Question

Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh) 300 000 27 200 25 40 000 400 1.1 Using the table above, calculate the lifecycle cost of the technology over an assessment period of 25 years at a real discount rate of 5% 1.2 Calculate the average unit cost of the power in present value terms (in cents/kWh) supplied by the technology over its lifetime at this real discount rate. 1.3 What is the corresponding Levelised Cost of Electricity (LCOE) (in cents/kWh)? Why is this value higher than that obtained in question 1.2

Answer 1

Assuming these values as per question : Cap cost: 300000 , op cost : 27200, life: 27

salvage: 40000 , elec supplied: 400

1. There is operating cost of 27200 per year and after discounting @5% and calculating Present value (look at picture uploaded for reference ), it comes out to be 383355. There is one time capital cost incurred of 300000. and we will get back 40000 at end of 25 years, so present value of salvage is 11812 [40000/(1.05^25)]. .So adding up cap cost + operating cost - salvage= $671543.= 67154300cents

2. I assume that i can't discount electricity with time. so in 25 years it produces = 400*25=10000MWh =10000000Kwh. so avg unit cost is 6.71 cents per Kwh.

3. LCOE= cost of ownership/power produced. So here we don't have any discount factor which is why numerator willbe higher than what was there is 2 part. cost= cap cost+ operating cost *25= $980000= 98000000cents.So cost per unit is 9.8 cents per kwh.