Levelized Revenue of Electricity (LROE) - Part 2

In part 1 of this post, we introduced a new concept for comparing the revenue from different energy sources and markets, called the levelized revenue of electricity (LROE). In part 2, we show some specific calculations of the LROE for solar. We show that in some markets the incentives are set properly to encourage growth in solar by having LROE>LCOE. Other markets, however, don't provide enough incentives, thus LROE<LCOE.  

Levelized Revenue of Electricity (LROE) - Part 1

I introduce a new term, the levelized revenue of electricity (LROE), an analogue of the levelized cost of electricity (LCOE). It is a financial instrument to discount the flow of revenue from a renewable or non-renewable source of electricity. Like the LCOE, the LROE is vital for comparing the revenue from different energy sources in different markets. It is needed, especially for renewable projects, because revenue includes several time component variables such as the retail or wholesale electricity rates, tax breaks, and government incentives.


There is no easy answer to the question of how much energy costs. Utility scale projects are complicated, incredibly expensive, and contain many variables that affect the cost over the lifetime of the project.