3. You developed an interest in the LCOE relation and the publicized cost of ele

Question

3. You developed an interest in the LCOE relation and the publicized cost of electricity of 10.27c/kWh for this year. You wonder if the addition of 60 MW of wind-sourced electricity will make any difference in the LCOE value for this next year. You did learn the following: This is year t = 1 1 for LCOE computation purposes n = 25 years 5% per year E, i = 5.052 billion kWh LCOE last year was 10.22 ¢/kWh (last year's breakeven cost to customers) From these sketchy data, can you determine the value of un- knowns in the LCOE relation for this year? Is it possible to determine if the wind farm addition of 60 MW makes any difference in the electricity rate charged to customers? If not, what additional information is necessary to determine the LCOE with the wind source included?

Explanation / Answer

LCOE can be defined in various forms like

   LCOE = Annual Cost/ Average Output or

LCOE = (Fixed Charge Rate X capital expenditures) + fixed operations and maintenance costs / (Capacity Factor X8760) + Maintenance Cost + Fuel Cost

       (As 8760 hours in a year)

// From the provided formula for LCOE and other relations discussed above it is evident that we need to figure out values of some key unknow parameters; as mentioned below

1. Capital Investment Made in year [ It]

2. Maintenance and Operating cost [M&O]

3. Fuel Cost for year [Ft]

* Overall Expenditure can be estimated for the given year "t" by using available data but it is not possible to calculated values of individual unknown values .

# Inclusion of 60 MW of wind energy will definitly make some difference in cost offered to customers as it will increase annual average energy production.

but additional information about wind enegry plant setup cost, maintenace cost must be known for calculations and estimation of effect on cost offered to customer.

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