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)?

Question

A. $0.06 per kWh
B. $0.07 per kWh
C. $0.60 per kWh
D. $0.77 per kWh

Answer 1

The formula to calculate the levelized cost of energy (LCOE) is:

LCOE = (total costs over lifetime) / (total kWh produced over lifetime)

First, we need to calculate the total costs over the lifetime of the project:

Total costs = capital costs + (average yearly operating costs x lifetime)
Total costs = $995,000 + ($175,000 x 25 years) = $4,620,000

Next, we can plug in the values to calculate the LCOE:

LCOE = $4,620,000 / 89,500,000 kWh
LCOE = $0.0516 per kWh

Rounding to the nearest cent gives us the answer of:

A. $0.06 per kWh