Lazard, Inc. · NYSE:LAZ
Lazard — Investor Presentation (April 2023)
57 slides from Lazard's investor presentation, April 2023
Slide 1: Lazard's Levelized Cost of Energy+ April 2023
APRIL 2023 With support from Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any form by
Slide 2: Table of Contents
APRIL 2023 Table of Contents I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 1 II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 15 III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 24 APPENDIX A Maturing Technologies 29 1 Carbon Capture & Storage Systems 30 2 Long Dura
Slide 3: Lazard's Levelized Cost of Energy Analysis—Version 16.0
APRIL 2023 I Lazard’s Levelized Cost of Energy Analysis—Version 16.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied,
Slide 4: Introduction
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Introduction Lazard’s Levelized Cost of Energy (“LCOE”) analysis addresses the following topics: • Comparative LCOE analysis for various generation technologies on a $/MWh basis, including sensitivities for U.S. federal tax subsidies, fuel pr
Slide 5: Levelized Cost of Energy Comparison—Unsubsidized Analysis
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Unsubsidized Analysis Selected renewable energy generation technologies are cost-competitive with conventional generation technologies under certain circumstances Solar SolarPV—Rooftop PV—RooftopResidential
Slide 6: Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Sensitivity to U.S. Federal Tax Subsidies The Investment Tax Credit (“ITC”), Production Tax Credit (“PTC”) and domestic content adder, among other provisions in the IRA, are important components of the leve
Slide 7: Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Sensitivity to Fuel Prices Variations in fuel prices can materially affect the LCOE of conventional generation technologies, but direct comparisons to “competing” renewable energy generation technologies mu
Slide 8: Levelized Cost of Energy Comparison—Sensitivity to Carbon Pricing
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Sensitivity to Carbon Pricing Carbon pricing is one avenue for policymakers to address carbon emissions; a carbon price range of $20 – $40/Ton of carbon would increase the LCOE for certain conventional gene
Slide 9: Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Sensitivity to Cost of Capital A key consideration in determining the LCOE values for utility-scale generation technologies is the cost, and availability, of capital(1); this dynamic is particularly signifi
Slide 10: Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Renewable Energy versus Marginal Cost of Selected Existing Conventional Generation Technologies Certain renewable energy generation technologies have an LCOE that is competitive with the marginal cost of ex
Slide 11: Levelized Cost of Energy Comparison—Cost of Firming Intermittency
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Cost of Firming Intermittency The incremental cost to firm(1) intermittent resources varies regionally, depending on the current effective load carrying capability (“ELCC”)(2) values and the current cost of
Slide 12: Levelized Cost of Energy Comparison—Historical Utility-Scale Generation Comparison
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Historical Utility-Scale Generation Comparison Lazard’s unsubsidized LCOE analysis indicates significant historical cost declines for utility-scale renewable energy generation technologies driven by, among
Slide 13: Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Historical Renewable Energy LCOE Even in the face of inflation and supply chain challenges, the LCOE of best-in-class onshore wind and utility-scale solar has declined at the low-end of our cost range, the
Slide 14: Levelized Cost of Energy Comparison—Capital Cost Comparison
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Comparison—Capital Cost Comparison In some instances, the capital costs of renewable energy generation technologies have converged with those of certain conventional generation technologies, which coupled with improve
Slide 15: Levelized Cost of Energy Components—Low End
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Components—Low End Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; key factors regarding the continued cost decline of renewable energy generati
