Sunday, February 10, 2013

Cost of solar power (33)

Today’s edition of RenewEconomy carries a story about how the Greens have a plan to convert Western Australia into 100% renewable electricity within two decades.  The plan builds on previous studies in Australia, including Beyond Zero Emission’s stationary energy plan.

This follows on a report last week from Bloomberg New Energy Finance, which gave comparisons for various power generation scenarios, both with and without the cost of carbon.  The figures by BNEF show that in 2012, the LCOE (Levelised Cost of Electricity in AUD/MWhr) for various technologies are as follows:
  • wind 80-120
  • large-scale PV 160-230
  • solar thermal 180-360
  • biomass 140-230
  • landfill gas 70-90
  • coal 90-170 (140-240 with cost of carbon included)
  • natural gas CCGT 100-120 (125-140 with cost of carbon included)
  • natural gas OCGT 195-230 (230-250 with cost of carbon included)
[Those figures are as I have read them off a chart printed by RenewEconomy.]

The BNEF results are remarkable.  For wind-power, the best sites already give a superior LCOE to coal-fired power stations, albeit without the benefit of dispatchability. 

Moreover it is entirely reasonable to assume the renewables LCOE will come down with time.  For fossil fuel generators the cost will go up with time.

The plan of the WA Greens is also useful because it gives additional estimates for current costs of large-scale renewable generation technologies, specifically wind, solar thermal with storage, solar PV with tracking, wave-power and geothermal.  Here are the details:

Wind (2,500 MW project)
Annual output: 6,242 GWhr/yr
Capital cost:  AUD 2,530/kW (specific), AUD 6.3 billion (project)
Capacity Factor: 0.38 (maximum), 0.29 (project)
LCOE: AUD 91/MWhr (at rated CF), AUD 121/MWhr (at project CF)

Solar thermal with storage (3,500 MW project)
Annual output: 9,658 GWhr/yr
Capital cost:  AUD 8,308/kW (specific), AUD 29.1 billion (project)
Capacity Factor: 0.42 (maximum), 0.32 (project)
LCOE: AUD 187/MWhr (at rated CF), AUD 249/MWhr (at project CF)

Solar PV with tracking (1,300 MW project)
Annual output: 2,050 GWhr/yr
Capital cost:  AUD 3,860/kW, AUD 5.0 billion (project)
Capacity Factor: 0.24 (maximum), 0.18 (project)
LCOE: AUD 147/MWhr (at rated CF), AUD 196/MWhr (at project CF)

Wave (500 MW project)
Annual output: 1,150 GWhr/yr
Capital cost:  AUD 5,900/kW, AUD 3.0 billion (project)
Capacity Factor: 0.35 (maximum), 0.26 (project)
LCOE: AUD 222MWhr (at rated CF), AUD 296/MWhr (at project CF)

Geothermal (hot dry rocks, 300 MW project)
Annual output: 1,636 GWhr/yr
Capital cost:  AUD 7,000/kW, AUD 2.1 billion (project)
Capacity Factor: 0.83 (maximum), 0.62 (project)
LCOE: AUD 156/MWhr (at rated CF), AUD 208/MWhr (at project CF)

Over the past two years I’ve estimated the LCOE for 32 large-scale solar power projects around the world.  I’ve done this with my own methodology (explained immediately below).  The burning question is: how does my methodology compare with data from the plan of the WA Greens?  That’s the question answered in this post.
Here are my customary assumptions to estimate the Levelised Cost of Electricity (LCOE) for the project.  The assumptions are:
  • 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.
For the wind project, my calculation can be summarised as follows:
Project : wind (at studied CF)
LCOE             AUD 115/MWhr
The components of the LCOE are:
Capital  {0.094 × AUD 6,300×10^6}/{6,242,000 MWhr} = AUD 95/MWhr
O&M     {0.020 × AUD 6,300×10^6}/{6,242,000 MWhr} = AUD 20/MWhr
The calculation proceeds similarly for the other projects.
My results and the comparisons to the Greens figures are as follows.  These are LCOE figures at the estimated CF for the project, not the rated CF.  All figures in AUD/MWhr.
Solar thermal
Solar PV
Two of those comparisons (wind, wave) are very close; the other three differ substantially.
What’s going on here?
Although my LCOE methodology is very simple, in the past I’ve found it to give good comparisons with other published LCOE figures.  I don’t know the LCOE formula used in the Greens study, but I’m suspicious for example that my LCOE is 38% more than the Greens for solar thermal with storage, yet 29% less for geothermal.
I’m also suspicious about some of the other parameters in the Greens study.  For example, is geothermal really going to have less specific capital cost than solar thermal with storage, and yet give a CF that is almost twice as high?  I don’t buy that!  (And if so, why is the Greens LCOE for solar thermal only 20% higher than for geothermal?)
As further data becomes available, I’ll continue to benchmark my LCOE methodology against others.  In the interim, all that I can advise is to treat the Greens figures with due caution.

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