Levelisation

Levelisation is a concept used in various fields, primarily in economics and engineering, to compare and analyze costs or benefits that occur over different time periods. The core idea is to adjust future monetary values to their present-day equivalents. This is necessary because money today is generally worth more than the same amount of money in the future, due to factors like inflation, opportunity cost, and the time value of money.

In economics, levelisation is often applied to projects with long-term cash flows, such as infrastructure investments or renewable energy projects. The process involves discounting future revenues or costs back to their present value using a discount rate. This allows for a more accurate comparison of the overall economic viability of different projects, even if their investment and return profiles are spread across many years.

In engineering, particularly in electrical power systems, levelisation refers to ensuring a stable and consistent output from energy sources that might otherwise fluctuate. For example, renewable energy sources like solar and wind power are intermittent. Levelisation in this context involves strategies and technologies, such as energy storage or grid management systems, to smooth out the variability and provide a reliable supply of electricity. This ensures that the power delivered is consistent and meets demand, regardless of the source's instantaneous availability.