Slide 16: Levelized Cost of Energy Components—High End
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Levelized Cost of Energy Components—High End Certain renewable energy generation technologies are already cost-competitive with conventional generation technologies; key factors regarding the continued cost decline of renewable energy generat
Slide 17: Energy Resources—Matrix of Applications
I LAZARD’S LEVELIZED COST OF ENERGY ANALYSIS—VERSION 16.0 Energy Resources—Matrix of Applications Despite convergence in the LCOE of certain renewable energy and conventional generation technologies, direct comparisons must take into account issues such as location (e.g., centralized vs. distributed
Slide 18: Lazard's Levelized Cost of Storage Analysis—Version 8.0
APRIL 2023 II Lazard’s Levelized Cost of Storage Analysis—Version 8.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied,
Slide 19: Introduction
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Introduction Lazard’s Levelized Cost of Storage (“LCOS”) analysis addresses the following topics: • Lazard’s LCOS analysis − Overview of the operational parameters of selected energy storage systems for each use case analyzed − Comparative L
Slide 20: Energy Storage Use Cases—Overview
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Energy Storage Use Cases—Overview By identifying and evaluating selected energy storage applications, Lazard’s LCOS analyzes the cost of energy storage for in-front-of-the- meter and behind-the-meter use cases Use Case Description Technologi
Slide 21: Energy Storage Use Cases—Illustrative Operational Parameters
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Energy Storage Use Cases—Illustrative Operational Parameters Lazard’s LCOS evaluates selected energy storage applications and use cases by identifying illustrative operational parameters(1) • Energy storage systems may also be configured to
Slide 22: Levelized Cost of Storage Comparison—Capacity ($/kW-year)
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Levelized Cost of Storage Comparison—Capacity ($/kW-year) Lazard’s LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy storage use cases and configurations $0 $50 $10
Slide 23: Levelized Cost of Storage Comparison—Energy ($/MWh)
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Levelized Cost of Storage Comparison—Energy ($/MWh) Lazard’s LCOS analysis evaluates standalone and hybrid energy storage systems on a levelized basis to derive cost metrics across energy storage use cases and configurations $0 $50 $100 $150
Slide 24: Value Snapshots—Revenue Potential for Relevant Use Cases
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Value Snapshots—Revenue Potential for Relevant Use Cases Numerous potential sources of revenue available to energy storage systems reflect the benefits provided to customers and the grid • The scope of revenue sources is limited to those cap
Slide 25: Value Snapshot Case Studies—Overview
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Value Snapshot Case Studies—Overview Lazard’s Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases Storage Storage Generation Duration Location Description (MW) (MW) (hours) R
Slide 26: Value Snapshot Case Studies—Overview (cont'd)
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Value Snapshot Case Studies—Overview (cont’d) Lazard’s Value Snapshots analyze the financial viability of illustrative energy storage systems designed for selected use cases San Francisco, California Los Angeles, California 4C&I Standalone(1
Slide 27: Value Snapshot Case Studies—Summary Results
II LAZARD’S LEVELIZED COST OF STORAGE ANALYSIS—VERSION 8.0 Value Snapshot Case Studies—Summary Results Project economics evaluated in the Value Snapshot analysis continue to evolve year-over-year as costs change and the value of revenue streams adjust to reflect underlying market conditions, utility
Slide 28: Lazard's Levelized Cost of Hydrogen Analysis—Version 3.0
APRIL 2023 III Lazard’s Levelized Cost of Hydrogen Analysis— Version 3.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copi
Slide 29: Introduction
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 Introduction Lazard’s Levelized Cost of Hydrogen (“LCOH”) analysis addresses the following topics: • An overview of the current commercial context for hydrogen in the U.S. • Comparative and illustrative LCOH analysis for various hydrogen p
