To calculate the levelized cost of energy (LCOE), we can use the formula:
\[ LCOE = \frac{Total\ Lifetime\ Costs}{Total\ Lifetime\ Energy\ Production} \]
Step 1: Calculate Total Lifetime Costs.
Total Lifetime Costs consist of two components:
- Initial Capital Costs: $995,000
- Total Operating Costs over 25 years:
\[ Total\ Operating\ Costs = Average\ Yearly\ Operating\ Costs \times Lifetime \]
\[ Total\ Operating\ Costs = 175,000 \times 25 = 4,375,000 \]
Adding both components:
\[ Total\ Lifetime\ Costs = Capital\ Costs + Total\ Operating\ Costs \]
\[ Total\ Lifetime\ Costs = 995,000 + 4,375,000 = 5,370,000 \]
Step 2: Calculate Total Lifetime Energy Production.
The total energy production during the lifetime provided is 89,500,000 kWh.
Step 3: Calculate LCOE.
Now we can substitute the values into the LCOE formula:
\[ LCOE = \frac{5,370,000}{89,500,000} \]
Calculating this gives:
\[ LCOE \approx \frac{5,370,000}{89,500,000} \approx 0.05997 \]
Rounding this to two decimal places gives us:
\[ LCOE \approx 0.06 \]
Thus, the levelized cost of energy is approximately $0.06 per kWh.
So the correct response is:
$0.06 per kWh