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LCOE Formula:
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Levelized Cost of Electricity (LCOE) represents the average net present cost of electricity generation for a generating plant over its lifetime. It's used for investment planning and comparing different methods of electricity generation on a consistent basis.
The calculator uses the LCOE formula:
Where:
Explanation: This calculation provides the minimum price at which electricity must be sold for the project to break even over its lifetime.
Details: LCOE is crucial for energy project evaluation, investment decision-making, policy analysis, and comparing cost-effectiveness of different energy technologies.
Tips: Enter the present value of total project costs in dollars and present value of total electricity generation in kilowatt-hours. Both values must be positive, with electricity generation greater than zero.
Q1: What costs are included in the total cost calculation?
A: Total costs typically include capital costs, operation and maintenance costs, fuel costs, and decommissioning costs, all discounted to present value.
Q2: How is present value calculated?
A: Present value is calculated by discounting future costs and electricity generation using an appropriate discount rate that reflects the time value of money.
Q3: What is a typical LCOE range for different energy sources?
A: LCOE varies significantly by technology, location, and project specifics, ranging from $0.03-$0.15 per kWh for different renewable and conventional energy sources.
Q4: Why use LCOE instead of simple cost per kWh?
A: LCOE accounts for the time value of money, project lifetime, and all costs associated with electricity generation, providing a more comprehensive economic assessment.
Q5: What are the limitations of LCOE?
A: LCOE doesn't account for grid integration costs, intermittency issues, environmental externalities, or location-specific factors that may affect actual project economics.