Suppose that a report shows that, for a given year, the levelized cost of energy (LCOE) of new construction projects is expected to be $0.0545 per kWh for solar energy and $0.0995 per kWh for geothermal energy. Which form of energy has a better LCOE?

Question

A. geothermal energy, because the LCOE implies higher total production
B. geothermal energy, because the dollar amount per kWh is higher
C. solar energy, because the dollar amount per kWh is lower
D. solar energy, because the LCOE implies lower capital and operating costs

Answer 1

C. solar energy, because the dollar amount per kWh is lower

In this case, a lower LCOE for solar energy indicates that it is a more cost-effective form of energy production compared to geothermal energy. Therefore, solar energy has a better LCOE in this scenario.