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1、Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed withou
2、t the prior consent of Lazard.With support fromA P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopie
3、d or duplicated in any form by any means or redistributed without the prior consent of Lazard.Table of Contents ILAZARDS LEVELIZED COST OF ENERGY ANALYSISVERSION 16.01IILAZARDS LEVELIZED COST OF STORAGE ANALYSISVERSION 8.015IIILAZARDS LEVELIZED COST OF HYDROGEN ANALYSISVERSION 3.024APPENDIX AMaturin
4、g Technologies291Carbon Capture&Storage Systems302Long Duration Energy Storage33BLCOE v16.036CLCOS v8.041DLCOH v3.043A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,finan
5、cial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.ILazards Levelized Cost of Energy AnalysisVersion 16.0A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for
6、general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Introduction I L A Z A R D S L E V
7、E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Lazards Levelized Cost of Energy(“LCOE”)analysis addresses the following topics:Comparative LCOE analysis for various generation technologies on a$/MWh basis,including sensitivities for U.S.federal tax subsidies,fuel prices,carbo
8、n pricing and cost of capitalIllustration of how the LCOE of onshore wind,utility-scale solar and hybrid projects compare to the marginal cost of selected conventional generation technologies Illustration of how the LCOE of onshore wind,utility-scale solar and hybrid projects,plus the cost of firmin
9、g intermittency in various regions,compares to the LCOE of selected conventional generation technologiesHistorical LCOE comparison of various utility-scale generation technologies Illustration of the historical LCOE declines for onshore wind and utility-scale solar technologiesComparison of capital
10、costs on a$/kW basis for various generation technologiesDeconstruction of the LCOE for various generation technologies by capital cost,fixed operations and maintenance(“O&M”)expense,variable O&M expense and fuel costConsiderations regarding the operating characteristics and applications of various g
11、eneration technologiesAppendix materials,including:An overview of the methodology utilized to prepare Lazards LCOE analysis A summary of the assumptions utilized in Lazards LCOE analysisOther factors would also have a potentially significant effect on the results contained herein,but have not been e
12、xamined in the scope of this current analysis.These additional factors,among others,could include:implementation and interpretation of the full scope of the Inflation Reduction Act(“IRA”);network upgrades,transmission,congestion or other integration-related costs;permitting or other development cost
13、s,unless otherwise noted;and costs of complying with various environmental regulations(e.g.,carbon emissions offsets or emissions control systems).This analysis also does not address potential social and environmental externalities,including,for example,the social costs and rate consequences for tho
14、se who cannot afford distributed generation solutions,as well as the long-term residual and societal consequences of various conventional generation technologies that are difficult to measure(e.g.,nuclear waste disposal,airborne pollutants,greenhouse gases,etc.)Note:This report has been compiled usi
15、ng U.S.-focused data.1Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means o
16、r redistributed without the prior consent of Lazard.$117$49$24$46$61$24$42$72$115$141$68$39$282$185$96$102$102$75$114$140$221$221$166$101$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWin
17、d+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined Cycle(2)I L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Levelized Cost of Energy ComparisonUnsubsidized Analysis$52(4)$62(4)Selected renewable energy generation technologies are cost-competiti
18、ve with conventional generation technologies under certain circumstances(2)(1)$31(4)$116(6)$156(7)(5)(3)Source:Lazard and Roland Berger estimates and publicly available information.Note:Here and throughout this presentation,unless otherwise indicated,the analysis assumes 60%debt at an 8%interest rat
19、e and 40%equity at a 12%cost.See page titled“Levelized Cost of Energy ComparisonSensitivity to Cost of Capital”for cost of capital sensitivities.(1)Given the limited data set available for new-build geothermal projects,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for infl
20、ation.(2)The fuel cost assumption for Lazards unsubsidized analysis for gas-fired generation resources is$3.45/MMBTU for year-over-year comparison purposes.See page titled“Levelized Cost of Energy ComparisonSensitivity to Fuel Prices”for fuel price sensitivities.(3)Given the limited public and/or ob
21、servable data set available for new-build nuclear projects and the emerging range of new nuclear generation strategies,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation(results are based on then-estimated costs of the Vogtle Plant and are U.S.-focused).(4)Represe
22、nts the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle,coal and nuclear facilities,inclusive of decommissioning costs for nuclear facilities.Analysis assumes that the salvage value for a decommissioned gas combined cycle or coal asset is equivalent to it
23、s decommissioning and site restoration costs.Inputs are derived from a benchmark of operating gas combined cycle,coal and nuclear assets across the U.S.Capacity factors,fuel,variable and fixed operating expenses are based on upper-and lower-quartile estimates derived from Lazards research.See page t
24、itled“Levelized Cost of Energy ComparisonRenewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies”for additional details.(5)Given the limited public and/or observable data set available for new-build coal projects,the LCOE presented herein represents Lazards LC
25、OE v15.0 results adjusted for inflation.High end incorporates 90%carbon capture and storage(“CCS”).Does not include cost of transportation and storage.(6)Represents the LCOE of the observed high case gas combined cycle inputs using a 20%blend of“Blue”hydrogen,(i.e.,hydrogen produced from a steam-met
26、hane reformer,using natural gas as a feedstock,and sequestering the resulting CO2in a nearby saline aquifer).No plant modifications are assumed beyond a 2%adjustment to the plants heat rate.The corresponding fuel cost is$5.20/MMBTU,assuming$1.40/kg for Blue hydrogen.(7)Represents the LCOE of the obs
27、erved high case gas combined cycle inputs using a 20%blend of“Green”hydrogen,(i.e.,hydrogen produced from an electrolyzer powered by a mix of wind and solar generation and stored in a nearby salt cavern).No plant modifications are assumed beyond a 2%adjustment to the plants heat rate.The correspondi
28、ng fuel cost is$10.05/MMBTU,assuming$4.15/kg for Green hydrogen.Levelized Cost of Energy($/MWh)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas Peaking(2)Nuclear(3)Coal(5)Gas Combined Cycle(2)
29、2Renewable EnergyConventionalCopyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any
30、means or redistributed without the prior consent of Lazard.$117$74$49$32$24$16$24$0$46$31$61$37$24$0$42$12$72$56$282$229$185$155$96$80$96$77$102$88$102$87$75$66$114$103$140$114$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-Scale(ITC)Sol
31、ar PVUtility-Scale(PTC)Solar PV+StorageUtility-Scale(ITC)GeothermalWindOnshore(PTC)Wind+StorageOnshore(PTC/ITC)Offshore WindUnsubsidizedLevelized Cost of Energy ComparisonSensitivity to U.S.Federal Tax SubsidiesI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1
32、 6.0Subsidized(excl.Domestic Content)(3)Subsidized(incl.Domestic Content)(4)(1)(1)Source:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise indicated,this analysis does not include other state or federal subsidies(e.g.,energy community adder,etc.).The IRA is
33、comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes.(1)Results at this level are driven by Lazards approach to calculating the LCOE and selected inputs(see Appendix for
34、 further details).Lazards Unsubsidized LCOE analysis assumes,for year-over-year reference purposes,60%debt at an 8%interest rate and 40%equity at a 12%cost(together implying an after-tax IRR/WACC of 7.7%).Implied IRRs at this level for Solar PVUtility-Scale(PTC)equals 17%(excl.Domestic Content)and 2
35、2%(incl.Domestic Content)and implied IRRs at this level for WindOnshore(PTC)equals 17%(excl.Domestic Content)and 25%(incl.Domestic Content).(2)Given the limited public and/or observable data set available for new-build geothermal projects,the LCOE presented herein represents Lazards LCOE v15.0 resul
36、ts adjustment for inflation.(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity,debt and tax equity.(4)This sensitivity analysis assumes the above and also includes a 10%domestic content adder.Levelized Cost of Ene
37、rgy($/MWh)(2)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-Scale(ITC)Solar PVUtility-Scale(PTC)Solar PV+StorageUtility-Scale(ITC)Geothermal(2)WindOnshore(PTC)Wind+StorageOnshore(PTC/ITC)WindOffshore(PTC)The Investment Tax Credit(“ITC”),Production Tax Credit(“PTC”)and domestic conte
38、nt adder,among other provisions in the IRA,are important components of the levelized cost of renewable energy generation technologies3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,finan
39、cial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.$117$49$24$46$61$24$42$72$105$138$64$33$282$185$96$102$102$75$114$140$229$223$171$108$0$25$50$75$100$125$150$175$200$225$250$275$300Sola
40、r PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined CycleLevelized Cost of Energy ComparisonSensitivity to Fuel Prices I L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y
41、A N A L Y S I S V E R S I O N 1 6.0Variations in fuel prices can materially affect the LCOE of conventional generation technologies,but direct comparisons to“competing”renewable energy generation technologies must take into account issues such as dispatch characteristics(e.g.,baseload and/or dispatc
42、hable intermediate capacity vs.peaking or intermittent technologies)Unsubsidized 25%Fuel Price AdjustmentSource:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise noted,the assumptions used in this sensitivity correspond to those used in the unsubsidized anal
