Levelised cost of energy/electricity (LCOE)

By June 17, 2022No Comments

The cost per unit of energy from an energy generating asset which is based on the present value of its total construction and lifetime operating costs, divided by total energy output expected from that asset over its lifetime.

Levelised cost of energy is a commonly used measure of the cost of electricity production. It is defined as the revenue required (from whatever source) to earn a rate of return on investment equal to the WACC over the life of the wind farm. Tax and inflation are not modelled. This is a key parameter for Developers bidding in international bids.