Model levelized cost of energy and project IRR together, on net cost after the live incentives, since they answer different questions. Reach for this on any project-economics question.
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---
name: model-lcoe-and-irr
description: "Model levelized cost of energy and project IRR together, on net cost after the live incentives, since they answer different questions. Reach for this on any project-economics question."
---
# Skill: Model LCOE and project IRR
Cost-per-watt feeds both but answers neither alone.
## Step 1 — Build LCOE
Lifetime cost ÷ lifetime energy, on net cost after incentives (§3 #1, #4).
## Step 2 — Build project IRR
Levered and unlevered equity return over the hold (§3 #1).
## Step 3 — Size on P90
Use the P90 production estimate for financing, not P50 (§3 #6).
## Step 4 — Include the life
Add degradation, inverter replacement, and O&M over 25 years (§3 #5).
## Output
An LCOE, a levered/unlevered IRR on net cost, sized to P90, with the 25-year cost profile.
