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)? (LCOE= capital costs + average yearly operating costs x number of project years / total production)
First, let's calculate the total operating costs over the lifetime of the project:
Total operating costs = average yearly operating costs x number of project years
Total operating costs = $175,000 x 25
Total operating costs = $4,375,000
Next, let's calculate the LCOE using the formula:
LCOE = (capital costs + total operating costs) / total production
LCOE = ($995,000 + $4,375,000) / 89,500,000 kWh
LCOE = $5,370,000 / 89,500,000 kWh
LCOE = $0.0599/kWh
Therefore, the levelized cost of energy (LCOE) for the solar energy project is $0.0599/kWh.