Technology Overview
Coal-fired power generation uses pulverized coal combustion technology to produce high-pressure, high-temperature steam, which drives a steam turbine to generate electricity following the Rankine cycle. This is a conventional technology that plays a foundational role in many power systems due to its ability to provide stable, large-scale, and continuous power output. Modern configurations, particularly supercritical and ultra-supercritical technologies, have improved efficiency and reduced fuel consumption compared to earlier generation units.
Technical Characteristics
| Technology |
Efficiency |
Unit Capacity |
Technical Characteristics |
Advantages |
Disadvantages |
| Subcritical |
~38% |
~300 MW |
Steam conditions ~170 bar, 541°C |
– Mature technology- Stable operation- Compatible with existing infrastructure |
– Lower efficiency- Higher emissions- Less flexible |
| Supercritical |
~37.7–39.9% |
~600 MW |
Above critical pressure, more flexible |
– Improved efficiency- Reduced fuel consumption- More flexible (2–4%/min) |
– Higher investment cost- Higher technical requirements |
| Ultra-supercritical |
~42.5–45.1% |
~1000 MW |
Temperature ~600°C+, high pressure |
– Highest efficiency- Lower emissions per kWh- High flexibility (up to 5%/min) |
– Complex technology- High investment cost- Requires advanced materials |
Investment cost data indicates that current capital costs are approximately 1.8 million USD/MW for supercritical technology and 2.0 million USD/MW for ultra-supercritical technology. Compared to variable renewable energy technologies, coal-fired power offers advantages in terms of stability, but is less flexible and releases GHG emissions and other pollutants.
Application in Vietnam
In Vietnam, coal-fired power is transitioning from conventional technologies to higher-efficiency configurations, while incorporating emission reduction solutions to align with energy transition trends. In the long term, the share of coal power in the generation mix is expected to gradually decline.
Technology Overview
Circulating Fluidized Bed (CFB) technology is a form of thermal power generation in which fuel is combusted in a fluidized bed environment, allowing for thorough mixing of fuel and air and maintaining stable combustion at lower temperatures compared to pulverized coal technology. Due to this characteristic, the technology can utilize a wide range of fuels, including low-quality coal and biomass blends, thereby enhancing fuel flexibility.
Technical Characteristics
This technology enables the combustion of various solid fuels, ranging from low-quality coal to biomass or waste-derived fuels, thanks to its flexible combustion mechanism. The generated heat is used to produce steam, drive turbines for electricity generation, or supply heat for industrial applications.
According to 2025 data, the net electrical efficiency of ultra-supercritical CFB technology is approximately 41%, which is lower than pulverized coal technology due to its lower combustion temperature. However, CFB has advantages in reducing NOₓ emissions and can directly absorb SO₂ within the combustion chamber, thereby reducing the need for downstream flue gas treatment systems. Plants can still achieve high-capacity factors if fuel supply remains stable.
Investment cost data indicates that current capital costs are approximately 1.9 million USD/MW. Compared to pulverized coal power, CFB has similar or slightly lower investment costs but is associated with lower efficiency.
Application in Vietnam
This technology has been used in Vietnam since the 2000s, with several plants currently in operation. However, the long-term direction is to gradually reduce its share in the power generation mix.
Technology Overview
Gas turbine power generation is a technology that uses gaseous fuels (primarily natural gas) to drive turbines and generate electricity. This technology can operate in two main configurations: simple cycle gas turbine (SCGT) and combined cycle gas turbine (CCGT). In CCGT systems, waste heat from the gas turbine is used to generate steam for a steam turbine, thereby improving overall generation efficiency.
Technical Characteristics
The net electrical efficiency of CCGT is approximately 58%, while open cycle gas turbines (OCGT) achieve around 42%. OCGT offers advantages in fast start-up capability and operational flexibility, making it suitable for peak load applications. In contrast, CCGT is more suitable for baseload or mid-merit operation due to its higher efficiency. CO₂ emissions from gas-fired power are lower than those from coal-fired power.
Technology Comparison:
| Technology |
Investment Cost 2025 |
Configuration |
Technical Characteristics |
| SCGT |
~1.01 million USD/MW |
Simple cycle gas turbine |
– Simple configuration (single cycle) |
| CCGT |
~1.14 million USD/MW |
Combined gas and steam turbine |
– Gas turbine reaches full load in <15 minutes
– Steam turbine reaches full load in <1 hour |
| Hydrogen-ready CCGT (future option) |
Not fixed |
Can operate with a mixture of natural gas and hydrogen |
– Capable of operating on natural gas–hydrogen blends
– High flame speed and high combustion temperature
– Potential for increased NOₓ emissions
– Challenges in flame stability |
Current investment costs are approximately 1.05–1.15 million USD/MW. Compared to coal-fired power, gas-fired power has lower capital costs and shorter construction time, while also supporting the integration of renewable energy due to its high operational flexibility.
