The Levelized Cost of Energy (LCOE) is widely used to define the cost of electricity generation (in $/ MWh) over the life of the solar power plant (typically 25 years).
The LCOE is calculated by dividing the present value of the capital costs + all operating costs over the lifetime of the solar plant by the present value of the electricity generated. See LCOE formula definition
The internal rate of return (IRR) and ROI are calculated from the initial capital cost and the cash flow during the period for which a return is expected.
Important: You need to install the CDF Player Plug-in prior to run this simulation.
- Annual energy capacity: Amount of energy in kWh generated per kWp installed. This value is for the 1st year and decreases by 3 % at first light and then yearly by 0.68% (17%/25) to take into account PV light induced degradation over the next 25 years.
- Cost: Total installed cost in $/Wp
- O&M: Annual cost of O&M in cents per Watt ( 1 ¢/W = 10,000 $/MW). The maintenance cost increases yearly with the CPI
- CPI: Consumer Price Index (or inflation) in %
- Discount Rate: Average expected bank rate for the period of the project in %.
- Period: Number of years the plant is operating – to a maximum of 25 years, the solar plant lifetime.
- Tariff: Utility electricity purchase price in $ / MWh.
- Escalation: Annual increase of electricity price in %. Equals to zero if the price is fixed over the production period.
- IRR /ROI Period: The number of years on which the internal rate of return (IRR) and ROI are calculated.