43、ysis as presented on the page titled“Levelized Cost of Energy ComparisonUnsubsidized Analysis”.(1)Given the limited public and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE presented herein rep
44、resents Lazards LCOE v15.0 results adjusted for inflation and,for nuclear,are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.(2)Assumes a fuel cost range for gas-fired generation resources of$2.59/MMBTU$4.31/MMBTU(representing a sensitivity range of 25%of the$3.45/MMBTU used
45、in the Unsubsidized Analysis).(3)Assumes a fuel cost range for nuclear generation resources of$0.64/MMBTU$1.06/MMBTU(representing a sensitivity range of 25%of the$0.85MMBTU used in the Unsubsidized Analysis).(4)Assumes a fuel cost range for coal-fired generation resources of$1.10/MMBTU$1.84/MMBTU(re
46、presenting a sensitivity range of 25%of the$1.47/MMBTU used in the Unsubsidized Analysis).Levelized Cost of Energy($/MWh)Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas Peaking(2)Nuclear(1)(3
47、)Coal(1)(4)Gas Combined Cycle(2)4Renewable EnergyConventionalCopyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied o
48、r duplicated in any form by any means or redistributed without the prior consent of Lazard.$117$49$24$46$61$24$42$72$115$126$141$68$86$39$46$282$185$96$102$102$75$114$140$221$240$221$166$171$101$118$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop Residential Solar PVCommunity&C&ISolar
49、PVUtilitySolar PV+StorageUtility Scale GeothermalWindOnshoreWind+StorageOnshoreWindOffshoreNuclearI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Levelized Cost of Energy ComparisonSensitivity to Carbon Pricing Carbon pricing is one avenue for policymaker
50、s to address carbon emissions;a carbon price range of$20$40/Ton of carbon would increase the LCOE for certain conventional generation technologies relative to those of onshore wind and utility-scale solarLevelized Cost of Energy($/MWh)Gas Peaking(1)Coal(1)(3)Gas Combined Cycle(1)(4)UnsubsidizedUnsub
51、sidized with Carbon PricingMarginal Cost without Carbon Pricing$52(4)$62(4)$31(4)$82(5)$99(6)Marginal Cost with Carbon PricingSource:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise noted,the assumptions used in this sensitivity correspond to those used in
52、the unsubsidized analysis as presented on the page titled“Levelized Cost of Energy ComparisonUnsubsidized Analysis”.(1)Given the limited public and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE
53、 presented herein represents Lazards LCOE v15.0 results adjusted for inflation and,for nuclear,are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.(2)The low and high ranges reflect the LCOE of selected conventional generation technologies including illustrative carbon prices
54、of$20/Ton and$40/Ton,respectively.(3)The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA(e.g.,nuclear subsidies)are not included in our analysis and could impact outcomes.(4)Represents the midpoint of the unsubsidize
55、d marginal cost of operating fully depreciated gas combined cycle,coal and nuclear facilities,inclusive of decommissioning costs for nuclear facilities.Analysis assumes that the salvage value for a decommissioned gas combined cycle or coal asset is equivalent to its decommissioning and site restorat
56、ion costs.Inputs are derived from a benchmark of operating gas combined cycle,coal and nuclear assets across the U.S.Capacity factors,fuel,variable and fixed operating expenses are based on upper-and lower-quartile estimates derived from Lazards research.See page titled“Levelized Cost of Energy Comp
57、arisonRenewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies”for additional details.(5)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated coal facilities with illustrative carbon pricing.Operating coal facilities are not
58、assumed to employ CCS technology.(6)Represents the midpoint of the unsubsidized marginal cost of operating fully depreciated gas combined cycle facilities with illustrative carbon pricing.Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)W
59、indOnshoreWind+StorageOnshoreWindOffshoreGas Peaking(2)Nuclear(1)(3)Coal(1)(2)Gas Combined Cycle(2)5Renewable EnergyConventionalCopyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial o
60、r other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.$66$71$76$82$88$94$45$49$54$60$66$72$41$44$47$50$53$57$85$95$106$117$128$140$61$64$67$70$74$77$136$146$157$168$179$192$124$142$160$180$201$222
61、$87$93$99$106$114$000$225LCOE($/MWh)Levelized Cost of Energy ComparisonSensitivity to Cost of CapitalI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0A key consideration in determining the LCOE values for utility-scale generation tech
62、nologies is the cost,and availability,of capital(1);this dynamic is particularly significant for renewable energy generation technologiesSource:Lazard and Roland Berger estimates and publicly available information.Note:Analysis assumes 60%debt and 40%equity.Unless otherwise noted,the assumptions use
63、d in this sensitivity correspond to those used on the page titled“Levelized Cost of Energy ComparisonUnsubsidized Analysis”.(1)Cost of capital as used herein indicates the cost of capital applicable to the asset/plant and not the cost of capital of a particular investor/owner.(2)Reflects the average
64、 of the high and low LCOE for each respective cost of capital assumption.Midpoint of Unsubsidized LCOE(2)Gas PeakingGeothermalCoalGas Combined CycleSolar PVUtility-Scale WindOnshoreAfter-Tax IRR/WACC4.2%5.4%6.5%7.7%8.8%10.0%Cost of Equity6.0%8.0%10.0%12.0%14.0%16.0%Cost of Debt5.0%6.0%7.0%8.0%9.0%10
65、.0%LCOE v16.0NuclearWindOffshore6Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by
66、any means or redistributed without the prior consent of Lazard.$24$46$16$0$31$24$42$0$12$29$29$51$96$102$80$77$88$75$114$66$103$34$74$73$0$10$20$30$40$50$60$70$80$90$100$110$120Levelized Cost of Energy($/MWh)I L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.
67、0Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of existing conventional generationSource:Lazard and Roland Berger estimates and publicly available information.Note:Unless otherwise noted,the assumptions used in this sensitivity correspond to
68、 those used on page titled“Levelized Cost of Energy ComparisonUnsubsidized Analysis”.(1)Represents the marginal cost of operating fully depreciated gas combined cycle,coal and nuclear facilities,inclusive of decommissioning costs for nuclear facilities.Analysis assumes that the salvage value for a d
69、ecommissioned gas combined cycle and coal asset is equivalent to its decommissioning and site restoration costs.Inputs are derived from a benchmark of operating gas combined cycle,coal and nuclear assets across the U.S.Capacity factors,fuel,variable and fixed O&M are based on upper-and lower-quartil
70、e estimates derived from Lazards research.Assumes a fuel cost of$0.79/MMBTU for Nuclear,$3.11/MMBTU for Coal and$6.85/MMBTU for Gas Combined Cycle.(2)See page titled“Levelized Cost of Energy ComparisonSensitivity to U.S.Federal Tax Subsidies”for additional details.(3)Results at this level are driven
71、 by Lazards approach to calculating the LCOE and selected inputs(see Appendix for further details).Lazards Unsubsidized LCOE analysis assumes,for year-over-year reference purposes,60%debt at an 8%interest rate and 40%equity at a 12%cost(together implying an after-tax IRR/WACC of 7.7%).Implied IRRs a
72、t this level for Solar PVUtility-Scale(PTC)equals 17%(excl.Domestic Content)and 22%(incl.Domestic Content)and implied IRRs at this level for WindOnshore(PTC)equals 17%(excl.Domestic Content)and 25%(incl.Domestic Content).(4)The IRA is comprehensive legislation that is still being implemented and rem
73、ains subject to interpretationimportant elements of the IRA(e.g.,nuclear subsidies)are not included in our analysis and could impact outcomes.Levelized Cost of Energy ComparisonRenewable Energy versus Marginal Cost of Selected Existing Conventional Generation TechnologiesUnsubsidized(3)SubsidizedMar
74、ginal Cost(3)$52$62Marginal Cost Midpoint without Carbon Pricing Solar PVUtility-ScaleSolar PV+StorageUtility-ScaleSolar PVUtility-Scale(ITC)(2)Solar PVUtility-Scale(PTC)(2)Solar PV+StorageUtility-Scale(ITC)(2)WindOnshoreWind+StorageOnshoreWindOnshore(PTC)(2)Wind+StorageOnshore(PTC/ITC)(2)Nuclear(4)
75、CoalGas Combined Cycle$317Levelized Cost of New-Build Wind and SolarMarginal Cost of Selected Existing Conventional Generation(1)Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial
76、or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Source:Lazard and Roland Berger estimates and publicly available information.(1)Firming costs reflect the additional capacity needed to suppl
77、ement the net capacity of the renewable resource(nameplate capacity*(1 ELCC)and the net cost of new entry(net“CONE”)of a new firm resource(capital and operating costs,less expected market revenues).Net CONE is assessed and published by grid operators for each regional market.Grid operators use a nat
78、ural gas CT as the assumed new resource in MISO($8.22/kW-mo),SPP($8.56/kW-mo)and PJM($10.20/kW-mo).In CAISO,the assumed new resource is a 4 hour lithium-ion battery storage system($18.92/kW-mo).For the PV+Storage cases in CAISO and PJM,assumed Storage configuration is 50%of PV MW and 4 hour duration
79、.(2)ELCC is an indicator of the reliability contribution of different resources to the electricity grid.The ELCC of a generation resource is based on its contribution to meeting peak electricity demand.For example,a 1 MW wind resource with a 15%ELCC provides 0.15 MW of capacity contribution and woul
80、d need to be supplemented with 0.85 MW of additional firm capacity in order to represent the addition of 1 MW of firm system capacity.(3)LCOE values represent the midpoint of Lazards LCOE v16.0 cost inputs for each technology adjusted for a regional capacity factor to demonstrate the regional differ
81、ences in both project and firming costs.(4)For PV+Storage cases,the effective ELCC value is represented.CAISO and PJM assess ELCC values separately for the PV and storage components of a system.Storage ELCC value is provided only for the capacity that can be charged directly by the accompanying reso
82、urce up to the energy required for a 4 hour discharge during peak load.Any capacity available in excess of the 4 hour maximum discharge is attributed to the system at the solar ELCC.ELCC values for storage range from 90%95%for CAISO and PJM.LCOE v16.0 Levelized Firming Cost($/MWh)(3)Levelized Cost o
