Levelized Cost of Energy

LCOE is the benchmark for comparing the economics of different electricity generation technologies on a like-for-like basis, accounting for upfront capital cost, annual O&M expenses, financing costs, and the plant's entire lifetime output.

LCOE Formula

LCOE = (NPV of all costs) / (NPV of all energy produced)

Or simplified: LCOE = (CAPEX + NPV of OPEX) / Total kWh over project life

India Solar LCOE Trends

• 2010: ~₹18/kWh (utility scale)
• 2017: ~₹4.50/kWh (auction discovery)
• 2020: ~₹2.50/kWh
• 2023: ~₹1.90–2.30/kWh (depending on location and financing)

India's lowest solar tariff discovered in competitive auctions as of 2023 was ₹1.99/kWh, driven by module price declines, improved efficiency, and lower project financing costs.

Rooftop vs Utility LCOE

Rooftop solar LCOE is higher (₹3.50–5.50/kWh for residential) but is compared against retail electricity tariffs (₹6–10/kWh), not wholesale prices — making rooftop economics highly compelling for most consumers.