Utility LCOE |  |  |  |

| This topic describes SAM 3.0 and has not been revised for SAM 2009 Beta. You may find useful information, especially if you are new to SAM, but some of the information may be inconsistent with the new version.

For utility projects and commercial projects with third party ownership financing, the LCOE is the cost per unit of energy, that, when multiplied by the total energy produced over the project life and discounted to the base analysis year, is equivalent to the present value of the project required revenues over the project life given a set of financing constraints defined on the Financials page.

The required revenue is a target, and is different from the actual revenue earned by the project.

Where Q n is the energy produced by the project in year n, calculated based on solar radiation and other climate data and the parameters of the software's system performance models. N is the project life in years, R required,n is the required project revenue due to electricity sales in year n, and d is the discount rate. The summation in the left hand term begins at n = 1, which is the first year that the project produces energy. The right hand summation also starts at n = 1, the first year that the project earns revenue.

Solving for LCOE:

The required revenue in year one, R required,1, is equal to the first year electricity sales prices reported as First Year PPA in the Metrics table on the Results Summary page. The required revenue in subsequent years is the first year value escalated by the PPA Escalation rate on the Financials page.