83、f Energy ComparisonCost of Firming IntermittencyI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0The incremental cost to firm(1)intermittent resources varies regionally,depending on the current effective load carrying capability(“ELCC”)(2)values and the cu
84、rrent cost of adding new firming resourcescarbon pricing,not considered below,would have an impact on this analysis$54$35$42$18$43$28$67$47$60$43$51$33$36$11$57$37$88$62$46$24$82$63$64$41$141$126$117$97$132$115$60$42$55$30$102$82$110$84$77$5502550755200$225Levelized Cost of Energy($/MWh)L
85、azards Unsubsidized LCOEFirming CostSolarWindSolarPV+StorageWindSolarWindSolarPV+StorageWindELCC 50%16%7%51%(4)15%85%17%38%70%(4)15%Capacity Factor20%43%25%25%30%21%50%19%19%39%Resource Penetration3%25%32%32%19%1%56%5%5%7%MISOCAISOSPPPJMGas Peaking LCOE v16.0($115$221/MWh)Lazards Subsidized LCOEGas
86、Combined Cycle LCOE v16.0($39$101/MWh)(3)(3)(1)8Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated
87、in any form by any means or redistributed without the prior consent of Lazard.I L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Levelized Cost of Energy ComparisonHistorical Utility-Scale Generation ComparisonSelected Historical Mean Unsubsidized LCOE Value
88、s(1)Solar PVUtility-Scale(3)(83%)Lazards unsubsidized LCOE analysis indicates significant historical cost declines for utility-scale renewable energy generation technologies driven by,among other factors,decreasing capital costs,improving technologies and increased competition$359$248$157$125$98$79$
89、64$55$50$43$40$37$36$60$111$111$111$102$105$109$108$102$102$102$109$112$108$117$83$82$83$75$74$74$65$63$60$58$56$59$60$70$135$124$71$72$70$59$55$47$45$42$41$40$38$50$123$96$95$96$104$112$117$117$148$151$155$163$167$180$168$157$159$174$145$124$150$151$140$140$141$76$107$104$116$116$116$100$98$97$91$9
90、1$80$75$82$275$243$227$216$205$205$192$191$183$179$175$175$173$00260320$380200920000023Mean LCOE($/MWh)Gas Combined Cycle(15%)WindOnshore(63%)Nuclear47%Coal5%Solar ThermalTower(2)(16%)Gas Peaking(39%)Geothermal8%Source:Lazard and Roland Berger e
91、stimates and publicly available information.(1)Reflects the average of the high and low LCOE for each respective technology in each respective year.Percentages represent the total decrease in the average LCOE since Lazards LCOE v3.0.(2)The LCOE no longer analyzes solar thermal costs;percent decrease
92、 is as of Lazards LCOE v13.0.(3)Prior versions of Lazards LCOE divided Utility-Scale Solar PV into Thin Film and Crystalline subcategories.All values before Lazards LCOE v16.0 reflect those of the Solar PVCrystalline technology.LCOE Version3.04.05.06.07.08.09.010.011.012.013.014.015.016.0/9Copyright
93、 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the pri
94、or consent of Lazard.$323$226$148$101$91$72$58$49$46$40$36$31$30$24$394$270$166$149$104$86$70$61$53$46$44$42$41$96 0500300350400$4502009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023LCOE($/MWh)Levelized Cost of Energy ComparisonHistorical Renewable Energy LCOEI L A Z A
95、R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Even in the face of inflation and supply chain challenges,the LCOE of best-in-class onshore wind and utility-scale solar has declined at the low-end of our cost range,the reasons for which could catalyze ongoing conso
96、lidation across the sectoralthough the average LCOE has increased for the first time in the history of our studies Source:Lazard and Roland Berger estimates and publicly available information.(1)Represents the average percentage decrease/increase of the high end and low end of the LCOE range.(2)Repr
97、esents the average compounded annual rate of decline of the high end and low end of the LCOE range.LCOE Version3.04.05.06.07.08.09.010.0 11.0 12.0 13.0 14.0 15.0 16.0Utility-Scale Solar LCOE RangeUtility-Scale Solar LCOE MidpointUnsubsidized Onshore Wind LCOE$101$99$50$48$45$37$32$32$30$29$28$26$26$
98、24$169$148$92$95$95$81$77$62$60$56$54$54$50$75 050100150200$2502009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023LCOE($/MWh)Unsubsidized Solar PV LCOEOnshore Wind 2009 2023 Percentage Decrease/CAGR:(66%)(1)(8%)(2)Onshore Wind LCOE RangeOnshore Wind LCOE MidpointUtility-Scale Solar
99、 2009 2023 Percentage Decrease/CAGR:(84%)(1)(13%)(2)Onshore Wind 2016 2023 Percentage Decrease/CAGR:(2)%(1)(1%)(2)Utility-Scale Solar 2016 2023 Percentage Increase/CAGR:3%(1)(2%)(2)LCOE Version3.04.05.06.07.08.09.010.0 11.0 12.0 13.0 14.0 15.0 16.0/10Copyright 2023 Lazard This study has been prepare
100、d by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Levelized Cost of E
101、nergy ComparisonCapital Cost ComparisonI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0In some instances,the capital costs of renewable energy generation technologies have converged with those of certain conventional generation technologies,which coupled
102、with improvements in operational efficiency for renewable energy technologies,have led to a convergence in LCOE between the respective technologies$2,230$1,200$700$1,075$4,700$1,025$1,375$3,000$700$8,475$3,200$650$4,150$2,850$1,400$1,600$6,075$1,700$2,250$5,000$1,150$13,925$6,775$1,300$0$1,500$3,000
103、$4,500$6,000$7,500$9,000$10,500$12,000$13,500$15,000Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined CycleCapital Cost($/kW)Solar PVRooftop ResidentialSolar PVCommunity&C
104、&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclear(1)Coal(1)Gas Combined CycleSource:Lazard and Roland Berger estimates and publicly available information.Notes:Figures may not sum due to rounding.(1)Given the limited public
105、and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation and,for nuclear,are based on then-estimated costs of the Vogtle P
106、lant and are U.S.-focused.11Renewable EnergyConventionalCopyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or dup
107、licated in any form by any means or redistributed without the prior consent of Lazard.Levelized Cost of Energy ComponentsLow EndI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Certain renewable energy generation technologies are already cost-competitive w
108、ith conventional generation technologies;key factors regarding the continued cost decline of renewable energy generation technologies are the ability of technological development and industry scale to continue lowering operating expenses and capital costs for renewable energy generation technologies
109、$109$44$21$3751$20$33$59$72$113$47$14$9$5$3$8$2$4$8$12$5$15$5$1$9$4$4$3$3$34$9$13$21$117$49$24$46$61$24$42$72$115$141$68$39$0$25$50$75$100$125$150Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas Peakin
110、gNuclearCoalGas Combined CycleLevelized Cost($/MWh)Capital CostFixed O&MVariable O&MFuel CostSolar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclear(1)Coal(1)Gas Combined CycleSource:L
111、azard and Roland Berger estimates and publicly available information.Notes:Figures may not sum due to rounding.(1)Given the limited public and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE pres
112、ented herein represents Lazards LCOE v15.0 results adjusted for inflation and,for nuclear,are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.12Renewable EnergyConventionalCopyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and
113、it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.$268$172$85$76$76$62$84$120$169$190$127$66$14$14$11$26$2$13$30$20$19$17$16$
114、6$24$5$5$6$5$28$9$18$24$282$185$96$102$102$75$114$140$221$221$166$101$0$25$50$75$100$125$150$175$200$225$250$275$300Solar PVRooftop ResidentialSolar PVCommunity&C&ISolar PVUtilitySolar PV+StorageUtility ScaleGeothermalWindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclearCoalGas Combined Cycle
115、Levelized Cost($/MWh)Capital CostFixed O&MVariable O&MFuel CostLevelized Cost of Energy ComponentsHigh EndI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Certain renewable energy generation technologies are already cost-competitive with conventional gener
116、ation technologies;key factors regarding the continued cost decline of renewable energy generation technologies are the ability of technological development and industry scale to continue lowering operating expenses and capital costs for renewable energy generation technologiesSolar PVRooftop Reside
117、ntialSolar PVCommunity&C&ISolar PVUtility-ScaleSolar PV+StorageUtility-ScaleGeothermal(1)WindOnshoreWind+StorageOnshoreWindOffshoreGas PeakingNuclear(1)Coal(1)Gas Combined CycleRenewable EnergyConventionalSource:Lazard and Roland Berger estimates and publicly available information.Notes:Figures may
118、not sum due to rounding.(1)Given the limited public and/or observable data set available for new-build geothermal,coal and nuclear projects,and the emerging range of new nuclear generation strategies,the LCOE presented herein represents Lazards LCOE v15.0 results adjusted for inflation and,for nucle
119、ar,are based on then-estimated costs of the Vogtle Plant and are U.S.-focused.13Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be c
120、opied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Energy ResourcesMatrix of ApplicationsI L A Z A R D S L E V E L I Z E D C O S T O F E N E R G Y A N A L Y S I S V E R S I O N 1 6.0Despite convergence in the LCOE of certain renewable energy
121、 and conventional generation technologies,direct comparisons must take into account issues such as location(e.g.,centralized vs.distributed)and dispatch characteristics(e.g.,baseload and/or dispatchable intermediate capacity vs.peaking or intermittent technologies)Source:Lazard and Roland Berger est
122、imates and publicly available information.(1)Represents the full range of solar PV technologies.Carbon Neutral/REC PotentialLocationDispatchDistributedCentralizedGeographyIntermittentPeakingLoad-FollowingBaseloadRenewable EnergySolar PV(1)UniversalSolar PV+StorageUniversalGeothermalVariesOnshore Win
123、dRuralOnshore Wind+StorageRuralOffshore WindCoastalConventionalGas PeakingUniversalNuclearRuralCoalCo-located or ruralGas Combined CycleUniversal14Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be const
124、rued as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.IILazards Levelized Cost of Storage AnalysisVersion 8.0A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared
125、by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Introduction Lazards
