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)? (LCOE= capital costs + average yearly operating costs x number of project years / total production) ( am getting .327 which is not an option.)
A. $0.60 per kWh

B. $0.77 per kWh

C. 0.06 per kWh

D. $0.07 per kWh

Answer 1

Answer:

$ 0.06 per kWh

Step-by-step explanation:

       Capital costs of the Solar Energy Project is expected at $ 995,000.

Average yearly operating costs are $ 175,000. The project is estimated to run for 25 years, producing a total 89,500,000 kWh.

       LCOE = Levelized Cost of Energy = $\dfrac{\text{Capital costs + (Average yearly operating costs)}\times\text{(Number of project years)}}{\text{Total Production}}$

       LCOE = $\dfrac{995,000+(175,000)\times(25) }{89,5000,000}=\dfrac{5,370,000}{89,500,000}=0.06\text{ }\frac{\ }{kWh}$

∴ Levelized Cost of Energy = $ 0.06 per kWh