What Is the Levelized Cost of Electricity (LCOE)?

What Is the Levelized Cost of Electricity (LCOE)?

LCOE is a standard way to evaluate the average cost of electricity produced by a solar PV (photovoltaic) system over its lifetime. It takes into account:

• Upfront system cost
• Operation & maintenance (O&M) costs
• Energy output over 20–25 years
• Inflation and interest rates

In simple terms, LCOE tells you how much you really pay per kilowatt-hour (kWh) from your solar system.

Key Findings from Malaysia-Based Research:

A study conducted by Universiti Teknikal Malaysia Melaka analyzed a 4 kWp residential solar PV system and found the following:

• Initial solar LCOE (2014): RM 0.9170/kWh
• Conventional electricity tariff (TNB): RM 0.3853/kWh (2014)
• Forecasted electricity price growth: 7% per year
• Solar cost trend: Declining by ~1% per year (if optimized)

When Will Solar Become Cheaper than Grid Electricity?

This point is known as grid parity. Based on the study's projections:

• Grid parity expected by: 2029 (under normal assumptions)
• Could be achieved as early as: 2026 (if solar technology cost continues to drop)

Once this happens, your solar energy cost will be equal to or cheaper than electricity from TNB, meaning:

Lower electricity bills
Long-term savings
Independence from rising utility costs

What Does This Mean for You?

• Installing solar now lets you lock in your energy costs at today’s rates, avoiding rising tariffs.
• Early adopters benefit more—you may break even before grid parity hits.
• With Malaysia’s Feed-in Tariff (FiT) schemes and financial incentives, solar is now more affordable than ever.

Our Promise

At Solar Sunyield, we design and install solar systems that optimize long-term cost savings. We help you:

• Estimate your personal LCOE
• Compare with your current utility bills
• Plan for breakeven and long-term ROI

Let us help you make solar energy work for your home—and your wallet.

For further information, please refer to our Bespoke Solar Solution