A standardized metric that expresses the per-unit cost of electricity over a power plant's lifetime, enabling apples-to-apples comparison across energy technologies with very different cost structures.
The levelized cost of energy (LCOE) is the constant per-megawatt-hour price at which electricity must be sold over a plant's economic lifetime for the project to break even. It folds together capital costs, financing charges, fuel expenses, operations and maintenance, decommissioning, and the time value of money into a single figure:1
LCOE = (Capital + O&M + Fuel + Decommissioning) / Lifetime Energy Output
All future costs and generation are discounted to present value at an assumed discount rate, typically 5–10 %. LCOE is reported in dollars (or euros) per megawatt-hour ($/MWh).
Fusion is a capital-intensive technology: the reactor core, superconducting magnets, tritium plant, and remote-maintenance systems represent large upfront expenditures, while fuel costs (deuterium and lithium) are negligible.2 This means LCOE is dominated by three factors: overnight capital cost per kilowatt, capacity factor, and plant lifetime. Sensitivity studies show that a 10 % reduction in capital cost or a 10-percentage-point increase in capacity factor can lower fusion LCOE by 8–12 %.3
LCOE is useful for first-order comparison but does not capture a technology's full economic value. It ignores dispatchability (a fusion baseload plant can generate on demand, unlike wind or solar), grid integration costs, location-specific transmission expenses, and the value of avoided carbon emissions.4 Analysts increasingly supplement LCOE with metrics such as the levelized avoided cost of energy (LACE) or system LCOE to reflect these factors.
For fusion specifically, LCOE projections carry additional uncertainty because no commercial plant has been built. Component lifetimes, annual availability, and learning-curve cost reductions remain assumptions rather than empirical data. Recognizing these limitations is essential when comparing fusion projections to costs observed in mature industries.