A solar energy project is expected to have capital costs of 785,000, average yearly costs of 123,000, and a lifetime of 25 years. If the estimated yearly production of the project is 3,580,000 kWh, what is the legalized cost of energy(LCOE)
To calculate the levelized cost of energy (LCOE), we need to take into account the total costs over the lifetime of the project and divide it by the total production over that same period.
Total costs over the lifetime of the project = Capital costs + (Average yearly costs * Lifetime)
Total production over the lifetime of the project = Estimated yearly production * Lifetime
Total costs = 785,000 + (123,000 * 25)
Total costs = 785,000 + 3,075,000
Total costs = 3,860,000
Total production = 3,580,000 * 25
Total production = 89,500,000 kWh
LCOE = Total costs / Total production
LCOE = 3,860,000 / 89,500,000
LCOE ≈ $0.043 per kWh
Therefore, the levelized cost of energy (LCOE) for the solar energy project is approximately $0.043 per kWh.