Tuesday, June 14, 2011

Cost of solar power (12)

Recently I’ve had a flurry of German visitors to my blog.  They come from a finance discussion group, and are particularly interested in activities of the German company Solar Millennium.  Solar Millennium AG, headquartered in Erlangen, builds solar thermal power stations such as Andasol and Ibersol in Spain, and I have previously estimated the Levelised Electricity Cost for these installations (see posts Cost of solar power (3) and Cost of solar power (9)).

Solar Millenium has a joint venture with another German company, Ferrostaal AG in the USA.  The JV, called the Solar Trust of America, is based in Oakland and plans to build a very large solar thermal plant in Blythe in the extreme south-east of California.

Wikipedia reports that the following approvals are in place for this project:
·         California Energy Commission (approved September 2010)
·         Bureau of Land Management (approved October 2010)
·         US Department of Energy USD 2.1 billion loan guarantee (approved April 2011)

The San Francisco Chronicle reported on 19 April 2011 that preliminary construction began last year.  In the same article is reported that

“Chevron Energy Solutions, a division of the San Ramon Oil Giant, helped develop the Blythe project but will not oversee construction”.

In the German discussion group, contributor ulm000 (post #8614) reports that the Chevron connection is as follows:

“Da Chevron ein kleines Grundstück hatte auf dem SM das Blythe CSP-Kraftwerk baut, wurde Chevron auch in allen Dokumenten zusammen mit SM erwähnt ("development agreement").   Das steht auch genau so in den offiziellen Dokumenten der BLM.  Der Entwickler von Blythe ist die Solar Trust of America und sonst niemand und die STA gehört SM und Ferrostaal.”

In English …

“Chevron had a small piece of land on which Blythe is being built, and that’s why Chevron appears together with SM in all the documents. … That’s exactly how it appears in the official documents.  The developer of Blythe is the Solar Trust of America and no-one else, and the STA belongs to SMA and Ferrostaal.”

From a technical standpoint, the Blythe project is conventional.  The sun’s energy is collected in parabolic troughs and used to raise steam to power Rankine-cycle steam turbines with air-cooled condensers.  According to the Wikipedia article, when complete the Blythe project will consist of four separate installations that will produce 968 MW peak and 2,200 GWhr per year.  The collectors will occupy 28.43 km^2, and the claimed CO2 emissions savings will be 884,000 short tons (approx 802,000 tonnes) per year.  There was no mention of thermal storage in any of the documents I saw.

The first half of the project is estimated to cost USD 2.8 billion.  The estimated cost for the full project is stated by Wikipedia to be USD 6 billion, but that would be an imprecise estimate since the full project is expected to take six years to develop.  I’ll make my cost estimates on the first half of the project, namely 484 MW, 1,100 GWhr/yr, USD 2.8 billion, 401,000 tonnes CO2 abatement per year.

I now evaluate the Levelised Electricity Cost (LEC) 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 (3% of the total project cost), and
          government subsidies are neglected.
(For further commentary on my LEC methodology, see posts on 2011-04-23, 2011-04-27 and 2011-05-21.)

The results are:

Cost per peak Watt USD 5.79/Wp
LEC                            USD 315/MWhr

The components of the LEC are:
Capital           {0.094× USD 2.8 ×10^9}/{1.1 ×10^6 MWhr} = USD 239/MWhr
O&M              {0.030× USD 2.8 ×10^9}/{1.1 ×10^6 MWhr} = USD 76/MWhr

The cost of CO2 abatement is {0.094+0.03} × USD 2.8 × 10^9/4.01× 10^5 = USD 866/t CO2.  That represents expensive CO2 abatement, although, to be fair, the attraction of building such solar power stations is more than just CO2 abatement in the short term; there is also the development of industrial capacity that will be needed in the post-Carbon economy of the future.

By way of comparison, here are LEC figures for all projects I’ve investigated:

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)
Cost of solar power (6): USD 177/MWhr (Lazio, Italy, PV)
Cost of solar power (7): AUD 295/MWhr (Kogan Creek, Australia, CLFR pre-heat)
Cost of solar power (8): USD 248/MWhr (New Mexico, CdTe thin film PV)
Cost of solar power (9): EUR 218/MWhr (Ibersol, Spain, trough)
Cost of solar power (10): USD 251/MWhr (Ivanpah, California, tower)
Cost of solar power (11): CAD 445/MWhr (Stardale, Canada, PV)
Cost of solar power (12): USD 315/MWhr (Blythe, California, trough)

On these numbers, the LEC for the Blythe project is 25% higher than for another big US project currently under construction – Ivanpah, see Cost of solar power (10).  After allowing for currency conversions at the current rate, USD 1 =EUR 0.691, the LEC for Blythe is very similar to that for Andasol and Ibersol.

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