Calculates the Levelized Cost of Electricity (LCOE per kWh/MWh) for rooftop and ground-mounted solar PV systems over a 25-year lifecycle. Factors in capital expenditures, specific yield (kWh/kWp/yr), annual degradation rate, OPEX, inverter replacement, weighted average cost of capital (WACC), and grid tariff escalation.
Governing Formulas & Standards
Standards Basis: NREL SAM / IEC 61724 / IRENA Costing Metrics
LCOE = \frac{\sum_{t=0}^N \frac{CAPEX_t + OPEX_t}{(1 + r)^t}}{\sum_{t=1}^N \frac{E_t}{(1 + r)^t}}
Calculates the net present value of total lifecycle project costs divided by the discounted lifetime clean energy generation (kWh).
Worked Engineering Example: 1.0 MWp Commercial Rooftop Solar PV LCOE in India
- Year 1 Generation: E_1 = 1000 kWp × 1550 kWh/kWp = 1,550,000 kWh → 1.55 Million Units (MWh)
- Discounted Lifetime Generation (25 yrs, 0.5% deg, 8.5% disc): NPV(Generation) ≈ 14.82 Million kWh → 14.82 M kWh
- Discounted Lifetime Costs (CAPEX + OPEX): NPV(Costs) = ₹3.80 Cr (CAPEX) + ₹0.92 Cr (OPEX) = ₹4.72 Crores → ₹4.72 Crores
- Calculated LCOE: LCOE = ₹47,200,000 / 14,820,000 kWh → ₹3.18 / kWh ($0.036/kWh)
Final Solution: LCOE: ₹3.18 / kWh vs Grid ₹8.20 / kWh | Levelized Savings: ₹5.02 / kWh (61.2% Cheaper)
Frequently Asked Questions
- What is the difference between simple payback and LCOE?
- Simple payback measures only how many years it takes for initial savings to cover CAPEX without considering the time value of money, degradation, or O&M. LCOE accounts for the full discounted 25-year financial lifecycle.
Interactive calculation engine and real-time CAD solver available online at https://amithvijayan.in/tools/solar-lcoe.