2.3. Life-cycle cost analysis
The economic performance between different options was compared
based on the life-cycle cost (LCC) result, which is known as
the total cost of ownership of machinery and equipment. In this
study, to build a sound business case for action, life cycle cost analysis
(LCCA) is the best way to determine which alternative between
battery storage and pumped water storage is the most
economically attractive.
The various costs associated with the whole life cycle are usually
classified into: initial costs; operation, maintenance, and repair
costs; replacement costs; and residual/salvage values [44–46]. In
order to add and compare cash flows incurred at different times
during the study period, they have to be made time-equivalent
[47]. Hence the LCC approach converts all cash flows, whenever
they occur, to present equivalent values by use of a selected discount
rate. In this study, a 10% discount rate [48] is chosen as
the base case study. The LCC analysis period was taken as 25 years
(the usual lifetime of PV panels), beginning with the base date, the
date to which all cash flows are discounted.
In LCCA, the present value of all capital and recurring costs in
the system can be estimated based on the following equations:
Present value calculation: