LCOE (Levelized Cost of Electricity)

LCOE (Levelized Cost of Electricity) is the average cost per unit of electricity, usually expressed in $/MWh, that a generation asset must earn over its lifetime to cover capital cost, financing, operations and fuel, discounted to present value. Data center operators and PPA negotiators use LCOE to compare power sources when structuring long-term agreements for hyperscale and AI campuses — utility-scale solar now often prices below $30/MWh in favorable markets, onshore wind around $25-50/MWh, and new nuclear or gas-peaker capacity well above $80-120/MWh. LCOE excludes grid-integration costs such as transmission upgrades, storage and curtailment risk, which is why a low-LCOE renewable source paired with battery storage or firming contracts can still cost more delivered than its headline number suggests. The metric is distinct from Levelized Cost of Storage (LCOS), which prices the storage asset itself rather than the generation asset.