Capital and Financing Cost associated with Solar Power
Construction Cost Components and Trends. Most of the generating technologies are capital intensive; that is, they require a large initial construction investment relative to the amount of generating capacity built.
Power plant capital costs are often discussed in terms of dollars per kilowatt (kW) of generating capacity. All of the technologies considered have estimated 2008 costs of $2,100 per kW or greater, with the exception of the natural gas combined cycle plant ($1,200 per kW). Nuclear, geothermal, and IGCC plants have estimated costs in excess of $3,000 per kW.
Power plant capital costs have several components. Published information on plant costs often do not clearly distinguish which components are included in an estimate, or different analysts may use different definitions. The capital cost components are:
· Engineering, Procurement, and Construction (EPC) cost: this is the cost of the primary contract for building the plant. It includes the cost of designing the facility, buying the equipment and materials, and construction.
· Owner’s costs: these are any construction costs that the owner handles outside the EPC contract. This could include arranging for the construction of transmission and fuel delivery facilities (such as a natural gas pipeline) to a power plant.
· Capitalized financing charges: a plant developer incurs financing charges while a power plant is being built. This includes interest on debt and an imputed cost of equity capital. Until the plant is operating these costs are capitalized; that is, become part of the investment cost of the project for tax, regulatory, and financial analysis purposes.
Construction costs for power plants have escalated at an extraordinary rate since the beginning of this decade. According to one analysis, the cost of building a powerplant increased by 131% between 2000 and 2008 (or by 82% if nuclear plants areexcluded from the estimate). Costs reportedly increased by 69% just since 2005. The cost increases affected all types of generation. For example, between 2000 and 2008, the cost of wind capacity reportedly increased by 108%, coal increased by 78%, and gas-fired plants by 92%.47 The cost increases have been attributed to many factors, including:
· High prices for raw and semi-finished materials, such as iron ore, steel, and cement.
· Strong worldwide demand for generating equipment. China, for example, is reportedly building an average of about one coal-fired generating station a week
· Rising construction labor costs, and a shortage of skilled and experienced engineering staff. Wind power is less costly to build than, for example, coal or nuclear plants. However, because wind plants are weather dependent, wind plants have much lower capacity factors than coal or nuclear plants. A typical wind plant capacity factor is about 34%, compared to 70% to over 90% for coal and nuclear plants. This means the capital costs of a wind plant are spread over relatively few megawatt-hours of generation, increasing the cost per unit of electricity sold. In the case of variable renewable resources like wind and solar power, anything that reduces capital costs or increases utilization can significantly improve plant economics.
· An atrophied domestic and international industrial and specialized labor base for nuclear plant construction and components.
· In the case of wind, competition for the best plant sites and a tight market for wind turbines; in the case of nuclear plants, limited global capacity to produce large and ultra-large forgings for reactor pressure vessels.
· Coincident worldwide demand for similar resources from other business sectors, including general construction and the construction of process plants such as refineries. Much of the demand is driven by the rapidly growing economies of Asia.51
The future trend in construction costs is a critical question for the power industry. Continued increases in capital costs would favor building natural gas plants, which have lower capital costs than most alternatives. Stable or declining construction costs would improve the economics of capital-intensive generating technologies, such as nuclear power and wind. At least some long-term moderation in cost escalation is likely, as demand growth slackens and new supply capacity is added. But when and to what degree cost increases will moderate is as
unpredictable as the recent cost escalation was unforeseen.
Although the cost for a solar PV system will depend on the size of the system you intend to install, your electricity rate, the amount of kilowatt hours you expect to generate, and the state/local rebates/tax credits that may be available, the formulas for calculating the returns are pretty much the same.
Initial Investment
Retail Price for Solar Photovoltaic System
(include components and labor for installation)
+
Building Permits
-
$2,000 Federal Tax Credit
-
State or Local Tax Credit or Rebate
-
Utility Rebate or Other Incentive
=
Net Investment
Annual Electricity Bill Savings
Kilowatts of electricity generated from PV per year
x
Kilowatt hours used per year
=
Annual Kilowatt energy from the PV system
Annual Kilowatt energy from the PV system
x
Current Residential Electricity Rate
=
Annual $$ Saved
Net Metering or Resource Conservation Credits (where applicable)
Yearly Excess PV Energy Produced
x
$$ credit applied per watt
=
Annual Value from Net Metering
Many solar power providers will provide you with a comprehensive estimate. Helpful information to know includes:
Total cost to make the system operational (labor cost for design and installation and equipment costs)
Equipment (Make and Model)
Warranty info
Permit costs, if needed
Tax, where applicable
Federal tax credits
State or local jurisdiction tax credits or rebates
Utility rebates
Expected Renewable Energy Certificates or Net metering credits
Expected operation and maintenance costs
Projected saving
Solar thermal systems capture the sun’s energy to heat water and are one of the most cost-effective renewable energy systems. They are used to heat hot water tanks and/or a heating system. A solar pool heating system is another type of solar thermal system designed specifically to heat a pool or hot tub.
Generally it’s worth investigating the economic viability of installing a solar hot water system if you have an electric water heater with utility rates of at least 5 cents per kilowatt hour and have tax credits or rebates available. (It may even be worth changing out a gas-powered water heater if your costs are at least $8/million BTU).
The formulas for costing out a solar water heater system are similar to estimating the cost for installing solar PV system. Although few jurisdictions provide financial incentives for using solar energy to heat a swimming pool or hot tub, in general, using solar power to heat your pool is a “no-brainer” from a return on investment standpoint.
The electricity used to heat a pool during the swimming season often amounts to the same amount of energy that homes-without-pools consume over a year. Combining a solar thermal system to generate heat for the pool with a solar thermal pool cover to retain the heat generated can further maximize efficiencies and extend your swimming season.
Most installers recommend that a solar collector used to heat a pool is sized at roughly half the square footage of your pool surface area. Solar thermal panels typically last 10 – 20 years and come with a 10-year warranty.
The average homeowner saves over $1000 a year on electricity by installing solar panels on their roof. That’s including the cost of solar panels. The most common way to go solar today is by leasing, which essentially means instead of paying the utility you pay less to produce your own energy.
I suggest you consider the following vision: To produce the maximum energy through a éfficace and robust MPPT control to cushion the total expenses of the investment in solar power plant in optimal time.
good luck
in my opinion, you can use some digital controller that using parallel processing (like FPGA) to decrease the cost of implementation of controller that uses in MPPT problems. with the help of just one FPGA you can control a Solar Station.
The answer provided by Jorge Morales Pedraza is very complete and addresses all cost elements to consider. To see how this should be implemented in practice, have a look at this article that is done for wind energy systems, but the approach is the same for solar energy, and only different formulas for cost of energy calculations are used:
T Ashuri, MB Zaaijer, JRRA Martins, GJW van Bussel, GAM van Kuik. Multidisciplinary design optimization of offshore wind turbines for minimum levelized cost of energy.
Renewable Energy 68 (0), 893-905
Hope this will answer your question on what should be considered, and how to be implemented.
Best regards,
Prof. Ashuri
http://www.sciencedirect.com/science/article/pii/S0960148114001360
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