Wednesday, June 13, 2012

Cost of solar power (28)

I had intended that my next blog post would be on a major review of Concentrated Solar Power that appeared last week.  However, there was also a big announcement relating to the Australian Solar Flagships program, so let’s look at that first.

Two winners in the Flagships program were announced in June last year, and I analysed their Levelised Cost of Electricity (LCOE) here and here.  Since then, both successful bidders have struggled to complete their financial arrangements.  The Solar Dawn team has been given more time with their finances, but the Moree Solar Farm had to compete with others in a fresh application.

The outcome is that the PV project has been taken away from the Moree Solar Farm and awarded to a syndicate from AGL and First Solar.  From the AGL press release:

“AGL Energy Limited (AGL) has been selected by the Commonwealth Government as the successful proponent in the solar photovoltaic (PV) category of the Solar Flagships Program independent reassessment process.  AGL, together with First Solar (Australia) Pty Ltd (First Solar), will deliver large-scale solar PV power projects totalling 159 MW at two locations in New South Wales.

AGL will develop a 106 MW project at Nyngan and a 53 MW project at Broken Hill.  First Solar will provide engineering, procurement and construction services for both projects, using its advanced thin-film PV modules.”

The press release goes on to mention that the total project cost is approximately AUD 450 million, including AUD 129.7 million from the federal government and AUD 64.9 million from the NSW state government.

In response to my query, AGL has confirmed that the panels are fixed and that the 159 MW peak output is AC power to the grid.

When it comes to the annual output, the situation is not so clear.  The press release says the projects will provide enough power for 30,000 homes, with no mention of output in GWhr/yr.  In response to my e-mail query, AGL said the annual output would be around 365 GWhr/yr.

But that corresponds to a Capacity Factor of 365/(24*365*0.159) = 0.262, which seems too high for an installation with fixed panels.  By way of comparison, the Kagoshima facility in southern Japan has CF = 0.129, the NEXTDC facility in Melbourne has CF = 0.157, the GERO Solarpark in Germany has CF = 0.125, and the Kamberra project has CF = 0.172.  Why should this new project have CF = 0.262?

In his article on the Solar Flagships situation, Giles Parkinson at RenewEconomy also gives the AGL figures:  26% Capacity Factor at Nyngan, 27% at Broken Hill.

What to do?  I’m going to assume CF = 0.18 for the Nyngan/Broken Hill project.  (If fresh information comes to hand, I’ll update this post.)  So the annual output would be 0.18*24*365*0.159 = 251 GWhr/yr approximately.

I now evaluate the Levelised Cost of Electricity (LCOE) using my customary assumptions
          there is no inflation,
          taxation implications are neglected,
          projects are funded entirely by debt,
          all projects have the same interest rate (8%) and payback period (25 years), which means that the required rate of capital return is 9.4%,
          all projects have the same annual maintenance and operating costs (2% of the total project cost), and
          government subsidies are neglected.

For further commentary on my LCOE methodology, see posts on Real cost of coal-fired power, LEC – the accountant’s view, Cost of solar power (10) and (especially) Yet more on LEC.  Note that I am now using annual maintenance costs of 2% rather than 3% as in posts during 2011.

The results are as follows:

Cost per peak Watt              AUD 2.83/Wp
LCOE                                     AUD 205/MWhr

The components of the LCOE are:
Capital           {0.094 × AUD 450×10^6}/{251000 MWhr} = AUD 169/MWhr
O&M              {0.020 × AUD 450×10^6}/{251000 MWhr} = AUD 36/MWhr

By way of comparison, LCOE figures (in appropriate currency per MWhr) for all projects I’ve investigated are given below.  The number in brackets is the reference to the blog post, all of which appear in my index of posts with the title “Cost of solar power ([number])”:

