The life-cycle cost (LCC) of a project it the total amount of all costs incurred by the project from its initial design stages to its decommissioning.
Some of these costs are:
To determine what the life-cycle cost of a project will be, firms carry out life-cycle cost analysis (LCCA). A LCCA takes into account all costs, from the cost of construction, cost of fuel or repairs to the cost imposed by emissions from the project. The analysis takes into account all known and projected costs. Costs such as the social cost from pollution are difficult to quantify and therefore the LCCA is not exact. The LCCA of a project allows firms to compare different projects to determine which is the cheapest in the long term.
The LCCA is usually presented in the form of the levelized cost of energy (LCOE) for a project. The LCOE measures these costs over the lifetime of a plant and determines how much it costs to produce an amount of energy (usually per MWh) The LCCA of a project can be used to compare the lifetime costs of one project compared to another.