As the solar photovoltaic (PV) matures, the economic feasibility of PV projects is increasingly being eval-
uated using the levelized cost of electricity (LCOE) generation in order to be compared to other electricity
generation technologies. Unfortunately, there is lack of clarity of reporting assumptions, justifications and
degree of completeness in LCOE calculations, which produces widely varying and contradictory results.
This paper reviews the methodology of properly calculating the LCOE for solar PV, correcting the mis-
conceptions made in the assumptions found throughout the literature. Then a template is provided for
better reporting of LCOE results for PV needed to influence policy mandates or make invest decisions.
A numerical example is provided with variable ranges to test sensitivity, allowing for conclusions to be
drawn on the most important variables. Grid parity is considered when the LCOE of solar PV is comparable
with grid electrical prices of conventional technologies and is the industry target for cost-effectiveness.
Given the state of the art in the technology and favourable financing terms it is clear that PV has already
obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices
continue to escalate, and industry experience increases, PV will become an increasingly economically
advantageous source of electricity over expanding geographical regions.