(2)        AUD 183 (Nyngan, Australia, PV)
(3)        EUR 503 (Olmedilla, Spain, PV, 2008)
(3)        EUR 188 (Andasol I, Spain, trough, 2009)
(4)        AUD 236 (Greenough, Australia, PV)
(5)        AUD 397 (Solar Oasis, Australia, dish, 2014?)
(6)        USD 163 (Lazio, Italy, PV)
(7)        AUD 271 (Kogan Creek, Australia, CLFR pre-heat, 2012?)
(8)        USD 228 (New Mexico, CdTe thin film PV, 2011)
(9)        EUR 200 (Ibersol, Spain, trough, 2011)
(10)      USD 231 (Ivanpah, California, tower, 2013?)
(11)      CAD 409 (Stardale, Canada, PV, 2012)
(12)      USD 290 (Blythe, California, trough, 2012?)
(13)      AUD 285 (Solar Dawn, Australia, CLFR, 2013?)
(14)      AUD 263 (Moree Solar Farm, Australia, single-axis PV, 2013?)
(15)      EUR 350 (Lieberose, Germany, thin-film PV, 2009)
(16)      EUR 300 (Gemasolar, Spain, tower, 2011)
(17)      EUR 228 (Meuro, Germany, crystalline PV, 2012)
(18)      USD 204 (Crescent Dunes, USA, tower, 2013)
(19)      AUD 316 (University of Queensland, fixed PV, 2011)
(20)      EUR 241 (Ait Baha, Morocco, 1-axis solar thermal, 2012)
(21)      EUR 227 (Shivajinagar Sakri, India, PV, 2012)
(22)      JPY 36,076 (Kagoshima, Kyushu, Japan, PV, start July 2012)
(23)      AUD 249 (NEXTDC, Port Melbourne, PV, Q2 2012)
(24)      USD 319 (Maryland Solar Farm, thin-film PV, Q4 2012)
(25)      EUR 207 (GERO Solarpark, Germany, PV, May 2012)
(26)      AUD 259 (Kamberra Winery, Australia, PV, June 2012)
(27)      EUR 105 (Calera y Chozas, PV, Q4 2012)
(28)      AUD 245 (Nyngan and Broken Hill, thin film PV, end 2014?)

Conclusion

On these estimates, the new PV project (LCOE AUD205/MWhr) in the Solar Flagships program is clearly superior to the now-abandoned Moree Solar Farm (LCOE AUD 263/MWhr).  Moreover the cost per peak watt has dropped from AUD 6.15/Wp for the Moree Solar Farm to AUD 2.83/Wp for the new project.

This provides confirmation about the substantial fall in PV prices over the past year.

If I had used the CF = 0.262 figure provided by AGL, the LCOE would have been AUD 141/MWhr, which I think is too good to be true.  One further estimate is given by Jack Curtis of First Solar, as quoted in Giles Parkinson’s article:

“Jack Curtis from First Solar says the AGL project translates roughly to $180/MWh without subsidies”.

First Solar would have a different methodology to mine for LCOE calculations, and I acknowledge the uncertainty in the Capacity Factor I have used.  As I said, I’ll update this post if fresh information becomes available.


Update (16 June 2015):  The Nyngan plant is now on-line and Broken Hill will be completed later this year.  See my post of 2015-06-16 for an update on these estimates.

Thursday, June 7, 2012

Cost of solar power (27)

Now this is astonishing news!

I’ll start by quoting the full text of a press release issued three days ago by Solaria Energía y Medio Ambiente, S.A.

“Solaria develops a 60 MW plant in the province of Toledo in Spain

Madrid, 5 June 2012. - Solaria Energía y Medio Ambiente, S.A., only solar company listed in the Spanish Stock Exchange, begins the development of a 60 MW PV field plant in the area of Calera y Chozas, in the province of Toledo in Spain.

The plant will dump its output into the local grid at the corresponding market tariff, with no economic incentive and therefore competing with traditional energy sources.  This project is part of the generation investment plan that the company has for 2012 – 2015.

Solaria will carry out the development, engineering and management of the project, providing also its second generation high efficiency modules, as well as its leadership and technology in the photovoltaic sector.  The total project investment is estimated at 60 million Euros.

Thus, Solaria shows its commitment to the Spanish market where the grid parity is becoming a reality and where PV energy is already a mature technology, capable of competing with traditional energy sources.”

Let’s analyse the Levelised Cost of Electricity (LCOE) for this installation.

The cost of the project is known, EUR 60 million.  The peak output is given as 60 MW, but I expect that is DC output from the panels, not AC to the grid.  So, according to principles I discussed here and here, let me assume that the AC grid output is 53 MW, around 11-12% less.

What about the annual output?  At the given (low) price for the project, the panels would have to be fixed.  Recently I’ve reported Capacity Factors of 0.125 for the GERO Solarpark in northern Germany, 0.157 for the NEXTDC installation in Melbourne and 0.172 for the Kamberra Winery installation in Canberra.  Let me assume a Capacity Factor of 0.14 for Calera y Chozas.  That would give an annual output of 0.14×53×24×365 = 65,000 MWhr approximately.

I now evaluate the LCOE using my customary assumptions
          there is no inflation,
          taxation implications are neglected,
          projects are funded entirely by debt,
          all projects have the same interest rate (8%) and payback period (25 years), which means that the required rate of capital return is 9.4%,
          all projects have the same annual maintenance and operating costs (2% of the total project cost), and
          government subsidies are neglected.

For further commentary on my LCOE methodology, see posts on Real cost of coal-fired power, LEC – the accountant’s view, Cost of solar power (10) and (especially) Yet more on LEC.  Note that I am now using annual maintenance costs of 2% rather than 3% as in posts during 2011.