126、Levelized Cost of Storage(“LCOS”)analysisaddresses the following topics:Lazards LCOS analysis Overview of the operational parameters of selected energy storage systems for each use case analyzed Comparative LCOS analysis for various energy storage systems on a$/kW-year basisComparative LCOS analysis
127、 for various energy storage systems on a$/MWh basisEnergy Storage Value Snapshot analysis Overview of potential revenue applications for various energy storage systemsOverview of the Value Snapshot analysis and identification of selected geographies for each use case analyzed Summary results from th
128、e Value Snapshot analysisAppendix materials,including:An overview of the methodology utilized to prepare Lazards LCOS analysis A summary of the assumptions utilized in Lazards LCOS analysisOther factors would also have a potentially significant effect on the results contained herein,but have not bee
129、n examined in the scope of this current analysis.These additional factors,among others,could include:implementation and interpretation of the full scope of the IRA;network upgrades,transmission,congestion or other integration-related costs;permitting or other development costs,unless otherwise noted
130、;and costs of complying with various regulations(e.g.,federal import tariffs or labor requirements).This analysis also does not address potential social and environmental externalities,as well as the long-term residual and societal consequences of various energy storage system technologies that are
131、difficult to measure(e.g.,resource extraction,end of life disposal,lithium-ion-related safety hazards,etc.)I I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Note:This report has been compiled using U.S.-focused data.15Copyright 2023 Lazard This study has
132、been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Energy
133、Storage Use CasesOverviewUse Case DescriptionTechnologies AssessedIn-Front-of-the-MeterUtility-Scale(Standalone)Large-scale energy storage system designed for rapid start and precise following of dispatch signal.Variations in system discharge duration are designed to meet varying system needs(i.e.,s
134、hort-duration frequency regulation,longer-duration energy arbitrage(1)or capacity,etc.)To better reflect current market trends,this report analyzes one-,two-and four-hour durations(2)Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Utility-Scale(PV+Storage)Energy storage system d
135、esigned to be paired with large solar PV facilities to better align timing of PV generation with system demand,reduce curtailment and provide grid support Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Utility-Scale(Wind+Storage)Energy storage system designed to be paired with
136、large wind generation facilities to better align timing of wind generation with system demand,reduce curtailment and provide grid support Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Behind-the-MeterCommercial&Industrial(Standalone)Energy storage system designed for behind-th
137、e-meter peak shaving and demand charge reduction for C&I usersUnits often configured to support multiple commercial energy management strategies and provide optionality for the system to provide grid services to a utility or the wholesale market,as appropriate,in a given region Lithium Iron Phosphat
138、e(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Commercial&Industrial(PV+Storage)Energy storage system designed for behind-the-meter peak shaving and demand charge reduction services for C&I usersSystems designed to maximize the value of the solar PV system by optimizing available revenue streams an
139、d subsidies Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Residential(Standalone)Energy storage system designed for behind-the-meter residential home useprovides backup power and power quality improvementsDepending on geography,can arbitrage residential time-of-use(TOU)rates a
140、nd/or participate in utility demand response programs Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)Residential(PV+Storage)Energy storage system designed for behind-the-meter residential home useprovides backup power,power quality improvements and extends usefulness of self-ge
141、neration(e.g.,PV+storage)Regulates the power supply and smooths the quantity of electricity sold back to the grid from distributed PV applications Lithium Iron Phosphate(LFP)Lithium Nickel Manganese Cobalt Oxide(NMC)I I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R
142、S I O N 8.0Source:Lazard and Roland Berger estimates and publicly available information.(1)For the purposes of this analysis,“energy arbitrage”in the context of storage systems paired with solar PV includes revenue streams associated with the sale of excess generation from the solar PV system,as app
143、ropriate,for a given use case.(2)The Value Snapshot analysis only evaluates the 4 hour utility-scale use case.1234567By identifying and evaluating selected energy storage applications,Lazards LCOS analyzes the cost of energy storage for in-front-of-the-meter and behind-the-meter use cases16Copyright
144、 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the pri
145、or consent of Lazard.Energy Storage Use CasesIllustrative Operational ParametersI I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Project Life(Years)Storage(MW)(3)Solar/Wind(MW)Battery Degradation(per annum)Storage Duration(Hours)Nameplate Capacity(MWh)(4
146、)90%DOD Cycles/Day(5)Days/Year(6)AnnualMWh(7)ProjectMWhIn-Front-of-the-MeterUtility-Scale(Standalone)201002.6%1100135031,500630,000201002.6%2200135063,0001,260,000201002.6%44001350126,0002,520,000Utility-Scale(PV+Storage)(8)20501002.6%42001350191,0003,820,000Utility-Scale(Wind+Storage)(8)20501002.6%
147、42001350366,0007,320,000Behind-the-MeterCommercial&Industrial(Standalone)2012.6%22135063012,600Commercial&Industrial(PV+Storage)(8)200.5012.6%4213501,69033,800Residential(Standalone)200.0061.9%40.02513508158Residential(PV+Storage)(8)200.0060.0101.9%40.025135015300=“Usable Energy”(2)ABFCEDx =BCGx x =
148、DEFHx =AGSource:Lazard and Roland Berger estimates and publicly available information.Note:Operational parameters presented herein are applied to Value Snapshot and LCOS calculations.Annual and Project MWh in the Value Snapshot analysis may vary from the representative project.(1)The use cases herei
149、n represent illustrative current and contemplated energy storage applications.(2)Usable energy indicates energy stored and available to be dispatched from the battery.(3)Indicates power rating of system(i.e.,system size).(4)Indicates total battery energy content on a single,100%charge,or”usable ener
150、gy”.Usable energy divided by power rating(in MW)reflects hourly duration of system.This analysis reflects common practice in the market whereby batteries are upsized in year one to 110%of nameplate capacity(e.g.,a 100 MWh battery actually begins project life with 110 MWh).(5)“DOD”denotes depth of ba
151、ttery discharge(i.e.,the percent of the batterys energy content that is discharged).A 90%DOD indicates that a fully charged battery discharges 90%of its energy.To preserve battery longevity,this analysis assumes that the battery never charges over 95%,or discharges below 5%,of its usable energy.(6)I
152、ndicates number of days of system operation per calendar year.(7)Augmented to nameplate MWh capacity as needed to ensure usable energy is maintained at the nameplate capacity,based on Year 1 storage module cost.(8)For PV+Storage and Wind+Storage cases,annual MWh represents the net output of combined
153、 system(generator output,less storage“round trip efficiency”losses)assuming 100%storage charging from the generator.1234567abcLazards LCOS evaluates selected energy storage applications and use cases by identifying illustrative operational parameters(1)Energy storage systems may also be configured t
154、o support combined/“stacked”use cases17Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any fo
155、rm by any means or redistributed without the prior consent of Lazard.$79$59$135$104$252$194$210$125$251$120$256$197$380$224$102$80$180$143$323$258$247$171$288$161$282$229$402$277In-Front-of-the-MeterUtility-Scale Standalone(100 MW,1 hour)Utility-Scale Standalone(100 MW,2 hour)Utility-Scale Standalon
156、e(100 MW,4 hour)Utility-Scale PV+Storage(1)(50 MW,4 hour)(100 MW PV)Utility-Scale Wind+Storage(1)(50 MW,4 hour)(100 MW Wind)Behind-the-MeterC&I Standalone(1 MW,2 hour)C&I PV+Storage(1)(0.5 MW,4 hour)(1 MW PV)Residential Standalone(2)(0.006 MW,4 hour)Residential PV+Storage(1)(2)(0.006 MW,4 hour)(0.01
157、 MW PV)$1,595$1,172$989$584$1,769$1,408$1,055$735$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000Source:Lazard and Roland Berger estimates and publicly available information.Note:Here and throughout this presentation,unless otherwise indicated,analysis assumes 20%debt at an 8%interest rate and
158、 80%equity at a 12%cost,which is a different capital structure than Lazards LCOE analysis and therefore numbers will not tie.Capital costs are comprised of the storage module,balance of system and power conversion equipment,collectively referred to as the energy storage system,equipment(where applic
159、able)and EPC costs.Augmentation costs are included as part of O&M expenses in this analysis and vary across use cases due to usage profiles and lifespans.Charging costs for standalone cases are assessed at the weighted average hourly pricing(wholesale energy prices)across an optimized annual chargin
160、g profile of the asset.No charging costs are assumed for hybrid systems.See Appendix for charging cost assumptions and additional details.(1)For PV+Storage and Wind+Storage cases,the levelized cost is based on the capital and operating costs of the combined system,levelized over the net output of th
161、e combined system.(2)In previous LCOS reports,residential battery storage costs have reflected equipment purchase costs only.For Lazards LCOE v16.0 and LCOS v8.0,capital costs for residential battery storage projects includes installation/labor,balance-of-system components and warranties.(3)This sen
162、sitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity,debt and tax equity.In this analysis only the wind portion of the Wind+Storage system utilizes the PTC.(4)This sensitivity analysis assumes the above and also includes a 10%
