Monday, April 23, 2012

Cost of solar power (22)

Today is a special day for me.  I’m being interviewed by a reporter for the New Matilda magazine, who is writing a series of studies entitled “a day in the life of ….”  His study at the moment is on the solar energy industry in Australia, with me as the subject.  As part of the day, I’ll prepare this blog post on my favourite topic – the cost of solar power.

The utility-scale project I’ll analyse is the Kagoshima Nanatsujima Mega-Solar Power Plant, to be built at the southern tip of the island of Kyushu in southern Japan.  The project is the result of collaboration between three large agencies – Kyocera Corporation (solar cell manufacturer, construction and maintenance), IHI Corporation (lease of the land and subsequent operation) and Mizuho Corporate Bank (financing).  Another four entities will assist with financing.

As the project information reports:

“Expectations and interest in solar energy have heightened to a new level in Japan with the planned July 1 start of a revamped feed-in tariff (FIT) program and the need to resolve power supply issues caused by the effects of the Great East Japan Earthquake.  Under these circumstances the three companies have reached this basic agreement as they believe that it is their corporate responsibility to proactively tackle environmental problems.”

The project will involve 290,000 Kycera multicrystalline solar modules with a total peak output of 70 MW.  Although it is not clear from the documentation, I’m assuming this is AC output at grid voltage.  The project descriptions I read are not specific as to whether the PV panels will be fixed or tracking, but, whatever, the area of the site is 127 Ha, or approximately 27 baseball stadiums.

 The 70 MW peak output corresponds to almost 40% of the total amount of public/industrial solar power equipment shipped domestically in Japan in 2011.  The annual output is estimated to be 79 GWhr per year, enough for 22,000 average households, and will offset approximately 25,000 t of CO2 per year.  Construction is due to start in July 2012.

The project cost is estimated at 25 billion Yen.

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              JPY 357/Wp
LCOE                                     JPY 36,076/MWhr

The components of the LCOE are:

Capital           {0.094 × JPY 25 × 10^9}/{79,000 MWhr} = JPY 29,747/MWhr
O&M              {0.020 × JPY 25 × 10^9}/{79,000 MWhr} = JPY 6,329/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)

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

The Kagoshima LCOE of JPY 36,076/MWhr converts to USD 444/MWhr and EUR 337/MWhr at current exchange rates (1 USD = JPY 81.24, 1 EUR = JPY 106.92).  That is high compared to other recent projects I have analysed.  This is even more remarkable in view of the sunny location in southern Kyushu, where the insolation would presumably be much higher than in northern Germany.  A recent project for comparison would be Meuro in northern Germany, number (17) above, for which the LCOE is EUR 228/MWhr.

The Capacity Factor for the Kagoshima plant would be 79,000/(70×24×365) = 0.129, not especially high, and leading me to suspect the PV panels will be fixed.

I calculate the cost of CO2 abatement as JPY 36,076×79,000/25,000 = JPY 114,000/t CO2 abated, or USD 1,403/t CO2 or EUR 1,066/t CO2.  That is expensive abatement!

Footnote: the deadline for the New Matilda article is 15 May 2012, so it would presumably appear around the end of May.  Access to the site (not pay-walled) is at www.newmatilda.com.

1 comment:

  1. hi. the cost factors seem impressive. thanks for sharing the details. do keep posting more updates.

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