Application in Vietnam
In Vietnam, gas-fired power is considered an important transitional technology in the energy transition process.
Technology Overview
Carbon Capture, Utilization and Storage (CCUS) in thermal power plants is a technology that captures CO₂ from the flue gas of power plants and stores or reuses it in order to reduce greenhouse gas emissions. This technology does not generate electricity directly but is integrated into existing plants—particularly coal- and gas-fired power plants—to mitigate the environmental impact of fossil-based generation.
Technical Characteristics
CCUS systems are capable of capturing up to 90% of CO₂ emissions; however, they reduce the net electrical efficiency of the plant due to the additional energy required for capture and compression processes.
CCUS systems typically consist of three main stages:
- CO₂ capture from post-combustion flue gas
- CO₂ transport to storage or utilization sites
- CO₂ storage in geological formations or use in industrial processes
Among these, post-combustion capture is a key development pathway, with technologies such as solvent absorption and amine scrubbing aimed at improving capture efficiency and reducing costs.
Investment cost data indicates that current capital costs are approximately 1.86 million USD/MW as an add-on for CCGT plants and 3.61 million USD/MW for ultra-supercritical coal-fired plants. This represents one of the major barriers to large-scale deployment of CCUS.
In the context of the energy transition, CCUS can play an important role in reducing emissions from existing power generation assets, particularly during the transitional period when renewable energy sources are not yet able to fully replace fossil-based generation.
Technology Overview
Industrial Combined Heat and Power (CHP) is a technology that simultaneously produces electricity and useful heat from the same fuel source. Instead of generating electricity and releasing excess heat into the environment as in conventional power plants, CHP systems utilize this waste heat for industrial applications such as drying, heating, or steam production.
Technical Characteristics
This technology is typically deployed in industrial zones or facilities with high thermal demand, enhancing the overall energy efficiency of the system. The input can consist of various types of fuels, while the outputs include both electricity and heat for industrial use.
The net electrical efficiency of CHP systems is approximately 18–27%, making CHP one of the most energy-efficient technologies when considering total energy utilization. However, actual performance depends on the degree of alignment between electricity and heat demand within the system.
Investment cost data indicate that current capital costs are approximately 2.2–3.11 million USD/MW. Although the initial investment cost is relatively high, CHP can deliver significant economic and environmental benefits by reducing fuel consumption and emissions. In the context of the energy transition, CHP plays a role in optimizing energy efficiency rather than fully replacing other power generation sources.
Application in Vietnam
In Vietnam, industrial CHP is considered suitable for facilities with large and continuous heat demand, due to its ability to simultaneously produce electricity and heat. The deployment of this technology depends on the alignment between electricity and thermal demand across different industrial sectors.
Technology Overview
Hydropower is a power generation technology that uses the energy of flowing water to drive turbines and generate electricity, by converting the potential or kinetic energy of water into mechanical energy and subsequently into electrical energy. It is one of the oldest power generation technologies and plays a significant role in many power systems due to its ability to provide stable, flexible power with low operating costs. Common configurations include reservoir hydropower, run-of-river hydropower, and pumped storage hydropower, among which reservoir-based systems offer the capability to regulate water flow and effectively support power system operations.
Technical Characteristics
The net electrical efficiency of hydropower plants is approximately 95%, reflecting a very high level of energy conversion efficiency compared to other technologies. Within the power system, hydropower plays an important role due to its ability to flexibly adjust output and respond quickly to changes in demand. The capacity of hydropower plants depends on topography, water availability, and reservoir size.
In addition, long asset lifetimes and low operating costs are significant advantages of this technology.
Investment cost data indicate that current capital costs are approximately 1.8–2.0 million USD/MW. Although initial investment costs are relatively high and site-dependent, hydropower offers competitive electricity generation costs in the long term. In the context of the energy transition, hydropower plays a key supporting role in integrating variable renewable energy sources such as wind and solar power.
Application in Vietnam
In Vietnam, most of the hydropower potential has already been exploited, and new projects are primarily small-scale or focused on optimizing existing systems.
