Monday, August 7, 2017

Cost of solar power (68)

I've been busy on other projects lately, without time to blog on developments with the cost of solar power.  In the meantime, there have been various announcements of new PV systems in the state of Queensland, culminating yesterday in the announcement of a 1 GW facility.

Now 1 GW is a big round number, surely warranting that I add the project to my set of case studies.

As ever, RenewEconomy has the story.  The project is the Wandoan South Solar Project, to be built near Wandoan in the Surat Basin, up to now better known as a coal and gas province.  The project developer is Singapore-based Equis Energy and the project is described in this press release.  In brief, the 1 GW project will involve a capital investment of AUD 1.5 billion and construction will begin in 2018 and be complete in 20 19.  The annual output from the 3 million solar panels will be 1,800,000 MWh.

The Capacity Factor for the Wandoan project is 1,800,000 / (1000 X 365 X 24) = 0.205.  That's not particularly high, so I conclude the panels will be fixed, although that's not stated in the press release.

Let me now estimate the LCOE for the Wandoan South Solar Project using my standard assumptions:
  • there is no inflation,
  • taxation implications are neglected,
  • projects are entirely funded 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 Yet more on LEC.

Note that I am now using annual maintenance costs at 2% of capital cost.

The results are as follows:

Cost per peak Watt   AUD 1.50/Wp
LCOE                        AUD 95.00 / MWh

The components of the LCOE are:

Capital  {0.094 X 1.5 X 10^9} / 1,800,000 = AUD 78.33 / MWh
O&M      {0.02 X 1.5 X 10^9} / 1,800,000 = AUD 16.66 / MWh


The LCOE (AUD 95/MWh) is not as good as the last two projects that I have analysed from Queensland, namely Sun Metals (AUD 72/MWh) and Ross River (AUD 77/MWh).  I wonder if Equis Energy has just been cautious in their early announcement.  I also think the Capacity Factor (0.205) is on the low side for fixed panels in an area where the solar resource is excellent.

The graphic shows my LCOE results in USD/MWh over eight years at current exchange rates (AUD = USD 0.7928, EUR = USD 1.1779, JPY = USD 0.00903, GBP = USD 1.3044) and with the value of currency depreciated at 1.75% per year.  Red indicates solar thermal projects; blue indicates PV projects.  Filled-in circles are for projects that were completed when I made my LCOE assessment; non-filled-in circles are for projects as announced, even if not completed.

1 comment:

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