There are two formulas for calculating the COE as follows:
1) COE= (Total cost of generation of energy for one year ($))/ (Total energy generated in one year (kWh))
2)COE= (Total cost of generation of energy for one year ($))/ (Total energy supplied in one year (kWh))
Which formula is good for planning purpose?
For planning or to estimate the cost of energy the second formula will give you a better picture or figure as compared to first one. the cost function will always be calculated with respect to energy supplied rather than energy generated.
Thank you very much Mr. Pravan Kumar A. V. It would be better if you give any reference justifying your answer?
The formula for calculating the COE per unit is as follows:
COE= (Total cost of generation of energy for one year ($))/ (Total energy generated in one year (kWh).
See paper also through link.
https://shareok.org/bitstream/handle/11244/10241/Mathema_okstate_0664M_11770.pdf?sequence=1
The second formula can be realistic for planning the cost of energy due to also inclusion leakage-losses values.
You can calculate COE as follows:
Numerator: Amortized capital investment over the expected life of the plant + annual operating and maintenance costs (O&M)
Denominator: Electricity generation (MW) x capacity factor (%)
To get COE ($/kWh), just divide the numerator by the denominator as shown above. Make sure your units are correct in both the numerator and denominator in order to get COE in S/kWh
In my opinion too, the second formula seems to be more realistic as supplied energy will gives revenue which can decide COE.
It is better to use Levelised cost of energy (LCOE) than only considering generation for one year, unless you annualized it.
Calculation formula and other important points are explained on this web links.
http://www.powermag.com/a-more-accurate-way-to-calculate-the-cost-of-electricity/
http://www.anapsid.org/electricitycost.html
I think first formula is better than second due to it has same products in the numerator and denominator of formula. However, maybe, losses can be added to first formula.
The second formula can be realistic for planning the cost of energy due to also inclusion leakage-losses values.
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