Levelized Cost Calculations
Levelized Cost Calculations
Levelized costs are dynamically calculated for generation, fuels and vehicles. The following sections describe in more detail how these calculations are done, but there are common principles.
There are three modes that are available in calculating levelized costs. The mode defaults to normalized, but can be changed by selecting the radio button above the chart.
 Normalized Mode  This uses a single discount rate and lifetime across all technologies. The rate used can be seen in the Advanced Parameters panel on the left.
 Market Mode  This uses a different discount rate, lifetime and other costs for each technology. The rates are defined by the DOE Program Estimates that were published in 2011. These values can also be seen in the Advanced Parameters panel on the left (when Market Mode is selected).
 User Defined  The discount rate, lifetime, and other costs are different for each technology and default to the market mode values. But you are able to change these in the Advanced Parameters panel. These are the only parameters that can be changed.
Data for these calculations has been collected and adjudicated from a variety of sources, and more sources are being added. If you have published data, please submit it for consideration. However, publications do not consistently report data values. To maximize the usefulness of the data, many of the parameters can be determined by alternative methods. Please refer to the detailed discussion on each calculation for an explanation of the possibilities.
Disclaimer
The data gathered here are for informational purposes only. Inclusion of a report in the database does not represent approval of the estimates by DOE or NREL. Levelized cost calculations DO NOT represent real world market conditions. The calculation uses a single discount rate in order to compare technology costs only.
CRF: Capital Recovery Factor
A common element in the levelized cost calculations is capital expenditures. The capital expenditure is turned into annual payments with a Capital Recovery Factor (CRF) that is defined using a common calculation.
Capital Recovery Factor (CRF) DEFINITIONS  

Term  Description  Generation  Fuels  Vehicles 
D  Discount Rate is the assumed effective rate at which future income streams are discounted. Used to compute the capital recovery factor. In Normalized mode, a single discount rate is used. In Market and User modes, the discount rate can be different for each technology.  7%  7%  7% 
N  Lifetime of the Investment. It is the assumed lifetime of a new plant/vehicle and the period over which the investment is computed (unless specified otherwise)  30 yrs  30 yrs  15 yrs 
As noted above, the actual discount rate and investment lifetime parameters may be different depending on the technology and calculation mode. The descriptions of the different levelized cost calculations define the options.
If the discount rate (D) is zero, then the following formula is used to calculate the CRF.
Levelized Cost of Energy  LCOE
Levelized cost of electricity in cents / kWh. This is an approximation for the price at which electricity would need to be sold to break even.
LCOE Paramaters  

Term  Units  Description  Alternative Sources  Database Column  
Capital Cost  US$/Kw  Cost of the plant  OnghCptCstDlKwInclCtng will be used first, but if not available, the product of the Contingency Factor and OnghtCptlCostDolPerKw will be used, otherwise just OnghtCptlCostDolPerKw.  OnghCptCstDlKwInclCtng, ContingencyFactor, OnghtCptlCostDolPerKw  
CRF  Capital expenditures are annualized into the CRF term defined above  calculated  
τ  Tax rate paid (applied after depreciation credits). It is 39.2%.  
DPV  The present value of depreciation, depending on the MACRS schedule (Modified Accelerated Cost Recovery System):


8760  Hrs/Yr  Number of hours in a year.  
Capacity Factor  Yearly average percentage of power as a fraction of capacity  The average capacity factor defined with the data point will be used. If that is not available, the maximum capacity factor is used. Otherwise the default value defined for the technology (please see refer to the Levelizing Parameters for the default values based on the levelizing mode you have selected).  AvgCapacityFactor, MaxCapacityFactor  
All Inclusive O&M  US$/kW  Total (fixed and variable) cost of operations and maintenance of the plant, in $/kW.  This value would be used if provided (divided by the product of the Capacity Factor and 8760). If this value is not provided, then the fixed and variable O&M values would be used as shown in the formula above.  OMAllInclusive  
Fixed O&M  US$/kW  Fixed operations and maintenance cost of the plant per capacity in $ / kW.  This will not be used if the All Inclusive O&M is available. If this is zero, then this term will zero out and processing will continue. 
FixedOMDolPerKw  
Variable O&M  US$/mWh  Variable operations and maintenance cost of the plant per capacity in $ / kW.  This will not be used if the All Inclusive O&M is available. If this is zero, then this term will zero out and processing will continue. 
VariableOMDolPerMwh  
O&M  US$/kW  If the data point does not have any operational costs at all, then the same approach will be used with the Program Estimates; namely, for the given technology, if there is a program estimate for AllInclusive O&M, that will be used. If not, the program estimates for the technology fixed and variable O&M will be used. If none of these exist, then the LCOE will be set to zero.  
Fuel Price  US$/MMBtu  fuel cost of the plant in ($/mmBTU)  The cost depends on the type of fuel used:


