What is levelized cost of solar energy?

LCOE, or levelized cost of energy is a term which describes the cost of the power produced by solar over a period of time, typically the warranted life of the system. By purchasing solar you are essentially creating a hedge against rising utility costs by fixing the per kWh rate at a known cost.

What is the levelized annual cost?

Levelized Cost of Energy (LCOE, also called Levelized Energy Cost or LEC) is a cost of generating energy (usually electricity) for a particular system.

What levelized cost of energy means?

Levelized cost of electricity (LCOE) refers to the estimates of the revenue required to build and operate a generator over a specified cost recovery period. Levelized avoided cost of electricity (LACE) is the revenue available to that generator during the same period.

What is levelized capital cost?

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. It is used for investment planning and to compare different methods of electricity generation on a consistent basis.

What was the levelized cost of electricity before solar?

Before solar energy became mainstream, the term levelized cost of electricity (LCOE) was mainly used to compare the cost of very large scale investments such as a new nuclear power plant or a new coal plant.

Why do we use levelized cost of energy?

Levelized Cost Of Energy (LCOE) is a way to help people compare the cost of two different ways of paying for energy over long periods of time. The calculation is complicated, but the result is a simple number, expressed as cost per kilowatt-hour.

What is the levelized cost of energy ( LCOE )?

The levelized cost of energy ( LCOE) is a measure of a power source that allows comparison of different methods of electricity generation on a consistent basis. It is an economic assessment of the average total cost to build and operate a power-generating asset over its lifetime divided by the total energy output of the asset over that lifetime.

How is the cost of solar energy calculated?

The third, and final, step is to divide the life-cycle cost (Step 1) with the amount of electricity the system will generate in the next 20 years (Step 2). Thus, the levelized cost of solar energy would be $18,000 divided by 166,000 kWh for San Diego: about 11 cents/kWh. Whereas for Portland, we are looking at 16 cents/kWh.