– New study complements annual Levelized Cost of Energy Analysis
(LCOE 9.0) –
– LCOE 9.0 finds continued decline in renewable energy costs –
– LCOS 1.0 finds power grid storage applications positioned to drive
lower costs –
Lazard Ltd (NYSE: LAZ) today launched the first Levelized Cost of
Storage Analysis (LCOS 1.0), an in-depth study comparing the costs of
various energy storage technologies for particular uses.
LCOS 1.0, conducted with support from Enovation Partners, is being
released in tandem with Lazard’s latest annual Levelized Cost of Energy
Analysis (LCOE 9.0), which analyzes the costs of generating electricity
from conventional and alternative technologies.
“Although in its formative stages, the energy storage industry appears
to be at an inflection point, much like that experienced by the
renewable energy industry around the time we created the LCOE study
eight years ago,” said George Bilicic, Vice Chairman and Global Head of
Lazard’s Power, Energy & Infrastructure Group. “Based on our analysis of
storage technologies and our experience with LCOE, we expect to see
rapid declines in the costs of energy storage.”
LCOS 1.0 is an analytically rigorous study of the major energy storage
technologies in the context of their various uses, from large-scale,
power grid-oriented applications to small-scale, residential
applications. Its purpose is to compare the cost-effectiveness of each
technology on an “apples to apples” basis within applications, and to
compare each application to conventional alternatives.
“Energy storage system manufacturers and customers told us they expect
to achieve significant price decreases over the next five to seven
years,” said Jonathan Mir, Head of Lazard’s North American Power Group.
“Falling prices should in turn drive wider deployment, and spur further
innovation that could greatly expand the use of energy storage systems,
both on and off the power grid, including greater use of renewable
The two studies offer a variety of insights, including the following
The costs of generating electricity from all forms of renewable energy
continue to decline, especially in utility-scale solar photovoltaic
(PV) technology, where the median levelized cost has declined about
25% from one year ago.
Despite recent sharp declines in the market price of natural gas,
utility-scale solar and wind power remain cost-competitive complements
to traditional generation technologies, even without subsidies.
Rooftop solar PV technology is still not cost competitive without
significant subsidies, primarily due to higher installation costs.
However, the levelized cost of rooftop solar PV is expected to decline
in coming years, primarily as a result of more efficient installation
techniques, lower costs of capital and improved supply chains.
Even though alternative energy is increasingly cost-competitive and
storage technology holds great promise, alternative energy systems
alone will not be capable of meeting the baseload generation needs of
a developed economy for the foreseeable future. Therefore, the optimal
solution for many regions of the world is to use complementary
traditional and alternative energy resources in a diversified
Even without subsidies, certain storage technologies are already
cost-competitive with certain conventional alternatives (for example,
lithium-ion batteries for certain power grid support applications).
Other storage technologies are close to being cost-competitive in
other applications, and costs are expected to decline in coming years.
The transformational scenarios envisioned by some renewable energy
advocates – such as residential energy storage systems paired with
solar panels to take consumers “off the grid” – are still very
expensive without subsidies.
If industry projections materialize over the next five years,
cost-effective energy storage technologies will have increasingly
broad applications across the power grid, such as providing an
alternative to conventional gas-fired peaking plants in certain areas.
LCOS 1.0 and LCOE 9.0 reflect Lazard’s approach to long-term thought
leadership, commitment to the sectors in which it participates, and
focus on intellectual differentiation. The two studies are posted at www.lazard.com/insights.
Lazard’s Global Power, Energy & Infrastructure Group serves private and
public sector clients with advisory services regarding M&A, financing
and other strategic matters. The group is active in all areas of the
traditional and alternative energy industries, including regulated
utilities, independent power producers, alternative energy and
Lazard, one of the world's preeminent financial advisory and asset
management firms, operates from 43 cities across 27 countries in North
America, Europe, Asia, Australia, Central and South America. With
origins dating to 1848, the firm provides advice on mergers and
acquisitions, strategic matters, restructuring and capital structure,
capital raising and corporate finance, as well as asset management
services to corporations, partnerships, institutions, governments and
individuals. For more information on Lazard, please visit www.lazard.com.
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