Solar power presents one of the greatest opportunities for our world’s energy future. Drawing power from a truly unlimited source, a solar panel system provides you with this access for at least a quarter of a century.
So is solar power really that good? You still have to make the investment in your system, and you may not be sure that your solar panels will be able to soak up enough of the sun’s rays to provide you with all of the power that you need. To help lead to a more informed understanding about the financial benefits of solar power, we will show you how to financially evaluate solar through the Levelized Cost of Energy (LCOE) process.
What is the Levelized Cost of Energy?
The cost per watt measurement system wholly relies on generalized estimates based on the possible market value of energy in a given region. But this does not allow you to consider all factors relevant to the cost of energy. Also, it takes a short-term look instead of considering long term how much an energy resource will cost over the course of its lifetime. Therefore, it is not an accurate enough financial evaluation to allow you to effectively asses which energy resource is the most cost effective.
LCOE is the modern way to measure the relative cost of an energy resource. This is a more effective measurement system because it is designed to consider all relevant factors throughout the course of the production resource’s life cycle. To do this, it approaches the cost of energy from a holistic perspective, instead of trying to keep up with the often unpredictable variations that can occur in the energy market.