# Case Study Summary: The Levelized Cost Of Electricity

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The Levelized Cost of Electricity (LCOE) is a well-established metric used to calculate the cost of electricity generation over the plant’s lifetime. It is commonly used to compare the cost of generation across different technologies in order to determine the economic viability or commercial feasibility. The calculation for LCOE takes into account all the costs incurred over the lifetime of the plant such as capital cost, operation and maintenance (O&M) cost, fuel cost (where applicable), financing costs and other relevant costs. In essence, the generating plant would be able to break even if the cost of electricity is equal to the LCOE over its lifetime. The formula for calculating the LCOE of solar PV is shown below. The numerator is comprised…show more content…
As shown in Figure X below, the ratio between module cost to non-module (BOS) cost is about to 3:2. The anticipated system cost reduction until 2020 will be significant, approximately by half, due to economies of scale from improved module and non-module manufacturing technologies. The reduction then after would be slower as the percentage of soft cost over total system cost increases in proportion. Figure X: Cost breakdown of 100 kWp solar PV system Source: 4.2.3 Depreciation Expense Depreciation expense refers to a portion of capital asset that is deemed to have been consumed or expired, and thus becomes an expense. Table X below shows the ownership costs of lithium-ion batteries. Table X: Cost of lithium-ion batteries System parameters Value Capex (S\$/kWh capacity) 800 Lifespan without degradation (years) 10 Cycles per day 1 Depth of discharge, DOD (%) 80 Charging cycle efficiency, η (%) 90 Source: . The depreciation expense can be calculated as: δ=Capex/(Lifespan*Cycles per day*365*DOD* η) =800/(10*1*365*80* 90) = S\$0.30/kWh At this price, it makes better sense to sell surplus electricity generated than storing it for later