Technology Overview
Solar power is a technology that directly converts solar radiation into electricity through the photovoltaic effect in semiconductor cells. It is one of the fastest-growing renewable energy technologies in recent years due to rapidly declining costs, short deployment time, and flexibility across a wide range of scales, from rooftop systems to large-scale power plants.
Technical Characteristics
Solar power systems can be deployed in various forms, including utility-scale solar farms and distributed rooftop installations. The primary input is solar radiation, while the output is electricity for grid supply or on-site consumption.
The capacity factor of solar power is approximately 20%, depending on irradiation conditions and system configuration. Power generation varies with day–night cycles and weather conditions, requiring complementary solutions to maintain power system balance.
Investment cost data indicates that current capital costs are approximately 0.73 million USD/MW for ground-mounted solar systems. These costs have declined significantly in recent years, making solar one of the lowest-cost generation sources. In the energy transition, solar power plays a central role in reducing emissions, although challenges remain in grid integration and the need for energy storage or flexible generation sources.
Application in Vietnam
In Vietnam, solar power has been rapidly deployed in recent years, including both large-scale projects and rooftop installations. These projects are developed based on favorable solar irradiation conditions, contributing to the national power supply.
Technology Overview
Onshore wind power is a technology that generates electricity by harnessing the kinetic energy of wind to drive turbines. As wind turns the blades, mechanical energy is converted into electricity through a generator and delivered to the grid.
Onshore wind farms are typically developed in areas with strong wind resources. The primary input is wind, while the output is electricity supplied to the power system. Project capacity depends on wind conditions and installation scale.
Technical Characteristics
The nominal capacity factor of onshore wind power is approximately 35%, reflecting better energy capture compared to solar power since generation can occur both during the day and at night. However, output remains highly dependent on wind conditions and varies over time, requiring flexible system operation or complementary balancing resources. Modern turbines are designed to operate across a wide range of wind speeds, optimizing output and reducing operational losses.
Investment costs are approximately 1.37–1.65 million USD/MW. Compared to solar power, wind power has higher capital costs but benefits from higher capacity factors and more evenly distributed generation throughout the day. In the energy transition, onshore wind plays a key role in reducing emissions and diversifying the power supply.
Application in Vietnam
In Vietnam, onshore wind power has been developed in recent years, particularly in areas with favorable wind resources. Wind power projects contribute to expanding renewable energy supply and diversifying the national energy mix.
Technology Overview
Offshore wind power is a technology that generates electricity by harnessing wind energy in marine environments to drive turbines. Depending on geological conditions and water depth, projects may use either fixed-bottom or floating foundations. The generated electricity is transmitted to shore via submarine cables and integrated into the grid.
Technical Characteristics
Compared to onshore wind, offshore wind benefits from higher and more stable wind speeds, enabling large-scale projects with significant electricity output. It is considered a strategic technology in the energy transition in many countries.
The nominal capacity factor of offshore wind is approximately 46.5% for fixed-bottom turbines, higher than onshore wind due to favorable wind conditions and reduced terrain effects. This allows for higher and more stable generation over time. However, offshore deployment requires more complex technologies, including foundation design, marine installation, and subsea transmission systems, resulting in higher technical requirements and operational costs.
Investment costs are approximately 4.3 million USD/MW, significantly higher than onshore wind, reflecting the more challenging construction and operating conditions. Despite this, offshore wind is expected to play a major role in deep decarbonization due to its high capacity factor and large-scale potential.
Application in Vietnam
In Vietnam, offshore wind has significant potential due to the country’s long coastline. However, it remains at an early stage of development and requires further advancement in regulatory frameworks and supporting infrastructure.
Technology Overview
Tidal power is a technology that generates electricity by harnessing energy from tidal movements, including the rise and fall of sea levels and tidal currents caused by the gravitational interaction between the Earth, the Moon, and the Sun. This technology can be deployed in various forms, including tidal barrages, tidal stream turbines, and tidal lagoon systems. Among these, tidal stream turbines are increasingly gaining attention due to their lower environmental impact compared to large-scale barrage structures.
Technical Characteristics
The nominal capacity factor of tidal power is approximately 33–35%, reflecting greater stability compared to other renewable energy sources such as wind and solar due to the predictable nature of tidal cycles. However, electricity output still depends on site-specific geographical conditions and tidal range.
Tidal systems generally achieve relatively high energy conversion efficiency under optimal operating conditions, but the technology remains in the development stage and has not yet reached widespread commercialization.
