How to Evaluate an Energy Storage Project?
The levelized cost of energy is a value proposition metric that can prove to be useful when assessing investments in energy storage projects. It offers a convenient method of comparing capital costs, operations and maintenance, performance, and fuel costs in different combinations. The formula also considers the lifetime production of a plant, id est, it converts megawatts to megawatts per hour.
What results, then, is a figure that is suitable for comparison to other production costs. The calculator, however, does not take into account financing and discount issues, future replacement, or degradation c0sts.
To calculate the LCOE,
LCOE = (capex + NPV of total opex + NPV of financing costs) / NPV of total electricity production = $ / kWh
where capex = capital expenditure, opex = operational expenditure, npv = net present value, and kWh = kilowatt hour.
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