To calculate the levelized cost of energy (LCOE), we need to consider both the capital costs and the operating costs over the lifetime of the project, as well as the total energy produced. The formula for LCOE is as follows:
\[ \text{LCOE} = \frac{\text{Total Capital Costs} + \text{Total Operating Costs}}{\text{Total Energy Produced}} \]
Given Data
- Capital Cost: $995,000
- Average Yearly Operating Cost: $175,000
- Lifetime of the Project: 25 years
- Total Energy Produced: 89,500,000 kilowatts
Step 1: Calculate Total Operating Costs
The total operating costs over the lifetime of the project can be calculated as:
\[ \text{Total Operating Costs} = \text{Average Yearly Operating Cost} \times \text{Lifetime} \]
\[ \text{Total Operating Costs} = 175,000 \times 25 = 4,375,000 \]
Step 2: Calculate Total Costs
Now we can calculate the total costs, which includes both capital costs and total operating costs:
\[ \text{Total Costs} = \text{Capital Cost} + \text{Total Operating Costs} \]
\[ \text{Total Costs} = 995,000 + 4,375,000 = 5,370,000 \]
Step 3: Calculate LCOE
Now we can calculate the levelized cost of energy:
\[ \text{LCOE} = \frac{\text{Total Costs}}{\text{Total Energy Produced}} \]
\[ \text{LCOE} = \frac{5,370,000}{89,500,000} \]
\[ \text{LCOE} \approx 0.05995 \]
Result
The levelized cost of energy (LCOE) for the solar energy project is approximately $0.05995 per kilowatt-hour (kWh).
Rounding it gives us an LCOE of approximately $0.06 per kWh.