ABSTRACT
This chapter introduces the method of life-cycle costing (LCC), which accounts for all costs associated with a system over its lifetime, taking into account the time value of money. It explores some of the economic considerations that enter the decision process when someone expresses an interest in owning a photovoltaic (PV) system. The chapter also introduces the concept of externalities. Externalities are costs that are not normally directly associated with an item. The costs of a PV system include acquisition costs, operating costs, maintenance costs, and replacement costs. The LCC of an item consists of the total cost of owning and operating an item over its lifetime. Calculating the LCC of an item provides important information for use in the process of deciding which choice is the most economical. When performing an LCC, sometimes the cost of a component, a fuel or the operation of a system may be affected by a subsidy or subsidies.