The results are dramatic:

Cost per peak Watt              EUR 1.13/Wp
LCOE                                     EUR 105/MWhr

The components of the LCOE are:
Capital           {0.094 × EUR 60×10^6}/{65000 MWhr} = EUR 87/MWhr
O&M              {0.020 × EUR 60×10^6}/{65000 MWhr} = EUR 18/MWhr

By way of comparison, LCOE figures (in appropriate currency per MWhr) for all projects I’ve investigated are given below.  The number in brackets is the reference to the blog post, all of which appear in my index of posts with the title “Cost of solar power ([number])”:

(2)        AUD 183 (Nyngan, Australia, PV)
(3)        EUR 503 (Olmedilla, Spain, PV, 2008)
(3)        EUR 188 (Andasol I, Spain, trough, 2009)
(4)        AUD 236 (Greenough, Australia, PV)
(5)        AUD 397 (Solar Oasis, Australia, dish, 2014?)
(6)        USD 163 (Lazio, Italy, PV)
(7)        AUD 271 (Kogan Creek, Australia, CLFR pre-heat, 2012?)
(8)        USD 228 (New Mexico, CdTe thin film PV, 2011)
(9)        EUR 200 (Ibersol, Spain, trough, 2011)
(10)      USD 231 (Ivanpah, California, tower, 2013?)
(11)      CAD 409 (Stardale, Canada, PV, 2012)
(12)      USD 290 (Blythe, California, trough, 2012?)
(13)      AUD 285 (Solar Dawn, Australia, CLFR, 2013?)
(14)      AUD 263 (Moree Solar Farm, Australia, single-axis PV, 2013?)
(15)      EUR 350 (Lieberose, Germany, thin-film PV, 2009)
(16)      EUR 300 (Gemasolar, Spain, tower, 2011)
(17)      EUR 228 (Meuro, Germany, crystalline PV, 2012)
(18)      USD 204 (Crescent Dunes, USA, tower, 2013)
(19)      AUD 316 (University of Queensland, fixed PV, 2011)
(20)      EUR 241 (Ait Baha, Morocco, 1-axis solar thermal, 2012)
(21)      EUR 227 (Shivajinagar Sakri, India, PV, 2012)
(22)      JPY 36,076 (Kagoshima, Kyushu, Japan, PV, start July 2012)
(23)      AUD 249 (NEXTDC, Port Melbourne, PV, Q2 2012)
(24)      USD 319 (Maryland Solar Farm, thin-film PV, Q4 2012)
(25)      EUR 207 (GERO Solarpark, Germany, PV, May 2012)
(26)      AUD 259 (Kamberra Winery, Australia, PV, June 2012)
(27)      EUR 105 (Calera y Chozas, PV, Q4 2012)

[Note: all estimates made using 2% annual maintenance cost, and I’ve assumed the Calera y Chozas plant will be finished this year.]

Conclusion

For some time, we’ve been hearing about the dramatic fall in PV prices.  Until now, however, my results for the LCOE have not shown an abrupt plunge over time, rather more of a steady decrease.  But that has changed dramatically with the data from Calera y Chozas, for which the LCOE is about half of recent values (such as the GERO Solarpark).

The only other similarly dramatic result above is for Lazio, number (6) on the list, and I have always been suspicious of the data for that installation, which was completed before the big recent fall in PV prices.

It’s worthwhile concluding with an excerpt from the last sentence of the press release above.  In the Spanish market,

“grid parity is becoming a reality and … PV energy is already a mature technology, capable of competing with traditional energy sources.”

If this data for Calera y Chozas is correct, these low prices will wash over all PV markets in the near future.  Fossil fuel generators should be gravely concerned about the viability of their present business model.

Coming up next

I’ll comment on a major report on Concentrated Solar Power issued this week by the Australian Solar Institute.

Wednesday, June 6, 2012

Cost of solar power (26)

Giles Parkinson, the redoubtable chief correspondent for RenewEconomy, has a story today about a PV installation on the roof of the Kamberra Winery in Canberra, Australian Capital Territory.

This facility, which will be opened this week, is the product of a Joint Venture between SREC (Sustainable Renewable Energy Company, Melbourne-based) and the Elvin Group (a “green-tinged” Canberra-based concrete company).  I’ve never previously heard of concrete companies being green-tinged, but I welcome the concept.

According to the SREC web site:

“SREC Elvin has installed what is currently the largest solar PV installation in the ACT: a 146kW rooftop installation at the Kamberra Winery. The solar power station consists of 770 SolarOne solar modules together with 11 Power One Aurora 3-phase inverters.”

Parkinson reports that the installation is “understood to have cost just under AUD 500,000” and will generate “approximately 220 MWhr of electricity per year”.  Let’s go with the AUD 500,000 cost and assume the annual output is AC to the grid.

