Defined term
Levelized cost of energy
Levelized cost of energy is a discounted lifetime cost measure divided by a discounted lifetime energy measure under a specified method and boundary.
Also known as LCOE
economics · Concept code GS-CONCEPT-075 · Last verified August 20, 2026
Evidence through 2023-12-17 · 0 sources have no source-event date
Content modified 2026-08-20
Definition and boundaries
Definition
Levelized cost of energy is a discounted lifetime cost measure divided by a discounted lifetime energy measure under a specified method and boundary.
Definition claim verification: Verified August 20, 2026
In plain language
Use Levelized cost of energy only after the cash-flow perspective, timing, contract structure, included costs, and omitted items are made explicit.
What it is not
It is not an electricity bill savings rate, installed price per watt, or customer payback period.
Decision context
Why it matters
State cost perspective, financing and tax treatment, energy boundary, degradation, replacements, residual value, discounting, inflation, and analysis life before comparing results.
Decision-context claim verification: Verified August 20, 2026
Information boundary
This page provides general educational context, not a site design, production guarantee, utility determination, contract interpretation, legal opinion, tax conclusion, or individualized financial advice. Verify property, equipment, utility, jurisdiction, program, and agreement details before acting.
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Learning navigation
Primary topic: Finance
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Primary sources
- National Renewable Energy Laboratory: System Advisor Model Help
Revision System Advisor Model 2023.12.17 help · Source event as of December 17, 2023 · Ontology accessed August 20, 2026 · Ontology verified August 20, 2026