Abstract: In view of the limitation of the traditional economic evaluation of power grid which considers only initial cost, a cost analysis method based on the life cycle for power grid project investment is proposed. By considering the long\|term economic benefit of the project investment, analysis aims at minimizing relative life cycle cost, and the core problem is to establish the life cycle cost (LCC) model. According to the life cycle, the model will be divided into three phases: the construction cost, the operation cost and the final salvage value. In addition, techniques for construction cost between different strategies and the different operation cost caused by equipments selection are mainly considered. Meanwhile, by using of the sensitivity analysis method, it is found out that the biggest uncertainty factor that influence life cycle cost is load prediction value and the selection of investment time, which has important directive significance to the power grid project.