Levelised Costs of Electricity of Renewables are not Good Indicators of Future Electricity Costs

The falling levelised cost of electricity (LCOE) of renewables is often used to argue that electricity costs in Germany will decline. However, the LCOE is not a reliable basis for estimating future electricity costs because gaps between demand and supply of insufficient renewable production will have to be covered by complementary technologies such as battery storage or gas-fired power plants and, in the future, hydrogen-fueled power plants. The investment costs of these plants and their operation must be included in the calculation of the costs of meeting demand. The “Levelised Cost of Load Coverage” (LCOLC) calculated in this way does not indicate that electricity costs will fall significantly in the coming decade.