Solar Projects being approved in California
I am going to be a little critical with today’s reporting. More than once EnergyBiz will report on a deal , but they never delve into the deal. Yes EnergyBiz is free, but seriously it doesn’t take much work with the internet. For example, today’s article I came across on EnergyBiz involves the California Public Utility Commission (CPUC) approving PG&E solar deal with Sempra. In the article, they note how the commission approved the project, the dates, and the size. However, how come no discussion on the cost or expected performance of the project? Yes the project is a bilateral deal so the information is somewhat hidden. A little investigated journalism you can conclude the project is likely a 25 year commitment for under 0.10852 $/kWh with an expected capacity factor of 23%. First you go to the CPUC website. Do a simple search on “PG&E Sempra Nevada Solar “and you will get this link to the deal. In the deal you will note in the beginning “Generation from the 150 MW Project is expected to contribute an average of 303 gigawatt-hours (GWh) annually towards PG&E’s annual procurement target”. This would calculate to a 23% capacity factor. This is not the best capacity factor, but not the worst either.
In terms of cost the same link shows the statement “Based on 2012 commercial online date for the Copper Mountain 2 facility, the 25-year PPA is below the 2009 MPR and accordingly the PPA does not have above-market costs associated with it.” A little more investigative journalism would have you search on the website to see the 2009 MPR. The 2009 MPR can be seen on this link. From the link there is a table showing the 2012 25 year contract MPR is 0.10852 $/kWh. Interestingly if they had used the 2011 MPR, the limit was 0.09274$/kWh a drop of more than 10%.
The next level of investigated journalism is to see what type of cost Sempra is paying to build this facility. To do this I went to a publically available levelized costing calculator supplied by the very capable National Renewal Energy Laboratory (NREL) – note I served on the advisory panel for the technical review team. In addition to the calculator, if you click on the labels NREL will display the tables showing the range of cost. The lowest cost for solar is $5000/kW. For the remaining variables I used period 25, discount rate 4%, capacity factor 23%, FOM 10, VOM 0.002, HR 10000, and Fuel Cost 0. This produced a levelized cost of 0.166. I then changed the capital cost till the levelized cost was below 0.11. This occurs at $3200. If the investment tax credit is computed from the $5000 basis you do get around $3500. Applying a negative fuel cost (-1) from the $3500 capital cost you would produce 0.108. This implies likely the technology cost is still around $5000/kWh with a need for a 30% investment tax credit and some value of renewable credit around $10/MWh.
If you are of the very curious mind, you will be asking yourself how in the world is the MPR that high? Since you will note in the MPR link they state – “The MPR represents what it would cost to own and operate a baseload combined cycle gas turbine (CCGT) power plant over various time periods”. Well you see that’s not really a “true” statement on many fronts. Obviously there are forecast that need to be employed to calculate a CCGT cost in the future. They decided on using a NYMEX future curve for fuel which is understandable. The big driver pushing the MPR high is the assumption of CO2 price.
If this forecast became true, in the near future (in two weeks), Californians would be adding an extra 10 cpg on gasoline and by 2030 they will be paying almost a dollar extra on gasoline. This CO2 cost stream adds roughly $19/MWh on the levelized cost of CCGT– almost a 20% premium. Even removing the CO2 cost and comparing it with NREL levelized cost calculator the CPUC model shows an additional 0.01 $/kWh cost using the same inputs.
With simple investigative journalism the article EnergyBiz reported, which anyone could do scraping a company’s website, transforms into real value and knowledge.
At AEC we are committed to giving you knowledge not just information. Feel free to email me your comments or suggestions David K. Bellman [email protected]
