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System Advisor Model (SAM)

Regarding SAMs calculation for LCOE, it appears annual kWh production deflates

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dcorning
Topic Author

24 May 2019 19:22 #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?

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