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Life cycle sustainability assessment in the energy sector 129

2.2 Life cycle costing and associated techniques
Economic indicators in LCSA are normally based on conventional eco-
nomic metrics, aligned with the life cycle perspective of LCSA where pos-
sible. A popular approach is that of life cycle costing (LCC). Like LCA, LCC
follows the life cycle of a product or system within specified system bound-
aries. However, instead of tracking environmental flows, it includes only
monetary inputs and outputs throughout the system.
Therefore LCC is quite well aligned with the ISO 14040/44 method-
ology for LCA discussed before. In fact, the methodology for LCC proposed
by Swarr et al. (2011) is based on several years of work by the Society of
Environmental Toxicology and Chemistry (SETAC), which has played a
leading role in the development and standardization of LCA; thus LCC is
directly intended to align with LCA.
Under this approach, the life cycle cost of a product or process is the sum
of all economic costs incurred directly by actors in the life cycle. This can be
expressed according to the key stages of the life cycle which, for an energy
generating asset or piece of technology, might be represented simply as
follows:

LCC ¼ C C + C FO + C VO + C W + C E + C T
where
LCC¼Total life cycle cost
C C ¼Capital cost
C FO ¼Fixed operating costs
C VO ¼Variable operating costs
C W ¼Cost of waste management, including recycling
C E ¼Cost of end-of-life disposal (e.g., decommissioning)
C T ¼Cost of transport between stages
In many cases it is possible to estimate LCC values directly from LCA
modeling inputs: the latter will include flows of materials and energy
throughout the life cycle, therefore attaching cost data to those flows results
in a methodologically harmonized LCC model.
From LCC it is possible to derive other common economic indicators,
such as value added (VA). VA is defined as the sale price minus the total costs
of bought-in materials and/or services; the latter represented by LCC. Thus
the VA accrued over the life cycle can be estimated as follows:

VA ¼ SR LCC