Question

Which of the following would lower the levelized cost of energy (LCOE) for a project? Select all that apply. a) Increase total production b) Decrease capital expenses c) Keep capital expenses less than total production

Answer 1

To lower the LCOE of a project, one should aim to increase total production and decrease capital expenses. Keeping capital expenses less than total production doesn't straightforwardly affect LCOE.

Step-by-step explanation:

The approaches that would lower the levelized cost of energy (LCOE) for a project include:

• Increase total production - As production increases, the fixed costs of the project are distributed across more units, effectively reducing the cost per unit of energy produced.
• Decrease capital expenses - The initial investment costs for setting up a project are a major component of LCOE. Reducing these expenses will help to lower the overall LCOE.

Keeping capital expenses less than total production is not necessarily a straightforward approach for reducing LCOE, as it typically refers to ensuring project profitability rather than directly influencing the cost of energy.