Monday, September 14, 2015

Cost of solar power (57)


Overseas readers of this blog might be interested to read that Australia woke up to a new Prime Minister this morning.  As a result of an internal coup in the parliamentary ranks, Tony Abbott was replaced by Malcolm Turnbull as parliamentary leader of the Liberal Party.  Today Turnbull was sworn in as Prime Minister.

However, let me get back to regular topics.  RenewEconomy had a story yesterday about a proposed 150 MW PV facility at Lilydale, so I’ll run the numbers on that.

Construction on the AUD 400 million project is expected to start in ‘2016 to 2017’, require 18 months and create up to 200 construction jobs.  The 400 Ha site is more than 900 km north-west of Brisbane, capital of the State of Queensland.  This is coal-mining country, so it’s a nice twist that it will become home to a major PV installation.  The solar resource is excellent.

The new facility is to be developed by global renewables giant FRV.  It will use polycrystalline PV panels with single-axis tracking.  The one piece of information not mentioned in RenewEconomy’s report is the annual output, but let me assume the same Capacity Factor as the Barcaldine PV project, in the same general location, and also with one-axis tracking.  That CF was 0.256, which implies annual output for Lilydale of 0.256 × 150 × 365 × 24 = 336,384 MWh per year.

We can now estimate for the Levelised Cost of Electricity (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 Lilydale installation are as follows:
Cost per peak Watt              AUD 2.67/Wp
LCOE                                     AUD 136/MWh

The components of the LCOE are:
Capital           {0.094 × 400×106}/{336,384 MWhr} = AUD 112/MWhr
O&M              {0.020 × 400×106}/{336,384 MWhr} = AUD 24/MWhr

Conclusion

The LCOE for Lilydale (AUD 136 per MWh) is similar to that for the proposed Barcaldine project (AUD 129 per MWh).  The Lilydale project cannot compete however with the best I have analysed –  Cochin Airport (link).

Overall, the trend is clear.  The technology is improving, the prices are coming down.  The path towards the clean energy revolution is irresistible, and we should note today that a political impediment in Australia to this energy revolution has been removed from office.

I need to update my LCOE graphic and provide a link to all of my LCOE results.  I’ll do that tomorrow.

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