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)?(1 point)

Question

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)?(1 point)
Responses

$0.06 per kWh
$0.06 per kWh

$0.77 per kWh
$0.77 per kWh

$0.07 per kWh
$0.07 per kWh

$0.60 per kWh

GPT 3.5 · Answer

To calculate the Levelized Cost of Energy (LCOE), we can use the formula:

LCOE = (total present value of costs) / (total present value of electricity generated)

First, let's calculate the total present value of costs. This includes the capital costs and the total operating costs over the 25-year lifetime of the project.

Total capital costs = $995,000
Total operating costs over 25 years = $175,000 * 25 = $4,375,000

Total present value of costs = $995,000 + $4,375,000 = $5,370,000

Next, let's calculate the total present value of electricity generated. Given that the total production over the lifetime of the project is 89,500,000 kWh, we can use the total production as the total electricity generated.

Total present value of electricity generated = 89,500,000 kWh

Now, we can calculate the LCOE:

LCOE = $5,370,000 / 89,500,000 kWh = $0.06 per kWh

Therefore, the correct answer is:

$0.06 per kWh