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

$0.60 per kWh
$0.60 per kWh

$0.77 per kWh
$0.77 per kWh

$0.06 per kWh
$0.06 per kWh

$0.07 per kWh

GPT 3.5 · Answer

The formula for calculating the levelized cost of energy (LCOE) is as follows:

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

Total present value of costs = Capital costs + (Average yearly operating costs * lifetime)

Total present value of electricity generated = Total production during the lifetime of the project

Plugging in the values:

Total present value of costs = $995,000 + ($175,000 * 25) = $995,000 + $4,375,000 = $5,370,000
Total present value of electricity generated = 89,500,000 kWh

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

Therefore, the levelized cost of energy (LCOE) for this solar energy project is $0.06 per kWh.