Total Levelized Generation Costs in the Chilean Power System

  • Tiempo de lectura:2 minutos de lectura

Publicado en agosto de 2026.
Cristián Muñoz1, Valentina Ureta De La Fuente2, José Manuel Contardo3

  1. Director and Founder, BdE Spa; Adjunct Professor in the Department of Electrical Engineering, School of Engineering, Pontificia Universidad Católica de Chile; and Faculty Member at the Iberoamerican School of Electricity Regulation, Pontificia Universidad Católica de Chile
  2. Electrical Engineer and Physicist, Pontificia Universidad Católica de Chile
  3. Commercial Manager at Hidromaule
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Total Levelized Generation Costs in the Chilean Power System

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Abstract

The different electricity generation technologies are usually compared using the Levelized Cost of Electricity (LCOE), which summarizes fixed and variable costs into a single cost metric per unit of energy generated. The LCOE reflects the price required to cover investment and operating costs; however, it does not account for the costs arising from irregular and non-manageable generation profiles, particularly for wind and solar photovoltaic power plants, and therefore does not represent the total system cost.

This study reviews the state of the art in improvements to the LCOE, including the Levelized Full System Cost of Electricity (LFSCOE). The LFSCOE is defined as the levelized cost of providing electricity through a given generation technology, assuming a market supplied exclusively by that source, plus the storage systems required to satisfy demand at all times. Methodologically, the LFSCOE is the opposite extreme of the LCOE; while the latter assumes no obligation to balance the market or satisfy demand, the LFSCOE assumes maximum balancing and supply obligations. The LFSCOE cannot be interpreted as the system’s levelized cost considering its current technological composition; however, its virtue lies in enabling a straightforward comparison of the competitiveness of existing technologies.

For the Chilean electricity system, the results show that the LFSCOE of hydroelectric technology ranges from 78–146 USD/MWh depending on the investment scenario, while wind and solar photovoltaic reach 145 and 140 USD/MWh, respectively. The results show that only under the most unfavorable hydroelectric investment scenarios do wind and solar photovoltaic technologies become competitive.

Keywords: LCOE, LFSCOE, renewable energy, hydroelectric, solar photovoltaic, wind, energy storage, Chile.