Sunday, February 16, 2014

Cost of tidal power (1)

Let’s do something different today!  Instead of analysing the cost of solar power, let’s look at the cost of tidal power. 

I’ll start with RenewEconomy’s story today about the Swansea Tidal Lagoon Project.  This was actually contributed to RenewEconomy by CleanTechnica.  The story points out the cost of the project will be $1.2 billion (presumably USD), with peak output 320 MW.

A press release from the proponents, Tidal Lagoon Power, gives more details.  This will be the largest tidal power project in the world, and will involve a 9.5 km sea wall to capture renewable energy from incoming and outgoing tides.  The output will be sufficient to power over 120,000 homes.

The press release goes on to list interesting facts including: 

Rated output                         240 MW
Annual output                      420 GWh
Design life                             120 years
Area within breakwater      11.5 km^2
Height of wall                      5-20 m
Peak tidal range                   10.5 m approx.
Average tidal range             4.1 m (neap), 8.5 m (spring)

I’ll analyse the Levelised Cost of Electricity (LCOE) for the Swansea Tidal Lagoon project using my standard assumptions (see below).  These might be unfair to the project given that the design life is 120 years, but I’d also point out that the lifetime of solar thermal projects will also be greater than the 25 years assumed below.  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.

The results for the Swansea Tidal Lagoon project are as follows:
Cost per peak Watt              USD 3.75/Wp (installed), USD 5.00/Wp (rated)
LCOE                                     USD 326/MWh

The components of the LCOE are:

Capital           {0.094 × USD 1.2 × 10^9 }/{420,000 MWhr} = USD 269/MWhr
O&M              {0.020 × USD 1.2 × 10^9 }/{420,000 MWhr} = USD 57/MWhr


These LCOE estimates are quite a lot more than (more than double!) the best LCOE figures for solar power, as you can check by looking at recent posts on this blog.  I haven’t studied wind power much, but I think the tidal LCOE would also be expensive in that regard.

I’m happy to concede that my basic assumptions need to be tweaked for tidal power, but my preliminary conclusion is that, for renewable energy in the British Isles, I think investment in wind would be preferred to investment in tidal power.

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