Tuesday, April 10, 2012

Cost of solar power (21)

I have wanted for some time to analyse the Levelised Cost of Electricity (LCOE) for a utility-scale solar project in Asia.  Until now, I couldn’t find suitable data for an analysis, but that has changed (at least to some extent) with data available for the 125 MW Shivajinagar Sakri solar PV plant in India.

The tender document for the first 25 MW module of the plant is available at the Maharashtra Generation Company’s web site (www.mahagenco.in/NIT-Format25MW.pdf), and some details below will be quoted from an article by Sarosh Bana in Volume 13, Issue 1 of renewable energy focus.

The plant will be built in Dhule in the northern part of Maharashtra state in India.  Five generation blocks will be constructed, each of 25 MW.  Three blocks will be built using crystalline silicon panels and the other two will use thin film panels.  At an estimated 17% capability factor for what should be a very sunny location, the project will deliver 186,150 MWhr per year.

According to Bana, the EPC tender from Mahagenco determines the capital cost of the project to be EUR 1.78 million per MW.  If so, the cost would be EUR 222.5 million.  Here, however, the data becomes contradictory because there is an official report from the German government concerning the loan agreement:

“To promote development of renewable energy in India, the German Government-owned development bank KfW signed a Loan Agreement worth EUR 250 million (approximately Rs 1,600 Crore) with the Government of India on 24 August 2011 …

The concessional loan will finance a 125 MW solar PV power plant to be constructed by MAHAGENCO at Shivajinagar, Sakri, in the Dhule district of Maharashtra with the option for further expansion by 25 MW.  Sakri Solar Power Plant will be the largest of its kind in the world.  Its total costs are estimated at EUR 370 million (Rs 2,370 Crore) and will be funded by the loan amount from KfW and the Maharashtra state government’s contribution.  The loan carries a concessional interest rate, with a 12 year repayment period, including a two year moratorium.  The power plant is due to be commissioned by March 2012.”

So the money is available, helped enormously by a generous loan from the German government, and the plant will presumably be built.  But what is the actual cost?  In the absence of further information, let me use the figure of EUR 370 million.

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 and Cost of solar power (10).  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              EUR 2.96/Wp
LCOE                                     EUR 227/MWhr

The components of the LCOE are:
Capital           {0.094 × EUR 370 × 10^6}/{186,150 MWhr} = EUR 187/MWhr
O&M              {0.020 × EUR 370 × 10^6}/{186,150 MWhr} = EUR 40/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, 2012)
(21)      EUR 227 (Shivajinagar Sakri, India, 2012)

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

This LCOE for the Shivajinagar plant seems reasonable in comparison with recent utility-scale PV plants in Europe, e.g. Meuro (number 17 above).  If I had used the lower figure of EUR 222.5 million as indicated by the tender document, the LCOE figure would have been EUR 137/MWhr, which I think is too good to be true.

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