Thursday, May 10, 2012

Cost of solar power (24)

Earlier this week, I attended a PV seminar organised by the German-Australian Chamber of Trade and Commerce in Sydney.  As often the case in the past, I was impressed by the volume of activity associated with the business of renewable energy in Germany. 

One of the memorable talks on the day was by Kobad Bhavnagri of Bloomberg New Energy Finance, with whom I was also able to have a chat over lunch.  His presentation was on prediction of the Levelised Cost of Electricity (LCOE) from PV and wind up until 2020.  I should stress that he was concerned with utility-scale projects, not rooftop.

Bloomberg NEF employs a lot of smart guys like Bhavnagri, and their methodology to estimate the LCOE is more thorough than mine.  To obtain hard data on cost and output, which is usually a struggle for me, they go directly to the financiers.  The financiers, banks or the like, necessarily have access to the required data and  presumably provide it to Bloomberg NEF under confidentiality arrangements so details for individual projects aren’t made public.  Bloomberg NEF then gets their accountants (I was going to say bean-counters, but I don’t want to be pejorative) to calculate the LCOE.

Bhavnagri’s view is that electricity from wind is cheaper than electricity from PV today, and is likely to remain so all the way to 2020.  His LCOE estimates I jotted down during the talk were as follows (all figures $ per MWhr):

Wind: 94-140 (2011), 94-140 (2015), 85-120 (2020)
Solar PV: 210-310 (2011), 180-260 (2015), 150-220 (2020)
Solar thermal: 280-360 (2011)

My LCOE estimates for recent projects, as summarised at the end of this post, are in the same range as those provided by Bloomberg NEF, and I was rather encouraged by this presentation from an expert.  I’ll continue to use my methodology to estimate the LCOE for solar projects.

Today’s project is the Maryland Solar Farm.  On 14 March 2012, First Solar Inc. announced

“that it has purchased a 100% stake in a 20 MW solar photovoltaic (PV) plant under development in the U.S. state of Maryland, which will employ its cadmium telluride thin film PV modules.  The company plans to begin construction of the Maryland Solar Farm in Hagerstown, Maryland, in the second quarter of 2012 and complete the plant by the fourth quarter of the year. 

The USD 70 million PV plant will be built on one square kilometer of land owned by the State of Maryland, which is currently part of a state prison. 

There are only two currently operational PV plants on the East Coast of the United States larger than the Maryland Solar Farm.”

I found it difficult to obtain a figure for the annual output of the project, but Solarbuzz reports

“First Solar today announced its 100 per cent stake in Maryland Solar, a 20-megawatt (AC) photovoltaic solar power project in Hagerstown, Maryland. ...The project … is expected to start construction in Q2 2012 and be completed in Q4 2012. It will use First Solar’s advanced thin film PV modules to generate enough clean, renewable energy to power approximately 2,700 average Maryland homes, displacing approximately 23,000 metric tons of CO2 annually—the equivalent of taking 4,400 cars off the road each year.”

Well, that’s all I have to go on with, so I’ll estimate the annual output in two ways.  But before I do, let me comment on just how quickly these large PV projects are completed.  I doubt that construction of a 20 MW Rankine-cycle power station (solar, gas or coal) could be completed between Q2 and Q4 of one year. 

Now to estimate the output:

(1)  I expect that most of Maryland’s electricity comes from coal-fired generation, and let me assume an emissions intensity of 0.9 t CO2 per MWhr.  So the annual output would be 23,000 t / 0.9 (t/MWhr) = 25,556 MWhr.

(2) Or, let’s assume a Capacity Factor of 0.14 for the Maryland Solar Farm, which would give an annual output of 20 × 24 × 365 × 0.14 = 24,528 MWhr

Well, those estimates don’t agree exactly, but they indicate an annual output of 25,000 MWhr might be about right.

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              USD 3.50/Wp
LCOE                                     USD 319/MWhr

The components of the LCOE are:
Capital           {0.094 × USD 70 × 10^6}/{25000 MWhr} = USD 263/MWhr
O&M              {0.020 × USD 70 × 10^6}/{25000 MWhr} = USD 56/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)

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

On these estimates, the LCOE for the Maryland Solar Farm is at the upper end of the range described by Bhavnagri of Bloomberg NEF.  Maybe my estimate for the annual output is a bit low?

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