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).

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## 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