Investment costs are approximately 6.8–7.1 million USD/MW, higher than many other renewable technologies due to technical complexity and challenging underwater construction conditions. Operation and maintenance costs are also high due to the corrosive and difficult-to-access marine environment. While tidal power has the potential to contribute to renewable energy diversification and provide predictable generation, its role in the short term remains limited due to high costs and site constraints.
Application in Vietnam
In Vietnam, tidal power has not yet been commercially deployed and remains at the stage of potential assessment and research.
Technology Overview
Wave energy is a power generation technology that harnesses energy from the oscillatory motion of ocean waves. Wave energy is primarily generated by wind and accumulates over large areas, resulting in higher energy density compared to many other renewable sources.
Wave energy technologies include various configurations such as point absorbers, oscillating water columns, and attenuators, each suited to different wave conditions and water depths.
Technical Characteristics
The nominal capacity factor of wave energy is approximately 30%, indicating relatively stable energy output compared to wind and solar due to the continuity and lag characteristics of ocean waves. However, electricity generation still depends on oceanographic conditions and site-specific geographical features.
Wave energy systems must withstand harsh marine environments, including large waves, corrosion, and marine growth, requiring high durability and system reliability.
Investment costs are approximately 13.4 million USD/MW, which is high compared to mature renewable technologies. This is mainly due to the early development stage, limited deployment scale, and high manufacturing and offshore installation costs. While wave energy has the potential to diversify renewable energy supply—especially in countries with long coastlines—its role remains limited in the short term due to high costs and lack of widespread commercialization.
Application in Vietnam
In Vietnam, wave energy has not yet been deployed and remains at the stage of potential assessment and research.
Technology Overview
Biomass power is a technology that generates electricity using organic materials such as agricultural residues, wood, biological waste, or processed biomass fuels.
In principle, this technology is similar to conventional thermal power plants, using the Rankine cycle to produce steam and drive steam turbines. However, the key difference lies in fuel characteristics, which typically have lower energy density, higher moisture content, and more dispersed availability. Common configurations include direct combustion, co-firing with coal, and biomass gasification, with direct combustion being the most widely deployed.
Technical Characteristics
The net electrical efficiency of biomass power is approximately 32%, lower than fossil fuel-based thermal power due to fuel quality and smaller plant scale. The capacity factor can reach moderate to high levels if fuel supply is stable, but in practice depends heavily on supply chains and seasonal availability.
A notable advantage is that overall energy efficiency can be significantly improved when integrated with CHP systems, allowing waste heat to be utilized for industrial purposes.
Investment costs are approximately 2.23 million USD/MW, reflecting smaller plant scale and the need for complex fuel handling systems. In the energy transition, biomass power plays a complementary role by providing stable renewable electricity and utilizing waste resources, with potential emission reductions if managed sustainably.
Application in Vietnam
In Vietnam, biomass power has been deployed in sectors such as sugar production and wood processing, although overall scale remains limited.
Technology Overview
Waste-to-Energy (WtE) is a technology that generates electricity by processing and incinerating solid waste to produce heat, which is then used to generate steam and drive turbines. This technology integrates waste treatment with energy production, helping reduce the volume of waste requiring landfill disposal.
The system input consists of municipal solid waste or landfill gas, while outputs include electricity and potentially useful by-products, such as heat.
Technical Characteristics
The net electrical efficiency of WtE plants is approximately 25–35%, lower than conventional thermal power plants, due to heterogeneous fuel characteristics and lower calorific value. However, plants can operate relatively stable with high capacity factors when waste supply is continuous.
An important consideration is the need for advanced flue gas treatment systems to control hazardous pollutants such as dioxins, furans, and heavy metals, resulting in higher technical complexity and operational requirements compared to many other technologies.
Investment costs are approximately 7 million USD/MW for direct incineration plants, reflecting the high requirements for waste processing and environmental control technologies. The value of WtE lies not only in electricity generation, but also in reducing waste management costs and emissions from landfills. In the energy transition, WtE plays a complementary role, particularly in urban areas, contributing to indirect emission reductions and resource recovery.
Application in Vietnam
In Vietnam, WtE projects have been implemented in several major cities, although significant development potential remains for the future.
Technology Overview
Biogas power is a technology that generates electricity using biogas produced from the anaerobic digestion of organic materials such as agricultural waste, livestock waste, or sludge. The collected biogas is used as fuel in engines or turbines to generate electricity.
