Assumptions and the levelized cost of energy for photovoltaics

Photovoltaic electricity is a rapidly growing renewable energy source and will ultimately assume a major role in global energy production. The cost of solar-generated electricity is typically compared to electricity produced by traditional sources with a levelized cost of energy (LCOE) calculation. Generally, LCOE is treated as a definite number and the assumptions lying beneath that result are rarely reported or even understood. Here we shed light on some of the key assumptions and offer a new approach to calculating LCOE for photovoltaics based on input parameter distributions feeding a Monte Carlo simulation. In this framework, the influence of assumptions and confidence intervals becomes clear.

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