
Replacement costsAnnualized present value of large component replacement over technical life
* Not included in distributed technologies (residential or commercial)
Capacity Factor

Capacity factor is generally defined as the ratio of actual annual output to output at rated capacity for an entire year, using a long-term average over the lifetime of an asset, without curtailment for renewable generation. The default capacity factors listed in the ATB data spreadsheet are meant to be representative—actual plant capacity factors will depend on many factors and power-plant-specific conditions. The annual capacity factor ignores specific operating behaviors such as ramping, startup, and shutdown that could be relevant for more-detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide capacity and flexibility services. These services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as ReEDS and in corresponding analysis results such as the Standard Scenarios.

Performance Metrics Inclusions

Key performance metrics such as capacity factor, heat rate, and carbon capture percentage can vary with real-world conditions. The table below captures these real-world phenomena included quantitatively, documented qualitatively, not included, or not applicable to each ATB metric. More information is available on the pages for each technology.

Effects Included in Performance Metrics

TechnologyMetricAmbient TemperatureWear and Tear Over TimeScheduled DowntimeUnscheduled DowntimeStartup and Ramping
Land-Based WindCapacity factorNot included explicitly; assumed air density: 1.225 kilograms per cubic meter (kg/m3)Included quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factor
Offshore WindCapacity factorNot included explicitly; assumed air density: 1.225 kg/m3Included quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factor
Distributed WindCapacity factorNot included explicitly; assumed air density: 1.225 kg/m3Included quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factorIncluded quantitatively through loss factor
Photovoltaics (all scales)Capacity factorIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyNot applicable
Concentrating Solar PowerCapacity factorIncluded quantitativelyNot includedNot includedNot includedNot included
GeothermalCapacity factorIncluded quantitativelyLost generation because of equipment maintenance is quantitatively included; resource degradation over time is not includedIncluded quantitativelyIncluded quantitativelyNot included
HydropowerCapacity factorIncluded qualitativelyIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyIncluded qualitatively
Utility-Scale PV-Plus-BatteryCapacity factorSee photovoltaicsSee photovoltaicsSee photovoltaicsSee photovoltaicsSee photovoltaics
Battery Storage (all scales)Round-trip efficiencyNot includedQualitatively included via fixed O&MNot includedNot includedNot applicable
Pumped Storage HydropowerRound-trip efficiencyNot includedIncluded quantitatively via fixed O&MIncluded quantitatively via fixed O&MIncluded quantitatively via fixed O&MIncluded quantitatively via fixed O&M
Natural Gas and CoalHeat rateAnnual average included quantitatively in design basis Included in variable O&M via maintenance materialsIncluded quantitativelyIncluded quantitativelyIncluded quantitatively
Natural Gas and CoalCarbon capture percentageAnnual average included quantitatively in design basisIncluded in variable O&M via maintenance materialsIncluded quantitativelyIncluded quantitativelyIncluded quantitatively
NuclearCapacity factorNot applicableIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyIncluded quantitatively
NuclearHeat rateNot applicableIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyIncluded quantitatively
BiopowerCapacity factorNot applicableIncluded quantitativelyIncluded quantitativelyIncluded quantitativelyIncluded quantitatively
BiopowerHeat rateNot includedIt is assumed regular maintenance will address thisNot applicableNot applicableNot included

Other Data Dimensions


Base Year

2022 is the base year for the 2024 ATB because this is the year for which sufficient historical data are available. Sources for the Base Year include cost and performance estimates from published, regularly updated sources or methods. If estimates are not based directly on market data, they are compared with market observations as possible.

Projected Years

2022–2050 is the range of 2024 ATB projections. Projections are based on trend lines between historical data and long-term (2030 or 2035 and 2050) estimated costs. For most technologies, the Base Year (2022) is the final year of historical data; see below for an explanation of 2022 costs. Near-term values in the ATB do not reflect every local or near-term market condition. The long-term ATB projections are not informed by recent changes.

Dollar Year

All monetary values are in 2022 USD based on the Consumer Price Index for All Urban Consumers (BLS, 2024) for dollar year conversions, where the publication source year dollars do not match 2022 unless noted otherwise. Prices are not rigorously distinguished from costs.

Technology Innovation Scenarios

The three technology innovation scenarios are generally described as follows:

Conservative Scenario

Historical investments come to market with continued industrial learning. Technology looks similar to today, with few changes from technology innovation. Public and private research and development (R&D) investment decreases.

Moderate Scenario

Innovations observed in today's market become more widespread, and innovations nearly market-ready today come into the market. Current levels of public and private R&D investment continue. This scenario may be considered the expected level of technology innovation.

Advanced Scenario

Innovations far from market-ready today are successful and become widespread in the market. New technology architectures could look different from those observed today. Public and private R&D investment increases.

For nuclear and biopower technologies, technology cost designations appearing in ATB tables and figures refer to technology assumptions and the range of fuel price projections as described on their respective technology pages.

Financial Assumptions Cases

Financial assumptions impact LCOE by changing the cost of capital needed to finance electricity generation projects. Two project finance structures are used within the ATB: an R&D Only Financial Assumptions Case (R&D Only Case) and a Market + Policies Financial Assumptions Case (Market + Policies Case).

R&D Only Case

This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect the effects of R&D on technological risk perception, but it holds background rates constant and excludes effects of tax reform and tax credits. See financial assumptions cases and methods for details. 

Market + Policies Case

This sensitivity case retains the technology-specific changes to debt interest and return on equity rates from the R&D Only Case and incorporates the effects of the tax credits in the Inflation Reduction Act of 2022. See financial assumptions cases and methods for details.

