Lazard’s Levelized Cost of Storage Analysis – Version 3.0

By Lazard for DOE, Lazard and Enovation Partners estimates

What Is Lazard’s Levelized Cost of Storage Analysis (LCOS)?

  • It clearly defines a set of use cases in terms of output and operating characteristics (e.g., number of charging cycles, depth of discharge, etc.)
  • Lazard’s LCOS study analyzes the observed costs and revenue streams associated with the leading energy storage technologies and provides an overview of illustrative project returns; the LCOS is focused on providing a robust, empirically based indication of actual cash costs and revenues associated with leading energy storage technologies
  • It does not purport to measure the full set of potential benefits associated with energy storage to Industry participants or society, but merely those demonstrable in the form of strictly financial measures of observable costs and revenues
  • It applies a transparent set of financial and operating assumptions provided by industry participants across a range of commonly employed energy storage technologies to calculate the levelized cost of each
  • In addition, the study surveys the range of identifiable revenue streams available to energy storage projects

What the LCOS Does

  • Defines operational parameters associated with energy storage systems
    designed for a selected subset of the most prevalent use cases of storage
  • Aggregates cost and operational survey data from original equipment
    manufacturers and energy storage developers, after validation from
    additional Industry participants/energy storage users
  • Analyzes, based on the installed cost, what revenue is required over the
    indicated project life to achieve certain levelized returns for various
    technologies, designed for a selected subset of identified use cases
  • Provides an “apples-to-apples” basis of comparison among various
    technologies within a selected subset of identified use cases
  • Aggregates robust survey data to define a range of future/expected capital
    cost decreases by technology
  • Surveys currently available, pecuniary revenue streams associated with
    each use case across selected geographies
  • Profiles the economics of typical examples of each use case, located in
    geographic regions where they are most common, providing a Value
    Snapshot of the associated financial returns

What the LCOS Does Not Do

  • Identify the full range of use cases for energy storage, including “stacked”
    use cases (i.e., those in which multiple value streams are obtainable from a
    single storage installation)
  • Profile all potentially viable energy storage technologies and use cases
  • Authoritatively establish or predict prices for energy storage
  • Provide parameter values which, by themselves, are applicable to detailed
    project evaluation or resource planning
  • Identify and quantify all potential types of benefits provided by energy
    storage for power grids or consumers
  • Provide a definitive view of project profitability, overall or to specific
    individuals/entities, for the various use cases across all potential locations
    and specific circumstances
  • Purport to provide an “apples-to-apples” comparison to conventional or
    renewable electric generation