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 yearsIf the total production during the lifetime of the project is 89,500,000 kWh, what is the fevelized cost of energy (LCOE)? (1 point) $0.60 per \$0.06 perkWh 0.07 per 0.77 per
The levelized cost of energy (LCOE) can be calculated using the formula:
LCOE = (total present value of costs) / (total present value of energy produced)
First, calculate the total present value of costs:
Total capital costs = $995,000
Total operating costs over 25 years = $175,000/year * 25 years = $4,375,000
Total present value of costs = Total capital costs + Total operating costs = $995,000 + $4,375,000 = $5,370,000
Next, calculate the total present value of energy produced:
Total energy produced over 25 years = 89,500,000 kWh
Lifetime = 25 years
Assuming a discount rate of 4%, the total present value of energy produced can be calculated as follows:
Total present value of energy produced = Σ [Energy produced in year t / (1 + discount rate)^t]
= Σ [89,500,000 kWh / (1 + 0.04)^t]
= Σ [89,500,000 kWh / (1.04)^t]
Calculating the sum for t=1 to 25 gives a total present value of energy produced of 53,869,047.01 kWh.
Now, divide the total present value of costs by the total present value of energy produced to find the LCOE:
LCOE = $5,370,000 / 53,869,047.01 kWh ≈ $0.10 per kWh
Therefore, the levelized cost of energy (LCOE) for this solar energy project is approximately $0.10 per kWh.