The formula to calculate the Levelized Cost of Energy (LCOE) is:
LCOE=NPVCNPVEE
Where:
The Levelized Cost of Energy (LCOE) is a metric used to describe the total cost to run and operate an electrical energy-producing asset per unit of energy produced over its lifetime. This metric can then be used to compare different types of energy production to see which would be more cost-effective per unit of energy produced.
Let's assume the following values:
Using the formula to calculate the Levelized Cost of Energy (LCOE):
LCOE=1,000,0005,000,000=0.20 dollars per kWh
The Levelized Cost of Energy (LCOE) is $0.20 per kWh.