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Which of the following would lower the levelized cost of energy (LCOE) for a project? Select all that apply.(1 point)

Responses

increase total production
increase total production

decrease capital expenses
decrease capital expenses

keep capital expenses less than total production
keep capital expenses less than total production

decrease total production
decrease total production

increase capital expenses

1 answer

To lower the levelized cost of energy (LCOE) for a project, you would want to:

  1. Increase total production - This increases the amount of energy generated, which spreads out the costs over more units of energy, thereby reducing LCOE.

  2. Decrease capital expenses - Lowering upfront costs contributes directly to a lower LCOE, as the fixed costs are reduced.

  3. Keep capital expenses less than total production - While this is somewhat redundant in the context of calculating LCOE, it implies that a project that successfully generates more energy than its costs will have a favorable LCOE.

The options that would not lower LCOE are:

  • Decrease total production - This would increase the LCOE since costs would be spread over less energy produced.

  • Increase capital expenses - This would raise the LCOE, as higher costs would need to be recovered through energy sales.

So, the correct selections to lower LCOE are:

  • Increase total production
  • Decrease capital expenses
  • Keep capital expenses less than total production