  We show that different rates should be used for borrowing and discount rates,
and that the risk-free rate should be used for discounting when assessing and
comparing the cost of energy accross diffferent producers and technologies, on
the example of photovoltaics. Recent quantitative models using the same rate
for borrowing and discounting lead to an underestimation of the cost for risky
borrowers and to distorted sensitivities of the cost to financial and
non-financial factors. Specifically, it is shown that they may lead to gross
underestimation of the importance of solar-to-electricity conversion
efficiency. The importance of device efficiency is re-established under the
treatment of the discount rate proposed here. The effects on the cost of energy
of the installation efficiency and degradation rate, on the discount rate and
risk premium as well as on the project lifetime are estimated.
