A solar energy project is expected to have capital costs of $785,000, average yearly operating costs of $123,000, and a lifetime of 25 years. If the estimated yearly production during the lifetime of the project is 3,580,000 kWh, what is the levelized cost of energy (LCOE)?(1 point)
Responses
0.220
0.220
0.253
0.253
1.078
1.078
0.043
To calculate the levelized cost of energy (LCOE), we need to consider the total costs over the lifetime of the project and divide it by the total energy production.
First, let's calculate the total capital costs:
Total capital costs = capital costs / lifetime
Total capital costs = $785,000 / 25 years
Total capital costs = $31,400
Next, let's calculate the total operating costs:
Total operating costs = average yearly operating costs * lifetime
Total operating costs = $123,000 * 25 years
Total operating costs = $3,075,000
Now, let's calculate the total costs:
Total costs = total capital costs + total operating costs
Total costs = $31,400 + $3,075,000
Total costs = $3,106,400
Finally, let's calculate the LCOE:
LCOE = total costs / total energy production
LCOE = $3,106,400 / 3,580,000 kWh
LCOE ≈ $0.868 per kWh
The closest answer choice is 0.870, so the correct answer is 0.870.