Value chain · CLM-0304
In plain terms
The interest rate assumed changes an LCOE figure a lot, and most for plants that cost the most to build: in a 2020 international study, going from 0% to 20% raised gas plant costs by about 40%, wind and solar by about three times, and nuclear by more than five times.
The claim as recorded
IEA and the OECD Nuclear Energy Agency find that varying the discount rate from 0% to 20% increases median LCOE by around 40% for gas-fired combined-cycle plants, the least sensitive of the baseload plants, by more than 5 times for nuclear, the most sensitive, and by a factor of about 3 for wind and solar, and state that the more capital-intensive a technology is, the more sensitive it is to the discount rate.
Scope and limits
This is one source's sensitivity study, not a universal law; the source treats discount rate, load factor and lifetime in separate sections and does not rank them against each other; the specific percentages are conditional on IEA/NEA's own cost and lifetime assumptions for each technology, not independently re-derived here. The 2025 edition of the same series (SRC-599, printed p.57) repeats the gas result and the more-than-five-times nuclear result in its text, for nth-of-a-kind plants, puts near-term nuclear at more than seven times, and gives no factor for wind and solar in its text.
What it assumes
Discount rate varied 0-20%; other parameters at the source's sensitivity baseline, 85% capacity factor for baseload plants and country-specific load factors for renewables (p.83); figures are medians of the central 50% of cases for baseload plants and the central 20% for wind and solar.
Where it comes from
p.84: "Within the group of flexible baseload plants, i.e. nuclear, coal and natural gas-fired CCGTs, the latter are the least susceptible to changes in the discount rate. The average costs of the median case are increasing by around 40% when comparing the 0% and 20% discount rate cases." Nuclear, same page: "with median costs more than five times higher at 20% discount rate compared to the lower bound". Same page: "In general, the more capital-intensive a technology is, the more sensitive it is to changes in the discount rate." p.85: "the LCOE values increase similarly for all technology types by a factor of about three between the lowest and highest discount rate."
Basis: USD 2018 (stated for the whole report)
Related records
- Answers question
- QST-039 not published in this release
Cite this
energyaperture.com/c/clm-0304
CLM-0304, Energy Aperture, as of 2020-12.
Connected records
Other published records linked to this one. A list, not a judgement.
- Also from SRC-161
- CLM-0300The main international definition of LCOE is the flat price per unit of electricity a power plant would need to be paid, every year of its...CLM-0301The IEA itself says plain LCOE misses how useful a power plant is to the wider electricity system, which is why it built a second, add-on...CLM-0305How long a power plant is assumed to last matters much less to its cost per unit of electricity than the interest rate does.CLM-0308The IEA's alternative metric adds credit for how much a power plant helps keep the grid reliable, on top of its raw energy cost, but the...