163、domestic content adder.UnsubsidizedLevelized Cost of Capacity($/kW-year)Subsidized(excl.Domestic Content)(3)Subsidized(incl.Domestic Content)(4)I I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Levelized Cost of Storage ComparisonCapacity($/kW-year)Lazard
164、s LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy storage use cases and configurations231a1b1c456718$0$50$100$150$200$250$300$350$400$450$500Copyright 2023 Lazard This study has been prepared by Lazard for general informa
165、tional purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.In-Front-of-the-MeterUtility-Scale Standalone(100
166、MW,1 hour)Utility-Scale Standalone(100 MW,2 hour)Utility-Scale Standalone(100 MW,4 hour)Utility-Scale PV+Storage(1)(50 MW,4 hour)(100 MW PV)Utility-Scale Wind+Storage(1)(50 MW,4 hour)(100 MW Wind)Behind-the-MeterC&I Standalone(1 MW,2 hour)C&I PV+Storage(1)(0.5 MW,4 hour)(1 MW PV)Residential Standalo
167、ne(2)(0.006 MW,4 hour)Residential PV+Storage(1)(2)(0.006 MW,4 hour)(0.01 MW PV)$1,215$893$663$392$1,348$1,072$730$508$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000$249$186$215$166$200$154$110$65$69$33$407$313$225$133$323$252$285$227$257$205$131$91$79$44$448$363$241$166I I L A Z A R D S L E V
168、 E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Levelized Cost of Storage ComparisonEnergy($/MWh)Lazards LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy storage use cases and configurationsUnsubsid
169、izedLevelized Cost of Energy($/MWh)Subsidized(excl.Domestic Content)(3)Subsidized(incl.Domestic Content)(4)231a1b1c4567Source:Lazard and Roland Berger estimates and publicly available information.Note:Here and throughout this presentation,unless otherwise indicated,analysis assumes 20%debt at an 8%i
170、nterest rate and 80%equity at a 12%cost,which is a different capital structure than Lazards LCOE analysis and therefore numbers will not tie.Capital costs are comprised of the storage module,balance of system and power conversion equipment,collectively referred to as the energy storage system,equipm
171、ent(where applicable)and EPC costs.Augmentation costs are included as part of O&M expenses in this analysis and vary across use cases due to usage profiles and lifespans.Charging costs for standalone cases are assessed at the weighted average hourly pricing(wholesale energy prices)across an optimize
172、d annual charging profile of the asset.No charging costs are assumed for hybrid systems.See Appendix for charging cost assumptions and additional details.(1)For PV+Storage and Wind+Storage cases,the levelized cost is based on the capital and operating costs of the combined system,levelized over the
173、net output of the combined system.(2)In previous LCOS reports,residential battery storage costs have reflected equipment purchase costs only.For Lazards LCOE v16.0 and LCOS v8.0,capital costs for residential battery storage projects includes installation/labor,balance-of-system components and warran
174、ties.(3)This sensitivity analysis assumes that projects qualify for the full ITC/PTC and have a capital structure that includes sponsor equity,debt and tax equity.In this analysis only the wind portion of the Wind+Storage system utilizes the PTC.(4)This sensitivity analysis assumes the above and als
175、o includes a 10%domestic content adder.19$0$50$100$150$200$250$300$350$400$450$500Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be
176、 copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Use Cases(1)DescriptionUtility-Scale(S)Utility-Scale(PV+S)Utility-Scale(Wind+S)Commercial&Industrial(S)Commercial&Industrial(PV+S)Residential(PV+S)Residential standalone(S)WholesaleDemand
177、ResponseWholesale Manages high wholesale price or emergency conditions on the grid by calling on users to reduce or shift electricity demandEnergy Arbitrage Storage of inexpensive electricity to sell later at higher prices(only evaluated in the context of a wholesale market)Frequency Regulation Prov
178、ides immediate(four-second)power to maintain generation-load balance and prevent frequency fluctuationsResource Adequacy Provides capacity to meet generation requirements at peak loadSpinning/Non-spinning Reserves Maintains electricity output during unexpected contingency events(e.g.,outages)immedia
179、tely(spinning reserve)or within a short period of time(non-spinning reserve)UtilityDemand ResponseUtility Manages high wholesale price or emergency conditions on the grid by calling on users to reduce or shift electricity demandCustomerBill Management Allows reduction of demand charge using battery
180、discharge and the daily storage of electricity for use when time of use rates are highestBackup Power Provides backup power for use by Residential and Commercial customers during grid outagesValue SnapshotsRevenue Potential for Relevant Use CasesSource:Lazard and Roland Berger estimates,Enovation An
181、alytics and publicly available information.(1)Represents the universe of potential revenue streams available to the various use cases.Does not represent the use cases analyzed in the Value Snapshots.I I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Numero
182、us potential sources of revenue available to energy storage systems reflect the benefits provided to customers and the gridThe scope of revenue sources is limited to those captured by existing or soon-to-be commissioned projectsrevenue sources that are not clearly identifiable or without publicly av
183、ailable data have not been analyzed 20Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any for
184、m by any means or redistributed without the prior consent of Lazard.Value Snapshot Case StudiesOverview Source:Lazard and Roland Berger estimates,Enovation Analytics and publicly available information.Note:Actual project returns may vary due to differences in location-specific costs,revenue streams
185、and owner/developer risk preferences.(1)Refers to the California Independent System Operator.(2)Refers to the Electricity Reliability Council of Texas.(3)Refers to Pacific Gas&Electric Company.(4)Refers to Hawaiian Electric Company.I I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A
186、L Y S I S V E R S I O N 8.0LocationDescriptionStorage(MW)Generation(MW)Storage Duration(hours)Revenue StreamsIn-Front-of-the-MeterUtility-Scale(Standalone)CAISO(1)(SP-15)Large-scale energy storage system1004 Energy Arbitrage Frequency Regulation Resource Adequacy Spinning/Non-spinning ReservesUtilit
187、y-Scale(PV+Storage)ERCOT(2)(South Texas)Energy storage system designed to be paired with large solar PV facilities501004Utility-Scale(Wind+Storage)ERCOT(2)(South Texas)Energy storage system designed to be paired with large wind generation facilities501004Behind-the-MeterCommercial&Industrial(Standal
188、one)PG&E(3)(California)Energy storage system designed for behind-the-meter peak shaving and demand charge reduction for C&I energy users12 Demand ResponseUtility Bill Management Incentives Tariff Settlement,DR Participation,Avoided Costs to Commercial Customer,Local Capacity Resource Programs and In
189、centivesCommercial&Industrial(PV+Storage)PG&E(3)(California)Energy storage system designed for behind-the-meter peak shaving and demand charge reduction services for C&I energy users0.514Residential(Standalone)HECO(4)(Hawaii)Energy storage system designed for behind-the-meter residential home usepro
190、vides backup power and power quality improvements0.0064 Demand ResponseUtility Bill Management/Tariff Settlement IncentivesResidential(PV+Storage)HECO(4)(Hawaii)Energy storage system designed for behind-the-meter residential home useprovides backup power,power quality improvements and extends useful
191、ness of self-generation 0.006 0.01 41234567Lazards Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases21Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be
192、,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Value Snapshot Case StudiesOverview(contd)Lazards Value Snapshots analyze the financial viability o
193、f illustrative energy storage systems designed for selected use casesI I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V E R S I O N 8.0Honolulu,HawaiiResidential PV+Storage(2)HECOProject size:0.006 MW/0.025 MWh0.010 MW PVResidential Standalone(2)HECOProject size:0.006 MW
194、/0.025 MWhLos Angeles,CaliforniaUtility-Scale CAISOProject size:100 MW/400 MWh1San Francisco,CaliforniaC&I Standalone(1)PG&EProject size:1 MW/2 MWhC&I PV+Storage(1)PG&EProject size:0.5 MW/2 MWh1 MW PVCorpus Christi,TexasProject size:50 MW/200 MWh100 MW PVUtility-Scale PV+Storage ERCOTProject size:50
195、 MW/200 MWh100 MW WindUtility-Scale Wind+StorageERCOT234567Source:Lazard and Roland Berger estimates,Enovation Analytics and publicly available information.Note:Project parameters(i.e.,battery size,duration,etc.)presented above correspond to the inputs used in the LCOS analysis.(1)Assumes the projec
196、t provides services under contract with PG&E.(2)Assumes the project provides services under contract with HECO.22Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.
197、No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Utility-Scale(Standalone)(CAISO)Utility-Scale(PV+Storage)(ERCOT)Utility-Scale(Wind+Storage)(ERCOT)0500300$350Wholesale Energy SalesFrequency Regul
198、ationSpinning/Non-spinning ReservesResource AdequacyDemand ResponseUtilityBill ManagementLocal Incentive PaymentsC&I(Standalone)(PG&E)C&I(PV+Storage)(PG&E)Residential(Standalone)(HECO)Residential(PV+Storage)(HECO)02004006008001,0001,200$1,400Value Snapshot Case StudiesSummary ResultsProject economic
199、s evaluated in the Value Snapshot analysis continue to evolve year-over-year as costs change and the value of revenue streams adjust to reflect underlying market conditions,utility rate structures and policy developmentsI I L A Z A R D S L E V E L I Z E D C O S T O F S T O R A G E A N A L Y S I S V
200、E R S I O N 8.00.0%24.6%16.2%34.1%30.9%27.6%49.2%1234567In-Front-of-the-Meter RevenueBehind-the-Meter Revenue$/MWh$/MWhSubsidized IRRSource:Lazard and Roland Berger estimates,Enovation Analytics and publicly available information.Note:Levelized costs presented for each Value Snapshot reflect local m
201、arket and operating conditions(including installed costs,market prices,charging costs and incentives)and are different in certain cases from the LCOS results for the equivalent use case on the pages titled“Levelized Cost of Storage ComparisonEnergy($/MWh)”,which are more broadly representative of U.
