Abstract

Levelized Cost of Energy (LCOE) is a popular metric used to calculate the expected lifetime costs of a generation project on a unit-cost basis. Contrary to common understanding, however, LCOE is not a discounted metric but rather an undiscounted metric that distorts comparisons, with the distortion increasing with discount rate and with the length of analysis period. A different metric, the present value of the cost of energy (PVCOE), is proposed.

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