Energy Generation Costs Revisited

During the debate on LA’s new solar feed-in tariff (FiT) program, we reported on the comments from LA’s so-called Ratepayer Advocate (RPA) who complained that at 17¢/kWh, DWP was paying to much for energy under the FiT.  Instead, the price should be just 11¢ he said - a statement that had us scratching our collective heads.  Well now comes an article from Bloomberg that puts this into a very different perspective, and so we ask: just what is the cost of new energy generation?

Solar Panel Installation

The Bloomberg piece, First Solar May Sell Cheapest Solar Power, Less Than Coal, notes that a 50 MW project owned by thin-film solar manufacturer, First Solar, had just signed a power purchase agreement with El Paso Electric Co. for just 5.79¢/kWh, which makes it “’the lowest solar power purchase agreement price we have ever seen,’ [according to] Aaron Chew, an analyst at Maxim Group LLC in New York.” Now that is indeed amazing - but of course while thin-film panels are cheaper than crystalline panels they are also significantly less efficient - meaning that they are generally not suited to constrained footprints (like commercial building rooftops) which are the targets for the FiT.  And, of course, the economies of scale present in a 50MW project are simply not available for a 50kW project - again, the target size for the FiT.

But what really struck us in the article was this, referring to the incredibly low price being paid for the solar energy coming from this new solar plant:

That’s less than half the 12.8 cents per kilowatt-hour average price for new coal plants, according to data compiled by Bloomberg. Thin-film photovoltaic power typically sells for 16.3 cents a kilowatt-hour, according to Bloomberg New Energy Finance.

Wow - according to Bloomberg, new coal-power plants are selling energy for more than the RPA was willing to price energy under the FiT!  Moreover, even the significantly cheaper thin-film plants are averaging just under the price for energy set by DWP staff for the FiT - a rate the RPA ridiculed as a give-away.

As the FiT kicks off today amidst substantial speculation as to its viability, even at the 17¢ figure, this Bloomberg piece is yet another reminder that perhaps we need to look more closely at the pronouncements coming from LA’s newly minted RPA - at least some sources seem to call his numbers into question.


Original source: Run on Sun 

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