This process enables the conversion of organic waste into energy while also producing by-products that can be reused in agriculture. The generated electricity can be used on-site or supplied to the grid.
Technical Characteristics
The nominal net electrical efficiency of biogas power systems is approximately 35%, depending on the conversion technology, such as gas engines or small gas turbines. These systems are typically small-scale and relatively flexible in operation; however, their capacity factor depends on the ability to collect and supply biogas consistently.
Gas treatment and cleaning before use in power generation equipment is a critical factor to ensure system efficiency and equipment lifetime.
Investment costs are approximately 3.6 million USD/MW, which can be relatively high per unit of capacity due to small scale and decentralized deployment. However, the technology provides significant environmental benefits by reducing methane emissions from organic waste and utilizing locally available energy resources. In the energy transition, biogas power plays an important complementary role, particularly in agriculture and waste management, contributing to emission reduction and promoting a circular economy.
Application in Vietnam
In Vietnam, this technology has been applied in some farms and waste treatment facilities, but its full potential has not yet been fully exploited.
Technology Overview
Internal Combustion Engine (ICE) power plants generate electricity by using combustion engines to convert fuel energy into electrical energy. Fuel, which can be in liquid or gaseous form, is combusted within the engine to produce mechanical energy that drives a generator.
This technology is typically deployed in small- to medium-scale units, with multiple engines operating in parallel to achieve the desired capacity. The generated electricity can be used locally or supplied to the grid.
Technical Characteristics
ICE power plants are highly flexible and can be rapidly installed. They are commonly used in distributed power systems, back-up generation, or applications requiring fast start-up and flexible load-following capability.
The nominal net electrical efficiency is approximately 45.5%, depending on fuel type and engine technology. Compared to gas turbines or large-scale thermal power plants, efficiency is generally lower, but this is offset by fast start-up, short response time, and operational flexibility. The capacity factor can vary depending on the application, ranging from continuous operation to standby or peak-load use.
Investment costs are approximately 0.91 million USD/MW, generally lower than large-scale power generation technologies. However, operating and fuel costs may be higher, particularly when fossil fuels are used. In the energy transition, ICE power can play an important complementary role by providing flexible generation to support the integration of variable renewable energy sources.
Application in Vietnam
In Vietnam, this technology is used in certain distributed power systems and back-up power applications, particularly in areas without stable grid access.
Technology Overview
Geothermal power is a technology that generates electricity by harnessing thermal energy from within the Earth, using natural steam or hot water to drive turbines. This energy originates from the Earth’s internal heat and can be exploited in areas with suitable geological conditions.
Common configurations include dry steam plants, flash steam plants, and binary cycle plants, with binary cycle systems enabling the use of lower-temperature resources and expanding the applicability of the technology.
Technical Characteristics
The nominal net electrical efficiency of geothermal power is approximately 10%, due to temperature limitations of geothermal resources compared to conventional thermal power. However, geothermal power has a high capacity factor and can operate continuously, similar to baseload power, as it is not dependent on weather conditions.
In addition, geothermal power has low greenhouse gas emissions and can provide stable electricity over long periods.
Investment costs are approximately 5.85 million USD/MW, with exploration and drilling accounting for a significant share and posing high risks. Despite high upfront costs, geothermal power benefits from low operating costs and long asset lifetimes. In the energy transition, it plays an important role in providing low-emission baseload power to complement variable renewable energy sources.
Application in Vietnam
In Vietnam, geothermal power has not yet been widely deployed and remains at the stage of research and resource assessment. Its development depends on the availability of suitable geothermal resources and geological conditions
Technology Overview
Nuclear power is a technology that harnesses energy from atomic nuclei, composed of protons and neutrons. This energy can be generated through fission or fusion; however, current nuclear power plants operate based on nuclear fission, in which unstable heavy elements split into more stable elements and release energy. Nuclear fusion technology is still in the research and development stage and has not yet been commercially deployed.
Technical Characteristics
Nuclear power has very high energy density and can provide large-scale, stable power output over long periods. Modern nuclear power plants primarily use pressurized water reactors (PWR) or boiling water reactors (BWR), with designs continuously improved to enhance safety and operational performance.
The nominal net electrical efficiency is approximately 36%, comparable to conventional steam-cycle thermal power plants. However, a key advantage is the very high capacity factor, allowing continuous operation with minimal interruptions, making nuclear power a reliable baseload source. Additionally, nuclear power does not emit CO₂ during operation, significantly contributing to greenhouse gas emission reduction.
