Limitations of using LCOE as economic indicator for solar power plants

Giampaolo Manzolini, Giancarlo Gentile, Lorenzo Pilotti, Emanuele Martelli, Giovanni Picotti, Marco Binotti and Michael E. Cholette

Renewable and Sustainable Energy Reviews, 2025, vol. 209, issue C

Abstract: With the increasing penetration of renewable energy, the importance of power plant dispatchability has become more relevant; an aspect that is not accounted in the Levelized Cost of Electricity (LCOE) parameter. This paper presents a mathematical model to optimize solar plant design based on optimized dispatching strategies considering real grid demand and prices. To demonstrate that the LCOE is not the correct optimization parameter of Photovoltaic and Concentrated Solar Power technologies, the application of the new approach is performed considering their installation in South Australia and Southern California. Sixteen different cases are proposed to assess the importance of the boundary conditions (location with corresponding electricity load curve, cost of the technology and possibility to purchase electricity from the grid) on the plant design.

Keywords: Concentrated solar power; Photovoltaic; Battery energy storage; NPV; LCOE; MILP; Plant optimization; Renewable dispatching (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.rser.2024.115087

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