New lows in solar costs

Source

In Arizona, this time, by the utility Tucson Electric Power, which plans to produce 30% of its electricity from renewables by 2030.

A new contract signed by a utility in Arizona has set a new low price for large-scale solar power in that country, but more importantly has also smashed expectations of the combined cost of large-scale solar and battery storage. 

Tucson Electric Power (TEP) this week announced it would buy solar energy from a new 100MW solar plant at the historically low price of less than US3c/kWh – less than half of what it had agreed to pay in similar contracts over the last few years. 

The project will also include 30MW/120MWh of battery storage, and the company says that the power purchase agreement for the combined output is “significantly less” than US4.5c/kWh – nearly two-thirds cheaper than the previous such contract struck in Hawaii, and well below the cost of a gas-fired peaking plant.

[Read more here]

Solar at less than US$30/MWh*; solar with storage at US$45/MWh*, well below the cost of a gas peaking power plant!  Wow!

A bit of a digression on capacity and just how much storage is being provided relative to demand. The solar farm will have a capacity of 100 MW, the storage 120 MWh.  But actual output from solar is less than its nameplate capacity, because of night, clouds, winter, etc. According to NREL's PVWatts website, a 100 MW of solar capacity in Arizona would produce during the average of 12 hours of daylight about 39 MW of electricity per hour (a capacity factor of 20%.)  Obviously, that varies by time of day and season.

The battery storage is 30MW/120 MWh,  Batteries are measured by the maximum output  (MW or kW) and the total stored capacity (MWh or kWh). In other words, this battery bank can deliver 30 MW of electricity for 4 hours, or perhaps 15 MW for 8. Unlike the output of the solar panels, this doesn't vary by time of day/season.

The batteries have to be charged.  At 39 MW per hour, that will take a bit more than 3 hours, or spread over the day, about 25% of daily output of the solar panels. This will reduce the net power available during daylight from 39 MW per hour to 30 MW.   So the batteries could provide the same net output as the solar panels for 4 hours after the sun has gone down.

Together solar plus batteries would provide something like 16 hours of electricity per day on average over the year.  In rough terms, the combination of solar and batteries will provide power from, say, 6 a.m. to 10 p.m.  (Arizona doesn't have daylight saving) That's still not electricity 24/7 but it's not far off, since demand from midnight to six a.m. is low.  Also, Tucson Electric Power is planning a new wind farm with 100 MW capacity, so reducing the need for electricity from the solar plus storage facility.   Wind and solar are to some extent complementary (the wind still blows at night when the sun doesn't shine, the wind is stronger during storms, when insolation is reduced, and so on.)

OK, end of digression.  The key takeaways from this are

•  renewables continue to get cheaper, even in mature markets like the USA.
• renewables are now as cheap as baseload electricity in the USA
• renewables with storage can provide dispatchable power more cheaply than peaking power gas
• coal is already on the nose; and gas will follow.

Incidentally, these conclusions are the same in Australia, and I suspect round most of the world.  I also suspect that Tucson Electric Power will achieve its 30% renewables target long before 2030, especially since the Navajo Generating Station, a massive (2250 MW) coal generator in Arizona, is to close in 2019.  In 2 years time, solar will be even cheaper, and batteries are still plunging in cost.  The cost advantage over peaking power gas plants can only improve.

* after 30% investment tax credit.