Analysis of the WACC in LCOE calculations

• Type: Article in International Conference Proceedings Book
• Date: 2017

Authors

Martinez Fernandez, P (Author) Other; de Llano Paz, F (Author) Other; Calvo Silvosa, A (Author) Other; Soares, I (Author) FEP

Conference proceedings International

Title: PROCEEDINGS OF THE 3RD INTERNATIONAL CONFERENCE ON ENERGY AND ENVIRONMENT (ICEE 2017)

Pages: 636-642

3rd Internacional Conference on Energy and Environment (ICEE) - Bringing Together Economics and Engineering

Porto, PORTUGAL, JUN 29-30, 2017

Indexing

ISI Web of Knowledge - 0 Citations

Other information

Authenticus ID: P-00P-QKN

Abstract (EN): Last year IEA and NEA published their 2015 edition of "Projected Costs of Generating Electricity" (IEA; NEA, 2015). The work is dedicated to calculate the levelized cost of electricity, commonly known by LCOE. The LCOE can be defined as the constant average price at which the present value of the whole lifetime categorised costs and expenditures of a specific technology generation plant equals the present value of its revenues. We can find in the literature a lot of studies about the LCOE sensitivity to its factors. In this paper we focus on one of those factors: the discount rate used to calculate the present value of both revenues and expenses. From Finance, we take the term structure of interest rates -a representation of the well-known empiric phenomenon of the interest being higher as their term increases- and the capital assets pricing model or CAPM -a model that explains how the return of an asset varies according to the market variations- and we introduce them in the LCOE calculation formula, which is certainly a new point of view in the literature.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 7