What does LCOS capture beyond the initial capital cost?

• A. Cost per kWh of installed power.
• B. LCOS captures the lifetime operation and maintenance costs, degradation, round-trip efficiency, and annualized capital costs.
• C. It's the operational cost only.
• D. It is the cost of building a storage facility per year.

Answer: (B)

LCOS measures the lifetime cost per unit of energy delivered by a storage system, spreading all costs over the total energy output. Beyond the upfront capital cost, it includes what you’ll spend to operate and maintain the system over its life, since ongoing expenses can significantly affect overall economics. It also accounts for degradation, because battery capacity and efficiency fade with use, meaning the system delivers less energy over time and may require replacements or upgrades. Round-trip efficiency losses matter too, since not every kWh stored can be retrieved without losses, so LCOS reflects the energy that actually reaches users. Finally, LCOS annualizes the capital costs, capturing how the initial investment is financed and paid back over the asset’s life. Put together, this gives a per-kWh figure that truly reflects what the storage will cost over its entire lifetime, not just the upfront price.