Levelized Cost of Electricity (LCOE)

Levelized cost of electricity (LCOE) is fundamentally a “break-even sales price (in dollars per kWh)” needed to justify an investment in a particular power generation facility.

It can be more accurately defined as the constant electricity price that would be required over the life of the plant to cover all operating expenses, payment of debt and accrued interest on initial project expenses, and the payment of an acceptable return to investors.

LCOE is the primary measure used to compare the costs effectiveness of different electricity sources.

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