Slide 30: Lazard's Levelized Cost of Hydrogen Analysis—Executive Summary
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 Lazard’s Levelized Cost of Hydrogen (“LCOH”) Analysis—Executive Summary Hydrogen and Hydrogen Production • Hydrogen is currently produced primarily from fossil fuels using steam-methane reforming and methane splitting processes (i.e., “Gra
Slide 31: Hydrogen Applications in Today's Economy
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 Hydrogen Applications in Today’s Economy Today, most hydrogen is produced using fossil sources (i.e., Gray hydrogen) and is used primarily in refining and chemicals sectors, but clean (i.e., Blue, Green or Pink) hydrogen is expected to pla
Slide 32: Levelized Cost of Hydrogen Analysis—Illustrative Results
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 Levelized Cost of Hydrogen Analysis—Illustrative Results Subsidized Green and Pink hydrogen can reach levelized production costs under $2/kg—fully depreciated operating nuclear plants yield higher capacity factors and, when only accounting
Slide 33: Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend
III LAZARD’S LEVELIZED COST OF HYDROGEN ANALYSIS—VERSION 3.0 Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend While hydrogen-ready natural gas turbines are still being tested, preliminary results, including our illustrative LCOH analysis, indicate that a 25% hydrogen by volume blen
Slide 34: Appendix
APRIL 2023 Appendix Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any form by any mean
Slide 35: Maturing Technologies
APRIL 2023 A Maturing Technologies Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any f
Slide 36: Introduction
A MATURING TECHNOLOGIES Introduction Lazard’s preliminary perspectives on selected maturing technologies addresses the following topics: • Lazard’s Carbon Capture & Storage (“CCS”) System perspectives − An overview of key findings and observed trends in the CCS sector − A comparative levelized cost
Slide 37: Carbon Capture & Storage Systems
APRIL 2023 1 Carbon Capture & Storage Systems Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicat
Slide 38: Lazard's Carbon Capture & Storage Analysis—Executive Summary
1 CARBON CAPTURE & STORAGE SYSTEMS Lazard’s Carbon Capture & Storage Analysis—Executive Summary • CCS refers to technologies designed to sequester carbon dioxide emissions, particularly from power generation or industrial sources • The core technology involves a specialized solvent or other material
Slide 39: Levelized Cost of Energy—Gas Combined Cycle + CCS System
1 CARBON CAPTURE & STORAGE SYSTEMS Levelized Cost of Energy—Gas Combined Cycle + CCS System CCS systems benefit from federal subsidies through the IRA, making the LCOE of a gas combined cycle plant plus a CCS system cost- competitive with a standalone gas combined cycle plant in both a retrofit and
Slide 40: Carbon Capture & Storage Systems—Capital Cost Comparison (Unsubsidized)
1 CARBON CAPTURE & STORAGE SYSTEMS Carbon Capture & Storage Systems—Capital Cost Comparison (Unsubsidized) CCS costs are still high and the majority of the capital cost of a CCS system consists of balance-of-system components Lazard’s LCOE v16.0 Gas Combined Cycle Capital Cost Range: $650 – $1,300/k
Slide 41: Long Duration Energy Storage
APRIL 2023 2 Long Duration Energy Storage Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated i
Slide 42: Lazard's Long Duration Energy Storage Analysis—Executive Summary
2 LONG DURATION ENERGY STORAGE Lazard’s Long Duration Energy Storage Analysis—Executive Summary • LDES technologies are emerging alternatives to lithium-ion batteries because they have the potential to be more economical at storage durations of 6 – 8+ hours • Technological categories include electro
Slide 43: Long Duration Energy Storage Technologies—Overview
2 LONG DURATION ENERGY STORAGE Long Duration Energy Storage Technologies—Overview LDES technologies typically fall into three main technological categories that provide unique advantages and disadvantages and also make them suitable (or not) across a variety of use cases Electrochemical Mechanical T
Slide 44: Levelized Cost of Energy—Illustrative LDES at Scale
