Monday, August 19, 2013

Cost of solar power (38)

Things are rather bizarre in Australia at the moment. 

A federal election campaign is under way, and both main parties are slinging mud at each other as hard and fast as they can.  My general response is to deploy the mute button on the TV and not read any political stories in the mainstream media.  It’s not as if frantic last-minute campaigning is going to change my vote.

But I do make exceptions.  I attempt to keep up to date with policies about renewable energy and climate change.  The existing government’s policies are weak, but at least heading in the right direction.  I hope they aren’t further weakened.  The opposition’s policies are poor, or actually bad, and will set the nation back in its quest to lower emissions.

However one level of government in Australia is setting a splendid example – that’s the provincial government of the Australian Capital Territory.

The ACT government yesterday announced the winners in its second round of solar developments.  These are decided by a reverse auction, and the winners are Zhenfa Solar (a 13 MW plant at Mugga Lane) and Elementus Energy (a 7 MW plant at Coree).  Today I’ll report on the Mugga Lane project, tomorrow on the Coree project.

RenewEconomy has a good story about the projects.  There were 15 bidders, so presumably the prices bid were at cut-throat levels.

The Mugga Lane solar farm will feature 53,000 solar modules with a mix of fixed and tracking systems and will generate 24,956 MWh per year.  (Yes, the output is quoted to five significant figures!)  500 kW of the 13 MW peak power will be from a tracking system.

According to RenewEconomy, the cost of the project is about AUD 30 million and the winning price in the reverse auction was AUD 178/MWh.  (The ACT government will make up the difference between the agreed tariffs and the retail price of electricity.  I presume the ACT government also retains federal government benefits associated with the Large-Scale Renewable Energy Certificates.)

Let me see how my estimate for the Levelised Cost of Electricity (LCOE) compares with the auction price.

I’ll analyse the LCOE using my standard 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 for the Mugga Lane project are as follows:
Cost per peak Watt              AUD 2.31/Wp
LCOE                                     AUD 137/MWh
 
The components of the LCOE are:
Capital           {0.094 × AUD 30×10^6}/{24,956 MWhr} = AUD 113/MWhr
O&M              {0.020 × AUD 30×10^6}/{24,956 MWhr} = AUD 24/MWhr
 
By way of comparison, LCOE figures (in appropriate currency per MWh) 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)
(28)      AUD 205 (Nyngan and Broken Hill, thin film PV, end 2014?)
(29)      AUD 342 (City of Sydney, multiple sites, PV, 2012)
(30)      AUD 281 (Uterne, PV, single-axis tracking, 2011)
(31)      JPY 31,448 (Oita, PV?, Japan, to open March 2014)
(32)      USD 342 (Shams, Abu Dhabi, trough, to open early 2013)
(34)      USD 272 (Daggett, California, designed 2010)
(35)      GBP 148 (Wymeswold, UK, PV, March 2013)
(36)      USD 139 (South Georgia, PV, June 2014)
(37)      USD 169 (Antelope Valley, CdTe Pv, end 2015)
(38)      AUD 137 (Mugga Lane, PV, mid 2014)
 
Conclusion
 
You can compare results in the graphic below (click for a larger image), which expresses costs in USD/MWh at the exchange rates of 20 August 2013.   (Currencies deflated at 1.75% per annum, baseline date is end 2014.  Red is for solar thermal, blue for PV.  Filled-in circles denote completed projects, non filled-in circles denote announced projects.)
 
According to my methodology, the Mugga Lane project is at the ‘bleeding edge’ on costs.  The only two large projects with a comparable LCOE are Calera y Chozas (number 27 on the list above) and South Georgia (number 36).  The Mugga Lane result is about 30% cheaper than the large Australian project at Nyngan and Broken Hill (number 28 on the list), which is still under construction.
 
Finally, although the agreed price in the reverse auction was AUD 178/MWh, RenewEconomy reports the actual figure is “less than AUD 150/MWh when indexing is taken into account”.  With my simple LCOE methodology, I aim to give a lifetime estimate, equivalent to inclusion of indexing, so I’m happy enough with the comparisons.


 

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