A tool for determining the levelized cost of energy (LCOE) automates the complex calculations required to assess the per-unit cost of electricity generation over an asset’s lifetime. This cost encompasses all stages of a power plant’s life, from initial capital expenses to ongoing maintenance, fuel costs, and eventual decommissioning. For example, a user might input data regarding an offshore wind farm, including turbine cost, estimated annual energy production, and operational lifespan, to calculate the anticipated cost of electricity produced by the facility.
Such tools offer critical insights for decision-making in the energy sector. By enabling detailed cost comparisons across diverse energy technologies, they aid investors, policymakers, and researchers in evaluating the economic viability of different generation options. Historically, these assessments were laborious and prone to error. Automated tools streamline the process, improve accuracy, and offer sensitivity analysis capabilities to explore the impact of various factors, like discount rates and fuel price fluctuations, on the overall cost of electricity.
