A solar energy project is expected to have capital costs of $995,000, average yearly operating costs of $175,000, and a lifetime of 25 years. If the total production during the lifetime of the project is 89,500,000 kWh, what is the levelized cost of energy (LCOE)?(1 point) Responses $0.06 per kWh $0.06 per kWh $0.60 per kWh $0.60 per kWh $0.77 per kWh $0.77 per kWh $0.07 per kWh
To calculate the Levelized Cost of Energy (LCOE), we can use the formula:
LCOE = (Total Present Value of Costs) / (Total Present Value of Energy Output)
First, let's calculate the Total Present Value of Costs:
Total Present Value of Costs = Capital Costs + (Operating Costs * Lifetime)
Total Present Value of Costs = $995,000 + ($175,000 * 25)
Total Present Value of Costs = $995,000 + $4,375,000
Total Present Value of Costs = $5,370,000
Next, let's calculate the Total Present Value of Energy Output:
Total Energy Output = 89,500,000 kWh
Discount Rate = $5,370,000 / 89,500,000 kWh
Discount Rate = $0.06 per kWh
Therefore, the Levelized Cost of Energy (LCOE) is $0.06 per kWh.
So, the correct response is:
$0.06 per kWh