202、S.storage market conditions versus location-specific.Levelized revenues in all cases show gross revenues(not including charging costs)to be comparable with the levelized cost,which incorporates charging costs.Subsidized levelized cost for each Value Snapshot reflects:(1)average cost structure for st
203、orage,solar and wind capital costs,(2)charging costs based on local wholesale prices or utility tariff rates and(3)all applicable state and federal tax incentives,including 30%federal ITC for solar,30%federal ITC for storage,$26/MWh federal PTC for wind and 35%Hawaii state ITC for solar and solar+st
204、orage systems.Value Snapshots do not include cash payments from state or utility incentive programs.Revenues for Value Snapshots(1)(3)are based on hourly wholesale prices from the 365 days prior to Dec.15,2022.Revenues for Value Snapshots(4)(6)are based on the most recent tariffs,programs and incent
205、ives available as of December 2022.23Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form
206、 by any means or redistributed without the prior consent of Lazard.IIILazards Levelized Cost of Hydrogen AnalysisVersion 3.0A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed a
207、s,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Introduction Lazards Levelized Cost of Hydrogen(“LCOH”)analysisaddresses the following topics:An overview of the current commerci
208、al context for hydrogen in the U.S.Comparative and illustrative LCOH analysis for various hydrogen power production systems on a$/kg basisComparative and illustrative LCOE analysis for gas peaking generation,a key use case in the U.S.power sector,utilizing a 25%blend of Green and Pink hydrogen on a$
209、/MWh basis,including sensitivities for U.S.federal tax subsidiesAppendix materials,including:An overview of the methodology utilized to prepare Lazards LCOH analysis A summary of the assumptions utilized in Lazards LCOH analysisOther factors would also have a potentially significant effect on the re
210、sults contained herein,but have not been examined in the scope of this current analysis.These additional factors,among others,could include:implementation and interpretation of the full scope of the IRA;development costs of the electrolyzer and associated renewable energy generation facility;convers
211、ion,storage and transportation costs of the hydrogen once produced;additional costs to produce alternate products(e.g.,ammonia);costs to upgrade existing infrastructure to facilitate the transportation of hydrogen(e.g.,natural gas pipelines);electrical grid upgrades;costs associated with modifying e
212、nd-use infrastructure/equipment to use hydrogen as a fuel source;potential value associated with carbon-free fuel production(e.g.,carbon credits,incentives,etc.).This analysis also does not address potential environmental and social externalities,including,for example,water consumption and the socie
213、tal consequences of displacing the various conventional fuels with hydrogen that are difficult to measureAs a result of the developing nature of hydrogen production and its applications,it is important to have in mind the somewhat limited nature of the LCOH(and related limited historical market expe
214、rience and current market depth).In that regard,we are aware that,as a result of our data collection methodology,some will have a view that electrolyzer cost and efficiency,plus electricity costs,suggest a different LCOH than what is presented herein.The sensitivities presented in our study are inte
215、nded to address,in part,such views I I I L A Z A R D S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S V E R S I O N 3.0Note:This report has been compiled using U.S.-focused data.24Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and
216、it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Technology Overview&Commercial ReadinessHydrogen and Hydrogen ProductionHyd
217、rogen is currently produced primarily from fossil fuels using steam-methane reforming and methane splitting processes(i.e.,“Gray”hydrogen)A variety of additional processes are available to produce hydrogen from electricity and water(called electrolysis),which are at varying degrees of development an
218、d commercial viability,but the two most discussed forms of electrolysis are alkaline and PEMAlkaline is generally best for large-scale industrial installations requiring a steady H2output at low pressure while PEM is generally well-suited for off-grid installations powered by highly variable renewab
219、le energy sources Hydrogen for Power GenerationCombustion turbines for 100%hydrogen are not commercially available today.Power generators are exploring blending with natural gas as a way to reduce carbon intensitySeveral pilots and studies are being conducted and planned in the U.S.today.Most projec
220、ts include up to 5%hydrogen blend by volume,but some testing facilities have used blends of over 40%hydrogen by volumeHydrogen for power generation can occur via two different combustion methods:(1)premixed systems(or Dry,Low-NOx(“DLN”)systems)that mix fuel and air upstream before combustion which l
221、owers required temperature and NOx emissions and(2)non-mixed systems that combust fuel and air without premixing which requires water injection to lower NOx emissionsMarket Activity&Policy SupportHydrogen is currently used primarily in industrial applications,including oil refining,steel production,
222、ammonia and methanol production and as feedstock for other smaller-scale chemical processesClean hydrogen is well-positioned to reduce CO2emissions in typically“hard-to-decarbonize”sectors such as cement production,centralized energy systems,steel production,transportation and mobility(e.g.,forklift
223、s,maritime vessels,trucks and buses)Natural gas utilities are likely to be early adopters of Green hydrogen as methanation(i.e.,combining hydrogen with CO2to produce methane)becomes commercially viable and pipeline infrastructure is upgraded to support hydrogen blendsThe IRA provides a distinct poli
224、cy push to grow hydrogen production through the hydrogen PTC and ITC.In addition,clean hydrogen would see added lifts from tax and other benefits aimed at clean generation technologiesFuture PerspectivesGiven its versatility as an energy carrier,hydrogen has the potential to be used across industria
225、l processes,power generation and transportation,creating a potential path for decarbonizing energy-intensive industries where current technologies/alternatives are not presently viable Clean hydrogen is expected to play a significant role in decarbonizing U.S.energy and other industries,including po
226、wer generation through combustion,feedstock for ammonia,refining processes and e-fuelsOverview of AnalysisThe LCOH illustratively compares hydrogen produced through electrolysis via renewable power(Green)and nuclear power(Pink)The analysis also includes the LCOE impact of blending these hydrogen sou
227、rces with natural gas for power generationFor the analysis,unsubsidized renewables pricing is based on the average LCOE of a wind plant,oversized as compared to the electrolyzer and accounting for costs of curtailment.Unsubsidized nuclear power pricing is based on the average LCOE for an existing nu
228、clear plantSubsidized costs include the impact of the IRA.The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes Lazards Levelized Cost of Hydrogen(“LCOH”)Analy
229、sisExecutive SummaryI I I L A Z A R D S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S V E R S I O N 3.0Source:Lazard and Roland Berger estimates and publicly available information.25Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,a
230、nd it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.I I I L A Z A R D S L E V E L I Z E D C O S T O F H Y D R O G E N A N A
231、L Y S I S V E R S I O N 3.0Hydrogen Applications in Todays EconomyToday,most hydrogen is produced using fossil sources(i.e.,Gray hydrogen)and is used primarily in refining and chemicals sectors,but clean(i.e.,Blue,Green or Pink)hydrogen is expected to play an important role in several new growth sec
232、tors,including power generation8.58.17.82.93.23.50.91.62.70.10.31.26.80.74.80.51.30.11.20.21.205021LDC Blending2030EPower GenerationAviation Fuel2040EPetroleum RefiningAmmoniaRoad TransportSteelmakingShipping Fuel30Methanol23%31%284%21%30%12%6%1%0%CAGR 2140Forecasted U.S.Hydrogen Demand(m
233、illion tons)1612Overview of Hydrogen Color Spectrum Hydrogen production can be divided into“conventional”and“clean”hydrogen:Conventional:Gray:Almost all hydrogen produced in the U.S.today is through steam-methane reforming,where hydrogen is separated from natural gas.Carbon dioxide is a byproduct of
234、 this processBlack(or Brown):Uses steam and oxygen to break molecules in coal into a gaseous mixture resulting in streams of hydrogen and carbon dioxide A catch-all,Yellow hydrogen is produced through electrolysis using grid electricity“Clean”hydrogen comes in several colors,which are based on the p
235、roduction process,including:Blue:Black,Brown or Gray hydrogen,but with carbon emissions captured or storedGreen:Renewable power used for electrolysis,where water molecules are split into hydrogen and oxygen using electricityPink:Nuclear power used for electrolysis Other novel production processes in
236、clude Turquoise hydrogen from methane pyrolysis,which uses thermal splitting of methane into hydrogen and solid carbon and is considered carbon-free if using electricity from renewable sourcesImplications for the Power Sector Several utilities and developers have started exploring co-firing clean hy
237、drogen with natural gas in combustion turbines to reduce emissions Clean hydrogen production as a method to store renewable energy could utilize what would otherwise be curtailed renewable load and turn this energy into carbon-free dispatchable load,allowing for higher penetration of intermittent re
238、newable resources,while also impacting capacity market prices and seasonal pricing peaksKey Hydrogen Terms and Implications for the Power SectorSource:Lazard and Roland Berger estimates and publicly available information.26Copyright 2023 Lazard This study has been prepared by Lazard for general info
239、rmational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Green HydrogenPEM(20 100 MW)Alkaline(20 100 MW)
240、Pink HydrogenPEM(20 100 MW)Alkaline(20 100 MW)$4.77$1.68$3.79$0.83$3.47$1.16$2.75$0.48$7.37$4.28$5.78$2.83$5.29$2.99$4.08$1.81$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00I I I L A Z A R D S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S V E R S I O N 3.0Subsidized Green and Pink hydr
241、ogen can reach levelized production costs under$2/kgfully depreciated operating nuclear plants yield higher capacity factors and,when only accounting for operating expenses,Pink can reach production levels lower than Green hydrogenLevelized Cost of Hydrogen AnalysisIllustrative Results Levelized Cos
242、t of Hydrogen($/kg)UnsubsidizedSubsidized(excl.Domestic Content)(1)Source:Lazard and Roland Berger estimates and publicly available information.Note:Here and throughout this presentation,unless otherwise indicated,this analysis assumes electrolyzer capital expenditure assumptions based on high and l
243、ow values of sample ranges,with additional capital expenditure for hydrogen storage.Capital expenditure for underground hydrogen storage assumes$20/kg storage cost,sized at 120 tons for Green H2and 200 tons for Pink H2(size is driven by electrolyzer capacity factors).Pink hydrogen costs are based on
244、 marginal costs for an existing nuclear plant(see Appendix for detailed assumptions).(1)This sensitivity analysis assumes that projects qualify for the full PTC and have a capital structure that includes sponsor equity,debt and tax equity.The IRA is comprehensive legislation that is still being impl