Cost Recovery Period

An important assumption for computing LCOE is the assumption about the period over which the electricity generation plant's cost and performance are levelized. In the ATB, this period is defined as the cost recovery period, and it represents the period over which the initial capital investment to build a plant is recovered. Three options are available for the cost recovery period. Use the chart below to explore the effects of the cost recovery period.

The technical life for each technology is shown in the following table. A technical life longer than the cost recovery period means residual value may be left after costs have been recovered. The value of a 30-year life is justified by current industry trends, such as for wind technologies. However, ReEDS continues to use a 20-year cost recovery period for all generating technologies regardless of their technical life.

Technical Lifetimes for Technologies

TechnologyTechnical Life (years)
Land-based wind30
Offshore wind30
Distributed wind30
Solar: Utility-scale PV30
Solar: Distributed commercial PV30
Solar: Distributed residential PV30
Solar: Concentrating solar power30
Utility-scale PV-plus-battery30†
Utility-scale battery storage*15
Commercial battery storage*15
Residential battery storage*15
Pumped storage hydropower*100
Natural gas*30

* Although LCOE is not computed for energy storage or fossil technologies, design technical life is included here for comparison.

† A project life of 30 years for PV-plus-battery assumes replacing all battery cells at year 15 (Cole and Karmakar, 2023).

Technology Detail Assumptions

Technology Detail

Technology details indicate resource levels and specific technology subcategories. Minima and maxima show the range of resource- and technology-specific values. For renewable technologies, ranges span resource characteristics available within the contiguous United States.

Representative Value

The ATB plant characteristics (and associated resource quality) that most closely align with recently installed or anticipated near-term installations of electricity generation plants are defined as the representative value. The representative value for renewable technologies is calculated based on the resource quality used in recent or near-future plants in the Base Year, in combination with the technology cost and performance and financial assumptions indicated. For coal and natural gas technologies, only technology cost and performance are indicated. The technology detail plant characteristics selected as representative values are as follows (see individual technology pages for descriptions of ATB representative plant characteristics):

Technology Maturity

Technology details can be classified as mature or nascent. Technology details are defined as mature if a representative plant is operating or under construction in the United States in the Base Year. In the data master spreadsheet, mature technology details are marked with "Y" in the maturity column, and nascent details are marked with "N." 

Standard Assumptions (unless otherwise noted on specific technology pages)

Labor cost

Labor costs are the average of union and nonunion labor rates.

Regional Cost Variation

Capital costs represent a national average benchmark. Regional variations are not applied.

Materials Cost Index

Materials costs are given in 2022 USD, based on the Consumer Price Index for All Urban Consumers (BLS, 2024) for dollar year conversions.

Scale of Industry

Technology costs assume fully mature and industrialized supply chain and that manufacturing capacity for a given technology and economies of scale are reached.

Policies and Regulations

Financial assumptions include financial effects of selected laws and regulatory regimes currently in effect.


All values are given in 2022 USD, using the Consumer Price Index for All Urban Consumers (BLS, 2024) for dollar year conversions where the source year dollars do not match 2022. Financial calculations for projections use an inflation assumption when converting between nominal and real interest rates. This value is assumed to be 2.5% in the R&D case, and the same value is used for 2024 through 2050 in the Markets + Policies Case. Other years are reflected in the following table.

Commercial Operation YearProject Life Average Value

Though inflation may be higher or lower in any particular year, these values represent average inflation over the life of the project.


Capital Regional Multiplier (CapRegMult)

Regional multipliers are not used in the ATB, but they are often applied in modeling tools such as ReEDS. For regional capital cost multipliers for the United States, see the ReEDS model documentation (Ho et al., 2021).

Construction Finance Factor (ConFinFactor)

This factor is applied to an overnight capital cost to represent the financing costs incurred during the construction period. In the calculation of construction finance factor in the ATB spreadsheet, year index 0 is closest to the plant's commercial operation date, and the highest year number corresponds to the start of construction.


See the following links for the disclaimer agreement and a guide to technical limitations.


The following references are specific to this page; for all references in this ATB, see References.

Short, W., D.J. Packey, and T. Holt. “A Manual for the Economic Evaluation of Energy Efficiency and Renewable Energy Technologies,” March 1, 1995.

Theis, Joel. “Quality Guidelines for Energy Systems Studies: Cost Estimation Methodology for NETL Assessments of Power Plant Performance.” National Energy Technology Laboratory, February 2021.

Seel, Joachim, Julie Mulvaney Kemp, Joseph Rand, Will Gorman, Dev Millstein, Fritz Kahrl, and Ryan H. Wiser. “Generator Interconnection Costs to the Transmission System.” Lawrence Berkeley National Laboratory, 2023.

Ramasamy, Vignesh, Jarett Zuboy, Eric O’Shaughnessy, David Feldman, Jal Desai, Michael Woodhouse, Paul Basore, and Robert Margolis. “U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2022.” Golden, CO: National Renewable Energy Laboratory, 2022.

BLS. “CPI for All Urban Consumers (CPI-U).” U.S. Bureau of Labor Statistics, 2024.

Cole, Wesley, and Akash Karmakar. “Cost Projections for Utility-Scale Battery Storage: 2023 Update.” Golden, CO: National Renewable Energy Laboratory, 2023.

Ho, Jonathan, Jonathon Becker, Maxwell Brown, Patrick Brown, Ilya (ORCID:0000000284917814) Chernyakhovskiy, Stuart Cohen, Wesley (ORCID:000000029194065X) Cole, et al. “Regional Energy Deployment System (ReEDS) Model Documentation: Version 2020.” Golden, CO: National Renewable Energy Laboratory, June 9, 2021.

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