However, the technology requires stringent safety standards, as well as careful management of radioactive waste and spent fuel.
Investment costs are approximately 6.5 million USD/MW, among the highest across power generation technologies. Long construction periods and high capital requirements present significant barriers to deployment. Nevertheless, in the context of energy transition and deep decarbonization goals, nuclear power is considered a key solution for providing carbon-free baseload electricity to complement variable renewable energy sources.
Application in Vietnam
In Vietnam, the nuclear power program is currently under development and is considered a long-term option to ensure energy security and meet increasingly stringent emission reduction requirements.
In the Technology Catalogue, data for power generation technologies is defined, standardized and presented following a consistent structure across all technologies.
Each technology in the catalogue is described through two main components: qualitative description and quantitative data. The qualitative section includes the technology principle, inputs, outputs, typical capacity, load flexibility, advantages and disadvantages, spatial requirements, water consumption, environmental aspects, employment, research and development status, and examples of existing projects. The quantitative section presents technical, operational, environmental, and economic parameters in a standardized format.
| Content Category |
Role in the Catalogue |
| Qualitative description |
Explain what the technology is, how it operates, and where it is applied |
| Technical/energy data |
Presents capacity, efficiency, ramping capability, lifetime, and construction time |
| Economic data |
Presents capital costs, fixed O&M, variable O&M, and start-up costs |
| Uncertainty range |
Indicates the variation range of key parameters |
| References |
Identifies data sources and the basis for parameter development |
All parameters are standardized to ensure comparability across technologies. Capacity and efficiency are expressed in net terms, meaning they account for the plant’s internal electricity consumption. Cost data are presented in constant 2025 USD and exclude taxes, such as VAT.
Mature technologies generally have lower uncertainty, while emerging technologies exhibit higher uncertainty, due to dependence on technological progress and future deployment conditions.
Appendix 2 provides an overview of long-term cost trends for power generation technologies, covering the period from 2025 to 2050. All data are standardized in constant 2025 USD and expressed as capital cost per unit of capacity (USD/MW), allowing direct comparison across technologies.
The data are compiled from multiple sources and harmonized to a common price basis, ensuring consistency and applicability for analysis, modeling, and power system planning.
| Technology Group |
Cost Trend |
| Conventional technologies (e.g., thermal power) |
Costs remain relatively stable or decline slightly over time |
| Renewable technologies |
Costs tend to decrease over time |
| New/emerging technologies |
Higher costs with greater uncertainty |
Cost projections are presented with low–high ranges to reflect uncertainty. This uncertainty depends on the maturity of the technology, differences in data sources, and real-world deployment conditions. Commercially mature technologies generally have more reliable cost estimates, while emerging technologies exhibit higher levels of uncertainty.
Overall, Appendix 2 provides a standardized and comparable cost data framework that supports economic evaluation across technologies, enabling effective power system modeling and long-term energy planning decisions.
Appendix 3 presents the methodology for calculating the Levelized Cost of Electricity (LCOE), providing a standardized metric to compare generation costs across different power technologies included in the Technology Catalogue. LCOE represents the average cost of producing one unit of electricity over the lifetime of a project, based on consistent techno-economic assumptions.
The methodology is intentionally simplified to support comparative analysis rather than detailed project finance evaluation. As such, it does not fully incorporate financial structures such as debt financing, taxation, depreciation, or specific contractual arrangements, unless explicitly added by the user.
The approach distinguishes between two main categories of power generation technologies. For non-thermal technologies (such as wind and solar), electricity output is primarily determined by installed capacity and capacity factor or full-load hours. In contrast, for thermal technologies (such as coal- and gas-fired power plants), generation costs are strongly influenced by fuel prices and plant efficiency.
The LCOE calculation involves several key steps: estimating annual electricity production, identifying cost components (including capital expenditures, operation and maintenance costs, and fuel costs where applicable), and discounting these costs over the project lifetime to obtain a present-value-based cost per unit of electricity. Users may adjust key input parameters such as discount rate, plant lifetime, and operational assumptions to reflect specific contexts.
The appendix also distinguishes between real and nominal LCOE, depending on whether inflation is considered. Importantly, it highlights the limitations of the approach, particularly its inability to fully capture financial risks, market dynamics, and project-specific conditions. Therefore, LCOE results should be interpreted as a comparative indicator across technologies rather than a definitive basis for investment decisions.
