Levelized Cost of Energy values for offshore wind projects can be represented in Real or Nominal, pre-tax or after-tax terms. Understanding the difference between these common LCoE calculations is essential for accurate project comparisons.
- Real values: are adjusted for expected inflation and provide an accurate representation of actual value over time.
- Nominal values: represent the cost without any adjustment for inflation and depict the current cost, or face value, at a specific point in time.
- Pre-tax: LCoE assumption do not take country-specific tax rates or tax incentives into consideration.
- After-tax: country-specific tax rates, tax incentives as well as revenue and payment dynamics are considered in the LCoE assumption.
It is crucial to recognize that any given LCoE unit is acceptable, but for the purpose of comparison, it is necessary to know and understand the underlying assumptions.
Want to dive deeper into LCoE fundamentals, calculations and potential pitfalls to look out for?
Download Aegir Insights’ white paper: “Levelized Cost of Energy for offshore wind investments: Methods and applications” here.
Setting the standard for offshore wind
We believe that it is crucial to align on industry fundamentals to help steer more efficient investments, which is why we published this first white paper as part of our series “Setting the standard for offshore wind”.
Aegir’s clients can reach out to Sebastian Kæmpe Hansen for questions or to schedule a bespoke walk-through of the white paper.
If you want to learn more about Aegir Insights intelligence offerings, please reach out to Matthew Delany.