Alternative Energy Solutions Quick Check
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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)
Responses
$0.77 per kWh
$0.77 per kWh
$0.06 per kWh
$0.06 per kWh
$0.07 per kWh
$0.07 per kWh
$0.60 per kWh
The correct answer is:
$0.07 per kWh
To calculate the Levelized Cost of Energy (LCOE), you need to add up all the costs over the lifetime of the project and then divide by the total amount of kWh produced.
Total Costs = Capital Costs + (Operating Costs * Lifetime)
Total Costs = $995,000 + ($175,000 * 25)
Total Costs = $995,000 + $4,375,000
Total Costs = $5,370,000
LCOE = Total Costs / Total Production
LCOE = $5,370,000 / 89,500,000 kWh
LCOE = $0.06 per kWh
Therefore, the LCOE is $0.06 per kWh.