Heat Rate  US$/MMBtu  The efficiency of the power plant in converting fuel into electricity  If the value is not defined in the data, zero is used.  HeatRate 
Levelized Cost of Fuel  LCOF
Levelized cost of fuel results in the US$/Gallon of Gasoline Equivalent (gge). This calculation is the cost of a fuel production plant, that is distributed over the lifetime of the plant, plus the pergallon production costs. The result is the approximate price at which the fuel would need to be sold to break even.
LCOF Parameters  

Term  Units  Description  Alternative Sources  Database Column  
Total Capital Cost  US$  Cost of the plant in $/gge  TotalCapitalCostDol  
CRF  Capital expenditures are annualized into the CRF term defined above  calculated  
Plant Scale  MGal/Yr  Number of millions of gallons of fuel produced in a year  ScaleMmGalYr  
Capacity Factor  Yearly average percentage of production as a fraction of total capacity capacity  OnlineCapctyFactorPrct  
O&M  US$/gge  Operations and maintenance cost of the plant  OperatingCost  
Delivered Feedstock Costs  US$/gge  This value is from the cost of the feedstock.  DlvrFstkCst  
Total Fuel Yield  units  Total fuel yield in gal fuel/ dry short ton biomass units  TtlFlYldGlFlDryShtTnBm  
Coproduct  US$/gal  Coproduct credit. The data point flag (IncludeCoprodCredit) determines if this should be included in the equation (and it typically is included).  CoprodCreditDlgal, IncludeCoprodCredit  

An energy correction ratio that only applies to ethanol. The value is 1.5. 
Levelized Cost of Driving  LCOD
Levelized cost of driving (LCOD) $ / mile for all vehicles other than PHEV. This calculation is essentially the distributed upfront cost of the vehicle plus the permile fuel cost.
The formula takes two forms depending on whether the vehicle uses a single type of fuel or a combination of electric and another type of fuel.
Vehicles – levelized cost of driving (LCOD) in $ / mile for all vehicles other than PHEV.
The formula includes terms for fuel and electric, but because these vehicles do not run as a hybrid, one of the terms will be zero (the %G or %E will be zero and the other 100%). The MPGG or MPGE has been calculated outside of the app and is stored in the CalculatedMpgg database column.
For PHEVs (defined by having a fuelType of: Gas & Elec, Diesel & Elec or h2 & Elec), which run on a combination of electricity and liquid fuel, the combined MPG (MPGGE) is calculated and used in the formula below, but here too, the actual calculated value is stored in the CalculatedMpgg column of the database and used directly by the app.
It is assumed that MPGE = z*MPGG, and the LCOD formula for PHEVs is:
LCOD Parameters  

Term  Units  Description  Alternative Sources  Database Column  
Capital Cost  US$  Cost of the new vehicle  alt  EstmtdVhclManufCst  
CRF  Capital expenditures are annualized into the CRF term defined above  calculated  
VMT  miles  Vehicle Miles Travelled, per year. Assumed to be 10,000  
Fuel Price  US$/gge  Retail cost of the fuel for gallon of gasoline equivalent.

FuelType  
%G  Percent of time driving on gasoline (ie 100%  %E)  calculated  
%E  Percent of time driving on electricity, which is looked up depending upon the BattryOnlyRngNomMiles value associated with the data. If none is provided, this is zero. If battery only range is 75 miles or more, then this value is one. Otherwise the table below lists the mapping.

BattryOnlyRngNomMiles  
MPGG  miles/gge  Miles Per Gallon of Gasoline  CalculatedMpgg  
MPGE  miles/gge  Miles Per Gallon of Gasoline Equivalent  CalculatedMpgg  
MPGGE  miles/gge  Total Miles Per Gallon of Gasoline Equivalent when considering running on gasoline and electric  CalculatedMpgg  
PG  US$/gge  Retail cost of a gallon of gasoline. Use Fuel Price lookup.  FuelType  
PE  US$/gge  Retail cost of a gallon of gasoline equivalent. Use Fuel Price lookup.  "Electricy"  
z  Indicating electric travel is 3.5 times as efficient on a delivered energy use basis. The value used is 3.5. 