FAQ: Fixed Charge Rate Economic Model (FCR) #316
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Users often ask: When should I use FCR and what are its limitations? |
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Answer: The LCOE calculations for various Economic Models may not match in certain scenarios (and thus will produce variable NPV values) because the FCR method is “is appropriate for very preliminary stages of project feasibility analysis before you have many details about the project's costs and financial structure” and “useful for large-scale studies of market trends”1. Therefore, the FCR Economic Model should only be used early in the techno-economic modeling process when the NPV is very preliminary. Later in the process, use Standard Levelized Cost or BICYCLE Financial Models when the financial picture is clearer, and the LCOE and NOV will be correctly coupled. Footnotes |
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Answer: The LCOE calculations for various Economic Models may not match in certain scenarios (and thus will produce variable NPV values) because the FCR method is “is appropriate for very preliminary stages of project feasibility analysis before you have many details about the project's costs and financial structure” and “useful for large-scale studies of market trends”1. Therefore, the FCR Economic Model should only be used early in the techno-economic modeling process when the NPV is very preliminary. Later in the process, use Standard Levelized Cost or BICYCLE Financial Models when the financial picture is clearer, and the LCOE and NOV will be correctly coupled.
Footnotes
LCOE Calc…