245、emented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes.27Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,fin
246、ancial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Green HydrogenPEM(20 MW)Alkaline(20 MW)Pink HydrogenPEM(20 MW)Alkaline(20 MW)Source:Lazard and Roland Berger estimates and publicly av
247、ailable information.Note:The analysis presented herein assumes a fuel blend of 25%hydrogen and 75%natural gas.Results are driven by Lazards approach to calculating the LCOE and selected inputs(see Appendix for further details).Natural gas fuel cost assumed$3.45/MMBtu,hydrogen fuel cost based on LCOH
248、$/kg for case scenarios,assumes 8.8 kg/MMBtu for hydrogen.Analysis includes hydrogen storage costs for a maximum of 8 hour peak episodes for a maximum of 7 days per year,resulting in additional costs of$120/kW(Green)and$190/kW(Pink).(1)This sensitivity analysis assumes that projects qualify for the
249、full PTC and have a capital structure that includes sponsor equity,debt and tax equity.The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes.I I I L A Z A R D
250、S L E V E L I Z E D C O S T O F H Y D R O G E N A N A L Y S I S V E R S I O N 3.0While hydrogen-ready natural gas turbines are still being tested,preliminary results,including our illustrative LCOH analysis,indicate that a 25%hydrogen by volume blend is feasible and cost competitive Levelized Cost o
251、f EnergyGas Peaking Plant with 25%Hydrogen Blend28Reference LCOE Gas Peaking at 0%H2blend($173/MWh)$178$198$185$206$184$210$193$220$186$206$196$217$195$221$208$235$0$25$50$75$100$125$150$175$200$225$250$275$300Lazards LCOE v16.0 Gas Peaking Range:$115$221/MWhLevelized Cost of Energy($/MWh)Unsubsidiz
252、edSubsidized(excl.Domestic Content)(1)Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any for
253、m by any means or redistributed without the prior consent of Lazard.Appendix A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this mat
254、erial may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.AMaturing TechnologiesA P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and sho
255、uld not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Introduction Lazards preliminary perspectives on selected maturing technologies addresses the following top
256、ics:Lazards Carbon Capture&Storage(“CCS”)System perspectives An overview of key findings and observed trends in the CCS sectorA comparative levelized cost of CCS for power generation on a$/MWh basis,including selected sensitivities for U.S.federal tax subsidiesAn illustrative view of the value-add o
257、f CCS when included as an element of a new-build and retrofitted combined cycle gas plantA comparison of capital costs on a$/kW basis for both new-build natural gas plants with CCS technology and existing natural gas plants retrofitted with CCS technologyLazards Long Duration Energy Storage(“LDES”)a
258、nalysisAn overview of key findings and observed trends in the LDES sectorA comparative levelized cost for three selected types of LDES technologies,including selected sensitivities for U.S.federal tax subsidiesOther factors would also have a potentially significant effect on the results contained he
259、rein,but have not been examined in the scope of this current analysis.These additional factors,among others,could include:implementation and interpretation of the full scope of the IRA;development costs of the carbon capture or LDES system or associated generation facility;conversion,storage or tran
260、sportation costs of the CO2once past the project site;costs to upgrade existing infrastructure to facilitate the transportation of CO2;potential value associated with carbon-free fuel production(e.g.,carbon credits,incentives,etc.);potential value associated with energy storage revenue(e.g.,capacity
261、 payments,demand response,energy arbitrage,etc.);network upgrades,transmission,congestion or other integration-related costs;permitting or other development costs,unless otherwise noted;and costs of complying with various regulations(e.g.,federal import tariffs or labor requirements).This analysis a
262、lso does not address potential environmental and social externalities,including,for example,water consumption and the societal consequences of storing or transporting CO2,material mining and land useImportantly,this analysis is preliminary in nature,largely directional and does not fully take into a
263、ccount the maturing nature of the technologies analyzed hereinA M A T U R I N G T E C H N O L O G I E SNote:This report has been compiled using U.S.-focused data.29Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and sh
264、ould not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.1Carbon Capture&Storage SystemsA P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Laza
265、rd for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Technology Overview&Commerci
266、al ReadinessCCS refers to technologies designed to sequester carbon dioxide emissions,particularly from power generation or industrial sourcesThe core technology involves a specialized solvent or other material that enables the capture of carbon dioxide from a gas stream(usually an exhaust gas)Oxyco
267、mbustion is emerging as a potential new type of natural gas power plant design that integrates CO2capture in the combustion cycle for a claimed 100%capture rateIn power generation,CCS can be applied as a retrofit to existing coal and gas-fired power plants or incorporated into new-build plantsCO2cap
268、ture rates are currently 80%90%,with a near-term goal of 95%+Current“post-combustion”CCS technologies require power plants to operate close to full load in order to maintain high capture ratesCCS systems require energy input and represent a parasitic load on the generation unit effectively increasin
269、g the“heat rate”of the generatorCCS also requires compression,transportation and either secure permanent underground storage of carbon dioxide or alternate end-useTo date,there are very few completed power generation CCS project examplesMarket Activity&Policy SupportCCS has attracted significant int
270、erest and investment from various market participantsProject costs,especially for retrofits,are highly dependent upon site characteristicsThe Department of Energy(“DOE”)/National Energy Technology Laboratory(“NETL”)have provided significant support for the emerging CCS sector by funding engineering
271、studies and collecting cost estimates and performance dataThe IRA has increased the tax credit for carbon sequestration to$85/ton,providing a significant subsidy for CCS deployment that can offset much of the increased capital and operating costs of a CCS retrofit or new-build with CCSA number of po
272、wer sector CCS projects are being developed to retrofit existing coal and natural gas power plants,some of which are expected to be completed by the middle of the decadeFuture PerspectivesNatural gas power generation will continue to play an important role in grid reliability,especially as renewable
273、 penetration increases and more coal retiresCCS has the potential to allow natural gas plants to remain in operation as the U.S.continues to rapidly decarbonize its power gridCCS costs are still high,and given that the majority of the capital cost of a CCS system consists of balance-of-system compon
274、ents,innovations in solvents and other core capture technologies may not result in significant cost reductionsNew technologies such as oxycombustion systems may represent meaningful improvements in capture efficiency and costThe deployment of any CCS technology depends on the availability of either
275、offtake or permanent CO2storage reservoirs(placing geographic limitations on deployment)and the validation of the security of permanent storage(in avoiding CO2leakage)Overview of AnalysisThe illustrative analysis presented herein is limited to post-combustion CCS for power generationTwo cases are in
276、cluded:(1)an amine CCS system retrofitted to an existing natural gas combined cycle plant and(2)an amine CCS system with a new-build natural gas combined cycle plant CO2transportation and storage costs are assumed to be fixed across both cases at$23/tonSubsidized costs include the impact of the IRA.
277、The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomesLazards Carbon Capture&Storage AnalysisExecutive Summary1 C A R B O N C A P T U R E&S T O R A G E S Y S T
278、E M SSource:Lazard and Roland Berger estimates and publicly available information.30Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may
279、be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.$84$59$66$40$128$103$110$86$0$25$50$75$100$125$150Retrofitted CCGT with CCSNew Build Power Plant with CCSLevelized Cost of EnergyGas Combined Cycle+CCS System UnsubsidizedLevelized Cost
280、of Energy($/MWh)Subsidized(excl.Domestic Content)(4)CCS systems benefit from federal subsidies through the IRA,making the LCOE of a gas combined cycle plant plus a CCS system cost-competitive with a standalone gas combined cycle plant in both a retrofit and new-build scenario(2)1 C A R B O N C A P T
281、 U R E&S T O R A G E S Y S T E M SRetrofitted Gas Combined Cycle(1)with CCS(2)New-Build Gas Combined Cycle(3)with CCS(2)Lazards LCOE v16.0 Gas Combined Cycle Range:$39$101/MWhLCOE550 MW Gas Combined Cycle Plus CCS SystemReference LCOE of Gas Combined Cycle plus CCS50%Capacity Factor($74/MWh)Source:L
282、azard and Roland Berger estimates and publicly available information.Note:The fuel cost assumption for Lazards analysis for gas-fired generation resources is$3.45/MMBTU.(1)Represents the LCOE of a combined system,new CCS with a useful life of 12 years and LCOE of Gas Combined Cycle including remaini
283、ng book value of retrofitted power plant.The low case represents an 85%capacity factor while the high case represents a 50%capacity factor.(2)Represents a 2 million-ton CO2plant and generation heat rate increases of 11%for the low case(85%capacity factor)and 21%for the high case(50%capacity factor)d
284、ue to fixed usage of parasitic power by the CCS equipment.(3)Represents the LCOE of a combined system with a useful life of 20 years.The low case represents an oxycombustion CCS system with a capacity factor of 92.5%and a$10/MWh benefit for industrial gas sales.The high case represents a Gas Combine
285、d Cycle+CCS with a capacity factor of 50%and a$2.50/MWh benefit for industrial gas sales.(4)Subsidized value assumes$85/ton CO2credit for 12 years with nominal carbon capture rate of 95%for Gas Combined Cycle+CCS and 100%nominal capture rate for oxycombustion.Assumes an emissions rate of 0.41 ton CO
286、2per MWh generated.All costs include a$23/ton CO2cost of transportation and storage.There is no domestic content adder available for the CO2tax credit.The IRA is comprehensive legislation that is still being implemented and remains subject to interpretationimportant elements of the IRA are not inclu
287、ded in our analysis and could impact outcomes.31Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated
288、in any form by any means or redistributed without the prior consent of Lazard.Lazards LCOE v16.0 Gas Combined Cycle Capital Cost Range:$650$1,300/kWCarbon Capture&Storage SystemsCapital Cost Comparison(Unsubsidized)Capital Cost($/kW)1 C A R B O N C A P T U R E&S T O R A G E S Y S T E M SSource:Lazar
289、d and Roland Berger estimates and publicly available information.(1)Represents an assumed 2-million-ton CO2plant and 550 MW Gas Combined Cycle generation at 85%capacity factor.(2)Represents an assumed$440$550/ton CO2of nameplate capacity CCS system.(3)Represents an assumed$700$1,300/kW for Gas Combi
290、ned Cycle and$400$500/ton CO2of nameplate capacity for CCS.(4)New-build range also includes a capital expenditure estimate for a 280 MW oxycombustion project.32CCS costs are still high and the majority of the capital cost of a CCS system consists of balance-of-system components$1,042$1,547$1,965$3,0
291、86$0$500$1,000$1,500$2,000$2,500$3,000$3,500Retrofitted CCGT-CCS CostOnlyNew Build Power Plant with CCS550 MW Gas Combined Cycle Plus CCS SystemRetrofitted Gas Combined CycleCCS Cost Only(1)(2)New-Build Power Plant with CCS(1)(3)(4)Copyright 2023 Lazard This study has been prepared by Lazard for gen
292、eral informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.2Long Duration Energy StorageA P R I L
293、 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistribute
294、d without the prior consent of Lazard.Technology Overview&Commercial ReadinessLDES technologies are emerging alternatives to lithium-ion batteries because they have the potential to be more economical at storage durations of 6 8+hoursTechnological categories include electrochemical(including flow ba
295、tteries and other non-lithium chemistries),mechanical(including compressed air storage)and thermal A key challenge for LDES economics is the round-trip efficiency or the percentage of the stored energy that can later be output.Currently,LDES technologies have round trip efficiencies,which are varied
296、 but generally less than the 85%90%for lithium-ion battery systemsLDES technologies generally do not rely on scarce or expensive mineral inputs,but they can require increased engineering,labor and site work compared to lithium-ion,particularly for mechanical storage solutionsMost LDES technologies h
297、ave not yet reached commercialization due to technology immaturity and,with limited deployments,seemingly none of the emerging LDES technologies have achieved the track record for performance required to be fully bankableMarket Activity&Policy SupportEmerging LDES technology companies have attracted
298、 significant capital investment in the past 5 yearsTo date,LDES deployments have generally been limited to pilot/early commercial scaleLDES providers are generally seeking to reach commercial manufacturing scale by the end of the decade to be able to support grid-scale deployments that are cost-comp
299、etitiveThe U.S.DOEs concerted funding initiatives,along with the IRA ITC for energy storage resources support and somewhat de-risk LDES deploymentLDES technologies are divorced from the lithium-ion/electric vehicle supply chain,which may confer attractiveness in the short term given increased lithiu
300、m costs and ongoing supply chain concerns However,Industry participants are still evaluating the system need for long duration storage as well as appropriate market mechanisms and signalsFuture PerspectivesAt increasingly high wind and solar penetrations,there will be a need for resources that can p
301、rovide capacity over longer durations in order to meet overall capacity and reliability requirementsLDES technologies could potentially serve this function and enable higher levels of decarbonized power generation as a substitute for traditional peaking resourcesMarket structures and pricing signals
302、 may be established/adopted to reflect identified value of longer duration storage resourcesLDES technologies will compete with,among other things,green hydrogen(generation and storage),natural gas generators with carbon capture systems and advanced nuclear reactors to provide capacity to a decarbon
303、ized power grid(assuming viability/acceptability of the relevant LDES technologies)Overview of AnalysisThe illustrative analysis presented herein includes non-lithium technologies and compares the levelized costs of several flow battery cases along with a compressed air energy system(“CAES”)case All
304、 systems are 100 MW,8 hour systems with one cycle per day at maximum charge and depth of discharge(maximum stored energy output given round trip efficiency)Subsidized costs include the impact of the IRA.The IRA is comprehensive legislation that is still being implemented and remains subject to inter
305、pretationimportant elements of the IRA are not included in our analysis and could impact outcomesLazards Long Duration Energy Storage AnalysisExecutive Summary2 L O N G D U R A T I O N E N E R G Y S T O R A G ESource:Lazard and Roland Berger estimates and publicly available information.33Copyright 2
306、023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior
307、 consent of Lazard.2 L O N G D U R A T I O N E N E R G Y S T O R A G EElectrochemicalMechanicalThermalDescription Energy storage systems generating electrical energy from chemical reactionsSolutions that store energy as a kinetic,gravitational potential or compression/pressure mediumSolutions stocki
308、ng thermal energy by heating or cooling a storage mediumTypical Technologies Flow batteries(vanadium,zinc-bromide)Sodium-sulfurIron-airAdiabatic and cryogenic compressedliquids(change in internal energy)Geo-mechanical pumped hydroGravitationalLatent heat(phase change)Sensible heat(molten salt)Select
309、ed Advantages No degradation Cycling throughout the day Modular options available Considered safe Considered safe Attractive economics Proven technologies(e.g.,pumped hydro)Able to leverage matureindustrial cryogenic technology base Inexpensive materials Power/energy independent ScalableSelected Dis
310、advantages Membrane materials costly Difficult to mass produce Scalability unclear Large volumetric storage sites Difficult to modularize Cycling typically limited to once per day Reduced energy density Cryogenic safety concerns Cannot modularize after installKey Challenges Expensive ion-exchange me
311、mbranesrequired due to voltage and electrolytestress Less compact(lower energy density)Geographic limitations of some sub-technologies Low efficiency of diabatic systems Visibility into peak and off-peak Climate impact on effectiveness Scale of application(e.g.,bestfor district heating)LDES technolo
312、gies typically fall into three main technological categories that provide unique advantages and disadvantages and also make them suitable(or not)across a variety of use casesLong Duration Energy Storage TechnologiesOverviewSource:Lazard and Roland Berger estimates and publicly available information.
313、34Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed with
314、out the prior consent of Lazard.Electrochemical(1)100 MW,8 hourMechanical(2)100 MW,8 hourThermal(3)100 MW,8 hour$127$99$158$126$178$142$221$188$215$176$253$211$0$50$100$150$200$250$300$350$4002 L O N G D U R A T I O N E N E R G Y S T O R A G EThe LCOE of LDES technologies is expected to be competiti
315、ve with lithium-ion for large-scale 8 hour systems in the second half of the decade,with anticipated unit cost advantages at longer durations overcoming lower round-trip efficiencyLevelized Cost of EnergyIllustrative LDES at ScaleSource:Lazard and Roland Berger estimates and publicly available infor
316、mation.Note:All cases assume a 20-year system life and 1 cycle per day at maximum depth-of-discharge.(1)Electrochemical includes flow batteries(vanadium redox,zinc bromine)and non-flow(liquid metal).(2)Mechanical includes CAES and liquified air energy storage(”LAES”).(3)Thermal includes sensible hea
317、t storage solutions(molten salt).(4)This sensitivity analysis assumes that projects qualify for the full standalone storage ITC.(5)This sensitivity analysis assumes the above and also includes a 10%domestic content adder.The IRA is comprehensive legislation that is still being implemented and remain
318、s subject to interpretationimportant elements of the IRA are not included in our analysis and could impact outcomes.UnsubsidizedSubsidized(4)Subsidized with Domestic Content Adder(5)Levelized Cost of Storage($/MWh)Lazards LCOS v8.0 Utility-Scale(100 MW,4 hour)Subsidized:$154$205/MWh35Copyright 2023
319、Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in any form by any means or redistributed without the prior con
320、sent of Lazard.BLCOE v16.0A P R I L 2 0 2 3Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be copied,photocopied or duplicated in an
321、y form by any means or redistributed without the prior consent of Lazard.Year0123456720Key AssumptionsCapacity(MW)(A)55Capacity(MW)175Capacity Factor(B)55%55%55%55%55%55%55%55%Capacity Factor 55%Total Generation(000 MWh)(A)x(B)=(C)*843843843843843843843843Fuel Cost($/MMBtu)$0.0
322、0Levelized Energy Cost($/MWh)(D)$24.4$24.4$24.4$24.4$24.4$24.4$24.4$24.4Heat Rate(Btu/kWh)0Total Revenues(C)x(D)=(E)*$20.6$20.6$20.6$20.6$20.6$20.6$20.6$20.6Fixed O&M ($/kW-year)$20.0Variable O&M ($/MWh)$0.0Total Fuel Cost(F)-O&M Escalation Rate2.25%Total O&M(G)*3.53.63.73.73.83.94.05.5Capital Struc
323、ture Total Operating Costs(F)+(G)=(H)$3.5$3.6$3.7$3.7$3.8$3.9$4.0$5.5Debt 60.0%Cost of Debt8.0%EBITDA(E)-(H)=(I)$17.1$17.0$16.9$16.8$16.7$16.7$16.6$15.1Tax Investors0.0%Cost of Equity for Tax Investors10.0%Debt Outstanding-Beginning of Period(J)$107.6$105.5$103.2$100.7$98.0$95.1$92.0$9.9Equity 40.0%
324、Debt-Interest Expense(K)(8.6)(8.4)(8.3)(8.1)(7.8)(7.6)(7.4)(0.8)Cost of Equity12.0%Debt-Principal Payment(L)(2.1)(2.3)(2.5)(2.7)(2.9)(3.1)(3.4)(9.9)Taxes and Tax Incentives:Levelized Debt Service(K)+(L)=(M)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)($10.7)Combined Tax Rate 40%Economic Life(yea
325、rs)20EBITDA(I)$17.1$17.0$16.9$16.8$16.7$16.7$16.6$15.1MACRS Depreciation(Year Schedule)5Depreciation(MACRS)(N)(35.9)(57.4)(34.4)(20.7)(20.7)(10.3)0.00.0PTC(+10%for Domestic Content)$0.0Interest Expense(K)(8.6)(8.4)(8.3)(8.1)(7.8)6.316.6(0.8)PTC Escalation Rate1.5%Taxable Income(I)+(N)+(K)=(O)($27.4)
326、($48.8)($25.8)($11.9)($11.8)($7.6)($7.4)$14.3CapexEPC Costs($/kW)$1,025Federal Production Tax Credit Value(P)$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0Additional Owners Costs($/kW)$0Federal Production Tax Credit Received(P)x(C)=(Q)*$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0Transmission Costs($/kW)$0Tax Benefit(Liabilit
327、y)(O)x(tax rate)+(Q)=(R)$11.0$19.5$10.3$4.8$4.7$0.0$0.0$0.0Total Capital Costs($/kW)$1,025Capital Expenditures($71.8)($107.6)$0.0$0.0$0.0$0.0$0.0$0.0$0.0Total Capex($mm)$179After-Tax Net Equity Cash Flow(I)+(M)+(R)=(S)($71.8)$17.3$25.8$16.5$10.8$10.7$0.0$0.0($1.4)Cash Flow DistributionCash Flow to E
328、quity Investors(S)x(%to Equity Investors)($71.8)$17.3$25.8$16.5$10.8$10.7$6.4$2.1($1.4)Portion to Tax Investors(After Return is Met)1%IRR For Equity Investors12.0%Lazards LCOE analysis consists of creating a power plant model representing an illustrative project for each relevant technology and solv
329、ing for the$/MWh value that results in a levered IRR equal to the assumed cost of equity(see subsequent“Key Assumptions”pages for detailed assumptions by technology)Source:Lazard and Roland Berger estimates and publicly available information.Note:Onshore WindLow LCOE case presented for illustrative
330、purposes only.*Denotes unit conversion.(1)Assumes half-year convention for discounting purposes.(2)Assumes full monetization of tax benefits or losses immediately.(3)Reflects initial cash outflow from equity investors.(4)Reflects a“key”subset of all assumptions for methodology illustration purposes
331、only.Does not reflect all assumptions.(5)Economic life sets debt amortization schedule.For comparison purposes,all technologies calculate LCOE on a 20-year IRR basis.Levelized Cost of Energy ComparisonMethodology($in millions,unless otherwise noted)B L C O E V 1 6.0Technology-dependentLevelized(1)Un
332、subsidized Onshore Wind Low Case Sample Illustrative Calculations(5)(2)(4)(3)36Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only,and it is not intended to be,and should not be construed as,financial or other advice.No part of this material may be co
333、pied,photocopied or duplicated in any form by any means or redistributed without the prior consent of Lazard.Solar PVRooftopResidential Community and C&IUtility-Scale Utility Scale+StorageUnitsLow CaseHigh Case Low CaseHigh CaseLow CaseHigh Case Low CaseHigh CaseNet Facility OutputMW0.0055150100Total Capital Costs$/kW$2,230$4,150$1,200$2,850$700$1,400$1,075$1,600Fixed O&M$/kW-yr$15.00$18.00$12.00$