Thursday, June 7, 2012

Cost of solar power (27)

Now this is astonishing news!

I’ll start by quoting the full text of a press release issued three days ago by Solaria Energía y Medio Ambiente, S.A.

“Solaria develops a 60 MW plant in the province of Toledo in Spain

Madrid, 5 June 2012. - Solaria Energía y Medio Ambiente, S.A., only solar company listed in the Spanish Stock Exchange, begins the development of a 60 MW PV field plant in the area of Calera y Chozas, in the province of Toledo in Spain.

The plant will dump its output into the local grid at the corresponding market tariff, with no economic incentive and therefore competing with traditional energy sources.  This project is part of the generation investment plan that the company has for 2012 – 2015.

Solaria will carry out the development, engineering and management of the project, providing also its second generation high efficiency modules, as well as its leadership and technology in the photovoltaic sector.  The total project investment is estimated at 60 million Euros.

Thus, Solaria shows its commitment to the Spanish market where the grid parity is becoming a reality and where PV energy is already a mature technology, capable of competing with traditional energy sources.”

Let’s analyse the Levelised Cost of Electricity (LCOE) for this installation.

The cost of the project is known, EUR 60 million.  The peak output is given as 60 MW, but I expect that is DC output from the panels, not AC to the grid.  So, according to principles I discussed here and here, let me assume that the AC grid output is 53 MW, around 11-12% less.

What about the annual output?  At the given (low) price for the project, the panels would have to be fixed.  Recently I’ve reported Capacity Factors of 0.125 for the GERO Solarpark in northern Germany, 0.157 for the NEXTDC installation in Melbourne and 0.172 for the Kamberra Winery installation in Canberra.  Let me assume a Capacity Factor of 0.14 for Calera y Chozas.  That would give an annual output of 0.14×53×24×365 = 65,000 MWhr approximately.

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 dramatic:

Cost per peak Watt              EUR 1.13/Wp
LCOE                                     EUR 105/MWhr

The components of the LCOE are:
Capital           {0.094 × EUR 60×10^6}/{65000 MWhr} = EUR 87/MWhr
O&M              {0.020 × EUR 60×10^6}/{65000 MWhr} = EUR 18/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)
(25)      EUR 207 (GERO Solarpark, Germany, PV, May 2012)
(26)      AUD 259 (Kamberra Winery, Australia, PV, June 2012)
(27)      EUR 105 (Calera y Chozas, PV, Q4 2012)

[Note: all estimates made using 2% annual maintenance cost, and I’ve assumed the Calera y Chozas plant will be finished this year.]

Conclusion

For some time, we’ve been hearing about the dramatic fall in PV prices.  Until now, however, my results for the LCOE have not shown an abrupt plunge over time, rather more of a steady decrease.  But that has changed dramatically with the data from Calera y Chozas, for which the LCOE is about half of recent values (such as the GERO Solarpark).

The only other similarly dramatic result above is for Lazio, number (6) on the list, and I have always been suspicious of the data for that installation, which was completed before the big recent fall in PV prices.

It’s worthwhile concluding with an excerpt from the last sentence of the press release above.  In the Spanish market,

“grid parity is becoming a reality and … PV energy is already a mature technology, capable of competing with traditional energy sources.”

If this data for Calera y Chozas is correct, these low prices will wash over all PV markets in the near future.  Fossil fuel generators should be gravely concerned about the viability of their present business model.

Coming up next

I’ll comment on a major report on Concentrated Solar Power issued this week by the Australian Solar Institute.

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