Risk Analysis of Levelized Cost of Electricity to Renewable Energy in Brazil

This paper presents a risk analysis approach of levelized cost of electricity (LCOE) to renewable energy in Brazil: hydro, wind, and photovoltaic energy. The Monte Carlo method is applied to stochastic models to generate synthetic time series of four random variables: water inflow, wind speed, solar irradiance, and temperature of photovoltaic panel. Probability distribution of the levelized cost of electricity for the three sources are provided and analyzed. In addition, a sensitivity analysis was performed considering two key parameters: investment expenditure and discount rate, where a comparative analysis between sources is carried out. The results provide important risk information to assist policy makers and investors in the decision-making process.