Enter the NPV of costs over its lifetime and the NPV of energy produced over its lifetime to determine the Levelized cost of energy (LCOE).

## LCOE Formula

The following formula is used to calculate a levelized cost of energy:

LCOE = NPVC / NPVEE

• Where LCOE is the levelized cost of energy ($) • NPVC is the net present value of the costs of an electrical energy producing asset ($)
• NPVEE is the net present value of electrical energy produced by the asset over it’s lifetime (kWh)

## Levelize Cost of Energy Definition

What is LCOE?

LCEO is short for Levelized cost of energy. It represents a metric used to describe the total cost to run and operate an electrical energy-producing asset per unit of energy produced of 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.

## Example Problem

How to calculate LCOE?

First, determine the NPV of costs over the lifetime of the asset. For this example, we will be looking at a small nuclear power plant that has an NPV of costs of $50,000,000.00. Next, determine the total amount of energy produced over the lifetime. For this example, the power plant has a produced a total of 40,000 kWH of power of its lifetime. Finally, calculate the LCOE using the formula: LCOE = NPVC / NPVEE LCOE =$50,000,000/40,000

LCOE = \$1250.00 / kwH