Wednesday, August 21, 2013

Cost of solar power (39)

Two days ago, I wrote about the Levelised Cost of Electricity (LCOE) for one of two recently-announced PV installations in the Australian Capital Territory.  Today I’ll estimate the LCOE for the second of the projects.

The ACT government is awarding these projects on the basis of bids into a reverse auction.  Proponents nominate the price at which they can deliver power; the ACT government provides the difference between the agreed tariffs and the price that that the retailers want.   I presume the ACT government retains federal government benefits associated with the Renewable Energy Certificates.

As I mentioned on Tuesday, RenewEconomy has a good story about the projects.  There were 15 bidders, and my expectation is that the prices bid were at cut-throat levels.

The OneSun Capital Solar Farm at Coree, about 30 kms west of Canberra is a project of Elementus Energy.  The peak output is 7 MW from 26,190 solar panels at fixed tilt, which will produce an estimated 11,900 MWh of electricity per year.  The cost of the project is reported as around AUD 17 million.  The agreed reverse auction price is AUD 186/MWh.

A completion date in 2015 is envisaged because there is a need for local network upgrades before the project can be finalised.  For the sake of my records, let me estimate the completion date as the end of February 2015.

Let me see how my estimate for the 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 Coree project are as follows:
Cost per peak Watt              AUD 2.43/Wp
LCOE                                     AUD 163/MWh
The components of the LCOE are:
Capital           {0.094 × AUD 17×10^6}/{11,900 MWhr} = AUD 134/MWhr
O&M              {0.020 × AUD 17×10^6}/{11,900 MWhr} = AUD 29/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)
(39)      AUD 163 (Coree, fixed PV, Feb 2015)
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 LCOE for the Coree project is not as cut-throat as the LCOE for the Mugga Lane project, the co-winner in the ACT reverse auction.  Perhaps they have managed to incorporate a bit of profit in the deal?
My estimated LCOE (AUD 163/MWh) is to be compared with the reverse auction price, namely AUD 186/MWh.  The comparison is closer than that for the Mugga Lane project.
Overall, these two projects show the continuing trend towards cheaper PV.  I see this as excellent news and I look forward to the days when solar thermal power in Australia is able to give such competitive prices.  Of course, I also look forward, fervently, to the day when we no longer need or use fossil fuels to provide power.

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