Page - 151 - in Clean Water Using Solar and Wind - Outside the Power Grid

Economy 151 lifespans and project size as well as different capital costs, risks and capacities. Since the up-front capital cost does not take the whole picture into consideration the LCOE can help to make an informed decision to evaluate a project. A simple LCOE calculation can be made using the expression LCOE = + + + + = = ∑ ∑ c t om t f t r e t r tt n tt n ( ) ( ) ( ) ( ) ( ) ( ) 1 1 1 1 where c(t) = capital expenditures in year t, om(t) = operation and maintenance costs in year t, f(t) = fuel costs in year t, e(t) = electric energy generation in year t, r = discount rate, n = lifetime (years) of the system. The numerator in the equation is the total cost over the lifetime, while the denominator is the energy generated over the same time. A significant attractive feature of renewable energy is of course that the fuel costs are free. The initial capital cost and the capacity factor (Chapter 10) are two critical parameters. The discount rate and the annual operating expenses are essential parts of the financing costs. There are LCOE calculators available online and for free, for example from NREL (National Renewable Energy Laboratory) in the US (https://www.nrel.gov/analysis/tech-lcoe.html). Note that there are important factors that are not included in the LCOE calculation, such as the projected utilisation rate. 12.1.3 Levelised cost for solar PV The cost of the PV modules is determined by the raw material cost (type of semiconductor, metal frame, junction boxes etc.). The average LCOE of residential PV systems without any battery storage has been estimated at (WEC, 2016, Chapter 8): 0.38–0.67 USD/kWh in 2008 0.14–0.47 USD/kWh in 2014 Downloaded from https://iwaponline.com/ebooks/book-pdf/520710/wio9781780409443.pdf by IWA Publishing user