- Posts: 4
Regarding SAMs calculation for LCOE, it appears annual kWh production deflates
- dcorning
- Topic Author
24 May 2019 13:22 #6880
by dcorning
Regarding SAMs calculation for LCOE, it appears annual kWh production deflates was created by dcorning
Hi there,
In trying to understand SAMs calculation for LCOE I sent the cashflow data to excel with equations and find the calculation as follows:
-'Cash Flow'!B107-NPV(NominalDiscountRate/100,'Cash Flow'!C107:CX107))/NPV(real_discount_rate/100,'Cash Flow'!C5:CX5)*100
Where if I read it correctly it is the net present value of the annual after tax annual costs, divided by the net present value of the annual energy production.
But I am not clear on why annual kWh is put through an NPV calculation. Shouldn't a straight sum of kWh production be used and not the net present value of kWh where kWh deflates over time in the same way that money does?
In trying to understand SAMs calculation for LCOE I sent the cashflow data to excel with equations and find the calculation as follows:
-'Cash Flow'!B107-NPV(NominalDiscountRate/100,'Cash Flow'!C107:CX107))/NPV(real_discount_rate/100,'Cash Flow'!C5:CX5)*100Where if I read it correctly it is the net present value of the annual after tax annual costs, divided by the net present value of the annual energy production.
But I am not clear on why annual kWh is put through an NPV calculation. Shouldn't a straight sum of kWh production be used and not the net present value of kWh where kWh deflates over time in the same way that money does?
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