- Measure for a power source
- attempts to allow comparison on comparable basis
- a ssessment of average total cost to b uild & operate over a facilities lifetime divided by output over lifetime
- provides a minimum cost of electricity for facility to break even
Levelized cost of energy
The levelized cost of energy (LCOE), or levelized cost of electricity, is a measure of the average net present cost of electricity generation for a generating plant over its lifetime. The LCOE is calculated as the ratio between all the discounted costs over the lifetime of an electricity generating plant divided by a discounted sum of the actual energy amounts delivered. The LCOE is used to compare different methods of electricity generation on a consistent basis.
| It | investment expenditures in the year t |
| Mt | operations and maintenance expenditures in the year t |
| Ft | fuel expenditures in the year t |
| Et | electrical energy generated in the year t |
| r | discount rate |
| n | expected lifetime of system or power station |
Example
| Input | Data |
| Capital Cost | $10,000 |
| Maintenance Cost | $100/year |
| Fuel Costs | $0 |
| System Size | 4 KW |
| Capacity Factor | 17% |
| Discount rate | 10% |
| Operating Life | 20 years |
Levelized Cost of Energy Calculator
The levelized cost of energy (LCOE) calculator provides a simple calculator for both utility-scale and distributed generation (DG) renewable energy technologies that compares the combination of capital costs, operations and maintenance (O&M), performance, and fuel costs.
NREL, U.S. Department of Energy
