Finance
Levelized Cost of Energy (LCOE) is a financial metric that represents the average cost per unit of energy generated over the lifetime of a power project. LCOE is calculated by dividing the total lifecycle costs of a project (including initial capital, operations, maintenance, and financing costs) by the total energy output expected over the project’s operational lifetime. This metric is crucial for comparing different energy technologies and investment opportunities on an equal basis. For solar projects, LCOE helps investors evaluate project viability and compare solar investments against traditional energy sources or other renewables. LCOE is typically expressed in terms like dollars per megawatt-hour ($/MWh) or cents per kilowatt-hour (¢/kWh) and serves as a key decision-making tool for utilities, investors, and policymakers when evaluating energy project economics.