Levelized Cost of Energy (LCOE) is the average cost per unit of electricity produced over a project's lifetime, expressed in $/MWh (or $/kWh). It accounts for all capital, financing, and operating costs divided by total lifetime generation — making it the standard metric for comparing different energy sources.

What is a good capacity factor for solar or wind?

Utility-scale solar PV typically achieves 15–30% capacity factor depending on location. Onshore wind ranges from 25–45%, and offshore wind from 35–55%. Higher capacity factors lower the LCOE because the same capital cost is spread over more kWh.

What discount rate should I use?

The discount rate reflects the weighted average cost of capital (WACC). Utility-scale renewables in the US typically use 5–8%. Higher-risk projects or developing markets may use 10–15%. A lower discount rate favors capital-intensive projects like solar and wind.

Does LCOE include fuel costs?

For renewables like solar and wind, fuel cost is zero. For gas or coal plants, fuel cost is a major component of O&M. This calculator uses separate capital cost and O&M inputs, so you can model both renewables and thermal plants by entering the appropriate values.

What does the capital recovery factor (CRF) do?

The CRF converts the upfront capital cost into an equivalent annual payment, like an annuity. It combines the discount rate and project lifetime: CRF = r(1+r)^n / ((1+r)^n - 1). Multiplying CapEx by CRF gives the annual cost of capital that must be recovered from electricity sales.

Why does my LCOE differ from published benchmarks?

Published LCOE numbers (e.g. from NREL or Lazard) include project-specific tax incentives (ITC/PTC), regional labor costs, and detailed financing structures. This calculator uses a simplified formula without tax credits. Subtract applicable incentives from capital cost to approximate after-incentive LCOE.

Levelized Cost of Energy Calculator

Name: Levelized Cost of Energy Calculator
Availability: InStock
Author: Nham Vu

Enter capital cost, discount rate, capacity factor, O&M costs, and project lifetime to calculate LCOE in $/MWh for any power generation project.

Project Parameters

Quick Preset

Total Capital Cost (USD)

Overnight installed cost of the entire project

Installed Capacity (kW)

Nameplate power output of the plant

Capacity Factor (%)

Average fraction of nameplate power actually generated

Fixed O&M Cost ($/kW/year)

Annual operations & maintenance per kW of capacity

Discount Rate / WACC (%)

Weighted average cost of capital for project financing

Project Lifetime (years)

Expected operational life of the plant

Result

Fill in the parameters and click Calculate LCOE.

Summary

Enter capital cost, discount rate, capacity factor, O&M costs, and project lifetime to calculate LCOE in $/MWh for any power generation project.

How it works

Enter the total overnight capital cost of the project in USD (e.g. $1,000,000 for a 1 MW solar farm).
Set the installed capacity in kilowatts (kW) and the capacity factor — the fraction of time the plant runs at full power.
Enter the annual fixed O&M cost (operations and maintenance) in $/kW/year.
Set the discount rate (WACC) representing the cost of capital and the project lifetime in years.
The calculator applies the LCOE formula: present value of total costs divided by present value of total electricity generated, expressed in $/MWh.

Use cases

Compare the economics of solar PV vs. wind vs. gas peaker on a common $/MWh basis.
Evaluate whether a proposed renewable project beats the current grid electricity price.
Perform sensitivity analysis on how discount rate and capacity factor affect project viability.
Screen early-stage project proposals with quick back-of-envelope LCOE estimates.
Understand how O&M costs and project lifetime affect long-run energy costs.
Prepare inputs for an investor presentation or project finance model.

Frequently Asked Questions

Last updated: 2026-07-04 · Reviewed by Nham Vu

Capital Recovery Factor (CRF)
Annualized Capital Cost
Annual O&M Cost
Annual Generation
Specific Capital Cost
LCOE