I came to understand that cost of capital and discount rate are two different parameters, although they are also used interchangeably. Discount rate is used to get the future value of a technology in terms of present value. While cost of capital is the rate of return expected to make a risky investment viable.

This is a simplified formula of Levelised Cost of Electricity (LCOE): enter image description here

r is mentioned as discount rate. So, does discount rate and cost of capital mean the same thing in terms of LCOE?



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