2 LONG DURATION ENERGY STORAGE Levelized Cost of Energy—Illustrative LDES at Scale The LCOE of LDES technologies is expected to be competitive with lithium-ion for large-scale 8 hour systems in the second half of the decade, with anticipated unit cost advantages at longer durations overcoming lower
Slide 45: LCOE v16.0
APRIL 2023 B LCOE v16.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any form by any
Slide 46: Levelized Cost of Energy Comparison—Methodology
B LCOE V16.0 Levelized Cost of Energy Comparison—Methodology ($ in millions, unless otherwise noted) Lazard’s LCOE analysis consists of creating a power plant model representing an illustrative project for each relevant technology and solving for the $/MWh value that results in a levered IRR equal t
Slide 47: Levelized Cost of Energy—Key Assumptions
B LCOE V16.0 Levelized Cost of Energy—Key Assumptions Solar PV Rooftop—Residential Community and C&I Utility-Scale Utility Scale + Storage Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case Net Facility Output MW 0.005 5 150 100 (1) Total Capital Costs $/kW $2,230 – $4
Slide 48: Levelized Cost of Energy—Key Assumptions (cont'd)
B LCOE V16.0 Levelized Cost of Energy—Key Assumptions (cont’d) Wind—Onshore + (1) Geothermal Wind—Onshore Storage Wind—Offshore Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case Net Facility Output MW 250 175 100 1000 (2) Total Capital Costs $/kW $4,700 – $6,075 $1,02
Slide 49: Levelized Cost of Energy—Key Assumptions (cont'd)
B LCOE V16.0 Levelized Cost of Energy—Key Assumptions (cont’d) Gas Combined Cycle (1) (2) Gas Peaking Nuclear (New Build) Coal (New Build) (New Build) Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case Net Facility Output MW 240 – 50 2,200 600 550 Total Capital Costs (
Slide 50: Levelized Cost of Energy—Key Assumptions (cont'd)
B LCOE V16.0 Levelized Cost of Energy—Key Assumptions (cont’d) x Gas Combined Cycle Nuclear (Operating) Coal (Operating) (Operating) Units Low Case High Case Low Case High Case Low Case High Case Net Facility Output MW 2,200 600 550 (1) Total Capital Costs $/kW $0.00 $0.00 $0.00 Fixed O&M $/kW-yr $9
Slide 51: LCOS v8.0
APRIL 2023 C LCOS v8.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any form by any m
Slide 52: Levelized Cost of Storage Comparison—Methodology
C LCOS V8.0 Levelized Cost of Storage Comparison—Methodology Lazard’s LCOS analysis consists of creating a power plant model representing an illustrative project for each relevant technology and solving for the $/MWh value that results in a levered IRR equal to the assumed cost of equity (see subseq
Slide 53: Levelized Cost of Storage—Key Assumptions
C LCOS V8.0 Levelized Cost of Storage—Key Assumptions Utility-Scale Utility-Scale Utility-Scale C&I C&I Residential Residential (Standalone) (PV + Storage) (Wind + Storage) (Standalone) (PV + Storage) (Standalone) (PV + Storage) Units (100 MW / 100 MWh) (100 MW / 200 MWh) (100 MW / 400 MWh) (50 MW /
Slide 54: LCOH v3.0
APRIL 2023 D LCOH v3.0 Copyright 2023 Lazard This study has been prepared by Lazard for general informational purposes only, and it is not intended to be, and should not be construed as, financial or other advice. No part of this material may be copied, photocopied or duplicated in any form by any m
Slide 55: Levelized Cost of Hydrogen Comparison—Methodology
D LCOH V3.0 Levelized Cost of Hydrogen Comparison—Methodology ($ in millions, unless otherwise noted) Lazard’s LCOH analysis consists of creating a model representing an illustrative project for each relevant technology and solving for the $/kg value that results in a levered IRR equal to the assume
Slide 56: Levelized Cost of Hydrogen—Key Assumptions
D LCOH V3.0 Levelized Cost of Hydrogen—Key Assumptions Green Hydrogen Pink Hydrogen PEM Alkaline PEM Alkaline Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case Capacity MW 100 – 20 100 – 20 100 – 20 100 – 20 Total Capex $/kW $943 – $2,265 $740 – $1,984 $1,013 – $2,335
Slide 57: Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend Key Assumptions
D LCOH V3.0 Levelized Cost of Energy—Gas Peaking Plant with 25% Hydrogen Blend Key Assumptions Green Hydrogen Pink Hydrogen PEM Alkaline PEM Alkaline Units Low Case High Case Low Case High Case Low Case High Case Low Case High Case Capacity MW 20 20 20 20 Total Capex $/kW $1,412 – $2,265 $1,230 – $1