Question

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

$0.77 per kWh
$0.77 per kWh

$0.06 per kWh
$0.06 per kWh

$0.60 per kWh
$0.60 per kWh

$0.07 per kWh

Answer 1

The correct answer is:

$0.07 per kWh

To calculate the levelized cost of energy (LCOE), we can use the formula:

LCOE = (total capital costs + total operating costs) / total production

First, calculate the total capital costs over the lifetime of the project:
Total capital costs = $995,000

Next, calculate the total operating costs over the lifetime of the project:
Total operating costs = $175,000 * 25 years = $4,375,000

Now, calculate the levelized cost of energy:
LCOE = ($995,000 + $4,375,000) / 89,500,000 kWh = $5,370,000 / 89,500,000 kWh = $0.07 per kWh

Therefore, the levelized cost of energy is $0.07 per kWh.