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)

Question

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)

$0.07 per kWh

$0.77 per kWh

$0.06 per kWh

$0.60 per kWh

Answer 1

To calculate the levelized cost of energy (LCOE), we need to consider both the capital costs and the operating costs over the lifetime of the project, as well as the total production.

First, we need to calculate the total costs over the lifetime of the project:
Total Costs = Capital Costs + (Operating Costs per year * Lifetime)

Total Costs = $995,000 + ($175,000 * 25) = $4,870,000

Next, we calculate the LCOE:
LCOE = Total Costs / Total Production

LCOE = $4,870,000 / 89,500,000 kWh
LCOE = $0.054 per kWh

Therefore, the levelized cost of energy (LCOE) for the solar energy project is $0.054 per kWh. This is not one of the options provided, so we can choose the closest one, which is $0.06 per kWh.