Economics of PV
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Power costs
The PV industry is beginning to adopt levelized cost of energy (LCOE) as the unit of cost. The results of a sample calculation can be found on pp. 52, 53 of the 2007 DOE report describing the plans for solar power 2007-2011 [2]. For a 10 MW plant in Phoenix, AZ, the LCOE is estimated at $0.15 to 0.22/kWh.

The table below is a pure mathematical calculation. It illustrates the calculated total cost in US cents per kilowatt-hour of electricity generated by a photovoltaic system as function of the investment cost and the efficiency, assuming some accounting parameters such as cost of capital and depreciation period. The row headings on the left show the total cost, per peak kilowatt (kWp), of a photovoltaic installation. The column headings across the top refer to the annual energy output in kilowatt-hours expected from each installed peak kilowatt. This varies by geographic region because the average insolation depends on the average cloudiness and the thickness of atmosphere traversed by the sunlight. It also depends on the path of the sun relative to the panel and the horizon.

Panels can be mounted at an angle based on latitude, which can add to total energy output[69]. Solar tracking can also be utilized to access even more perpendicular sunlight, thereby raising the total energy output. The calculated values in the table reflect the total cost in cents per kilowatt-hour produced. They assume a 10% total capital cost (for instance 4% interest rate, 1% operating and maintenance cost, and depreciation of the capital outlay over 20 years).