The Capacity Factor for the Kamberra installation is given by 220/(24×365×0.146), or 0.172.  That seems about right for fixed PV panels, sloping to the north, in a reasonably sunny location.  (Canberra is at 35.5°S latitude, elevation 585 m, mean annual solar exposure 17.8 MJ/m^2.)

I now evaluate the LCOE using my customary assumptions

          there is no inflation,
          taxation implications are neglected,
          projects are funded entirely by debt,
          all projects have the same interest rate (8%) and payback period (25 years), which means that the required rate of capital return is 9.4%,
          all projects have the same annual maintenance and operating costs (2% of the total project cost), and
          government subsidies are neglected.

For further commentary on my LCOE methodology, see posts on Real cost of coal-fired power, LEC – the accountant’s view, Cost of solar power (10) and (especially) Yet more on LEC.  Note that I am now using annual maintenance costs of 2% rather than 3% as in posts during 2011.

The results are:

Cost per peak Watt              AUD 3.42/Wp
LCOE                                     AUD 259/MWhr

The components of the LCOE are:

Capital           {0.094 × AUD 500,000}/{220 MWhr} = AUD 214/MWhr
O&M              {0.020 × AUD 500,000}/{220 MWhr} = AUD 45/MWhr

By way of comparison, LCOE figures (in appropriate currency per MWhr) for all projects I’ve investigated are given below.  The number in brackets is the reference to the blog post, all of which appear in my index of posts with the title “Cost of solar power ([number])”:

(2)        AUD 183 (Nyngan, Australia, PV)
(3)        EUR 503 (Olmedilla, Spain, PV, 2008)
(3)        EUR 188 (Andasol I, Spain, trough, 2009)
(4)        AUD 236 (Greenough, Australia, PV)
(5)        AUD 397 (Solar Oasis, Australia, dish, 2014?)
(6)        USD 163 (Lazio, Italy, PV)
(7)        AUD 271 (Kogan Creek, Australia, CLFR pre-heat, 2012?)
(8)        USD 228 (New Mexico, CdTe thin film PV, 2011)
(9)        EUR 200 (Ibersol, Spain, trough, 2011)
(10)      USD 231 (Ivanpah, California, tower, 2013?)
(11)      CAD 409 (Stardale, Canada, PV, 2012)
(12)      USD 290 (Blythe, California, trough, 2012?)
(13)      AUD 285 (Solar Dawn, Australia, CLFR, 2013?)
(14)      AUD 263 (Moree Solar Farm, Australia, single-axis PV, 2013?)
(15)      EUR 350 (Lieberose, Germany, thin-film PV, 2009)
(16)      EUR 300 (Gemasolar, Spain, tower, 2011)
(17)      EUR 228 (Meuro, Germany, crystalline PV, 2012)
(18)      USD 204 (Crescent Dunes, USA, tower, 2013)
(19)      AUD 316 (University of Queensland, fixed PV, 2011)
(20)      EUR 241 (Ait Baha, Morocco, 1-axis solar thermal, 2012)
(21)      EUR 227 (Shivajinagar Sakri, India, PV, 2012)
(22)      JPY 36,076 (Kagoshima, Kyushu, Japan, PV, start July 2012)
(23)      AUD 249 (NEXTDC, Port Melbourne, PV, Q2 2012)
(24)      USD 319 (Maryland Solar Farm, thin-film PV, Q4 2012)
(25)      EUR 207 (GERO Solarpark, Germany, PV, May 2012)
(26)      AUD 259 (Kamberra Winery, Australia, PV, June 2012)

[Note: all estimates made using 2% annual maintenance cost.]

Note that the NEXTDC and the Kamberra installations, numbers 23 and 26 respectively in the list above, have similar estimates for the LCOE.  Both these figures are also similar to that for the GERO Solarpark at today’s exchange rate.

Parkinson reports on comments from the CEO of SREC, Glen Currie:

"the economics of solar PV are changing rapidly.  The Kamberra facility was built last year at a capital cost of around $3.50/watt, but Currie says the cost has come down since then to around $2.20/watt - courtesy of a dramatic fall in the cost of panels (from more than $2/W to 80c/W) and smaller falls in the price of inverters and frames."

Therefore at today's costs, the Kamberra facility would have LCOE of AUD 259x2.20/3.50 = AUD 163.  We'll see if those predictions are confirmed in installations over the coming year.

Finally a note to readers ...

I'd be very happy to receive data on installations so that I can add further analyses to this list.  All that is required is peak output (in AC MW to the grid), cost (in whatever currency) and annual output (MWhr electricity per year).  Where figures on CO2 avoided are available, I'll provide an estimate for the cost of CO2 abatement.