Wednesday, March 30, 2011

Cost of solar power (6)

I regularly scan press releases in order to obtain details about new solar projects.  According to my methodology for estimating the cost of solar power, I need three key pieces of information about each project: the peak power output, the annual output and the project cost.  Of these, the project cost is usually confidential and therefore not given.  In a few cases, project developers give the cost as if they are almost boasting of their capacity to put together an impressive deal.  In a few other cases governments contribute financial support and, as a result, project costs have to be disclosed to taxpayers.

Even then, there is sometimes a problem with the annual output of the project.  On occasions you can make an educated guess about the output from statements like “the project will save xxx tonnes of CO2 emissions”.  But that is always going to be rather risky.

To prepare today’s post, I investigated about 40 projects until I finally found one that provided the requisite three items of information.  The project is described as follows on the website of the developers, ABB:

“ABB, the leading power and automation technology group, has won a $50 million order from Phenix Renewables to deliver a 24 megawatt (MW) photovoltaic (PV) solar power plant in Lazio, central Italy.

Once connected to the grid, the Phenix solar plant will supply up to 35 gigawatt-hours (GWh) of electricity a year, avoiding the generation of over 25,000 tons of CO2 emissions, equivalent to the annual emission of over 10,000 European cars.

ABB will be responsible for the design, engineering, erection, civil works and commissioning of the plant. ABB’s modular EBoP (electrical balance of plant) concept will enable fast track execution within four months.

The 24.2 MW plant is based on single-axis trackers, which precisely follow the position of the sun to position PV panels at the best angle for maximum energy production. Key ABB products in this project include low- and medium-voltage switchgear, transformers, cables, the automation and control system and protection equipment. ABB will also build a 150 kilovolt (kV) substation equipped with the latest monitoring and control system to facilitate reliable and efficient integration of the electrical power generated by the solar panels into the grid. The PV panels will be supplied by the Norwegian company, REC (Renewable Energy Corporation) in consortium with ABB.”
[Press release dated 7 March 2011]
Note the outstanding construction time (four months) and the comments about CO2 emissions saved.  Note also the clear description of the breadth of engineering competencies required for projects such as these.

To estimate the cost of solar power from this project, I make my usual 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), and
·         all projects have the same annual maintenance and operating costs (3% of the total project cost), and
·         government subsidies are neglected.

That gives for the Lazio project:

Cost per peak Watt     USD 2.08/Wp
LEC                            USD 177/MWhr

The components of the LEC are:
CAPEX           {0.094× USD 50×106}/{35×103 MWhr} = USD 134/MWhr
OPEX             {0.030× USD 50×106}/{35×103 MWhr} = USD 43/MWhr

By way of comparison, here are LEC figures I have calculated for some other projects:

Cost of solar power (2): AUD 199/MWhr (Nyngan, Australia, PV)
Cost of solar power (3): EUR 547/MWhr (Olmedilla, Spain, PV)
Cost of solar power (3): EUR 205/MWhr (Andasol I, Spain, trough)
Cost of solar power (4): AUD 257/MWhr (Greenough, Australia, PV)
Cost of solar power (5): AUD 432/MWhr (Whyalla, Australia, dish)


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