Clean Power Austin_Solar_Prices_Chart

Published on July 2nd, 2015 | by Zachary Shahan

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World’s Cheapest Solar Power Lands In Austin, Texas — Under 4¢/kWh! (Sort Of)

July 2nd, 2015 by  

Update: I added the Lazard chart on levelized cost of electricity and the update below it in order to provide some context for those who don’t realize that 4¢/kWh (or even 5.71¢/kWh) is lower than the lowest LCOE for all other sources of electricity other than wind power.

Texans likes to be #1. Well, a lot of people like to be #1, but Texans are particularly known for this. For the time being, the Lone Star State can now lay claim to being #1 again with the cheapest solar power on the planet.

Not long ago, Dubai grabbed the title with a bid for a large solar project coming in under 6¢/kWh. As that article explains, that 5.98¢/kWh bid (now actually down to 5.84¢/kWh) shattered the previous record for the world’s cheapest solar power (or the world’s lowest solar power bid, since there is a slight difference). That article also noted that the second-lowest bid would have taken the record if the lowest hadn’t existed, showing that it wasn’t just a crazy anomaly from one developer. The Dubai solar bids were very exciting, and the talk of the industry for months, but records don’t last very long in the world of solar these days.

Austin Energy, the city of Austin’s utility, recently put out data on solar project bids for the utility’s 600 MW procurement plan. To show how competitive this landscape is, Khalil Shalabi, Austin Energy’s vice president of resource planning, noted that 7,976 MW worth of solar projects were bid in April in competition for this 600 MW.

But that only partly shows how competitive things have gotten. 1,295 MW of those solar project bids came in below 4¢/kWh! (Talk about shattering records.)

There is a difference between these bids and the Dubai one, of course — there are no subsidies for solar in Dubai, while these Texas solar projects can take advantage of the US federal tax credit for solar. But even accounting for the 30% tax credit, these projects would come in below 6¢/kWh (below 5.71¢/kWh, in fact). In other words, these do indeed represent the lowest solar power bids we’ve seen worldwide.

Lazard wind energy

Update: For context, note that no other source of electricity production other than wind has a levelized cost of electricity (LCOE) below 5.71¢/kWh, or even below 6¢/kWh. Furthermore, solar power was projected to hit a low of 6¢/kWh in 2017.

However, there is more context worth noting here as well. “There is a big difference between prices bid and prices delivered. There are no utility-scale solar projects that have been delivered at $40/MWh,” a commenter on Greentech Media noted.

“Because there is a scarcity of opportunities for solar PPAs these days, developers are effectively betting that they will be able to deliver at the $40/MWh or less price five years from now. If they sign the PPA and can’t deliver, they’re out the project development security, which is roughly around $100/kW depending on the utility.”

That said, I don’t think many of us would bet against solar developers being able to deliver at $40/MWh (4¢/kWh) in a few years, and the downward solar price trend has been pretty strong. Austin Energy is certainly bullish it will continue, as seen in the Austin Energy chart below (shared last week at a presentation for Austin city council) and this quote from Khalil Shalabi: “If you continue the curve, you can see that if the cost points continue along this sort of exponentially declining curve. We expect to see prices out in the future that are possibly below $20 a megawatt-hour.”

Austin_Solar_Prices_Chart


 

If you don’t recall, Austin Energy is required to get 55% of its electricity from renewables by 2025, which is surely a key reason why so many solar project developers are eyeing the market and submitting the lowest bids they can.

Also note that this is not the first time a solar project bid for Austin Energy has broken the “cheapest solar power” bid record. For record-breaking news from about a year ago, see: Austin’s Super Cheap Solar Agreement (5¢/kWh) Goes To Recurrent Energy, Not SunEdison, which followed this earlier article: Solar Less Than 5¢/kWh In Austin, Texas! (Cheaper Than Natural Gas, Coal, & Nuclear).

For all those who were claiming last year that solar prices wouldn’t continue falling, there’s clearly a big difference between <4¢/kWh and 5¢/kWh, and the fact that 1,295 MW of solar projects were that low is quite astounding.

If you’ve been hesitant to say that a solar revolution is underway, perhaps now is a time to reconsider.

 
 
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About the Author

is tryin' to help society help itself (and other species) one letter at a time. He spends most of his time here on CleanTechnica as its director and chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of EV Obsession, Gas2, Solar Love, Planetsave, or Bikocity; or as president of Important Media. Zach is recognized globally as a solar energy, electric car, energy storage, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media: ZacharyShahan.com, .



  • NRG4All

    That is amazing. This last annual cycle my electric utility paid me 4.4 cents/kWh that we sent them over the course of a year.

  • neroden

    I really think there will be no more new fossil-fuel plants built, very very soon. It’s just not cost-competitive to pay the capital costs. Anywhere. In sunny areas, it’s cheaper to build solar.

    In dark snowbelt areas… well, remember that solar is eating into demand in the sunny areas. There are a bunch of ‘stranded’ fossil fuel plants. It’s going to be cheaper to buy imported electricity from the existing plants in sunny regions than it is to build new plants.

    The existing stock of fossil-fuel plants is quite excessive for covering nighttime demand. And that demand is *dropping* thanks to LED lighting, etc. So nobody will have any incentive to build new fossil-fuel plants. Very, very quickly. They’ll just be cost-uncompetitive.

    It will take a while longer before the old ones are decommissioned, but that’s not what I’m talking about. I don’t think the new-build fossil-fuel-power-plant market will exist in a year or two.

    • Ronald Brakels

      Yep. It’s not possible to build new fossil fuel power plants in Australia and coal plant construction is down around the world.

      • Will E

        I was in WA, Perth Broome and was blown away by the Wind every day, and blown away by the sun,
        wonder what the Solar Radiation Index is in Perth and Broome and along the great Northern Highway,

    • Yep, and also remember wind power is super cheap.

      • Will E

        Germany has a political deal, yesterday, to transport their cheap Wind Power from the North to the South, Bayern. Now the car makers must start to make BMW, Mercedes and Audi all Electric cars with cheap Wind Power from the North. or a Tesla Giga factory can be build in Niedersachsen,
        Bremen, Hamburg. That would be nice. Lots of cheap Wind Power.

        • mike_dyke

          Do they have the other deal as well – Solar from South to North?

          • Calamity_Jean

            If they don’t, they should.

          • Ulenspiegel

            The Bavarian excess generation with PV not so high, the existing transmission capacity is sufficient. In contrast, with almost all new wind capacity added in the northern, often very rural, states create demand.

          • mike_dyke

            Ah, so the deal was to increase the transmission capacity so that more wind power could get onto the main grid and not (as I and Calamity_Jean thought) a power purchase agreement to allow Bayern to get cheap wind power.

  • Russell

    What about the solar tariffs? I they are paying for them, then the real cost would/should be lower than 5.7c

  • JamesWimberley

    What is it with the multi-gigawatt bids for a town with a university and state government and not much else? Are Texans trying to a/c the desert?

    • Bob_Wallace

      Austin? Some of the best music in the world!

      And the Texas state capital, so lots of AC needed to offset hot air.

    • Steve_R

      The city has almost a million people, including the surroundings gets you over 1.8 million people. They’re just doing what the utility co of any smart city should do when the costs are right.

      • Will E

        Talk about profits. All I can find is costs for renewables.
        cannot find profits of renewables on the web.
        Renewables must make a lot of profits.
        In Germany they have a second Wirtschaftswunder
        thanks to renewable billions flowing in their economy.
        Austin Texas will have billions flowing in their economy thanks to this Solar bid.

        • mike_dyke

          The profit in renewables from a purely business point of view is in the savings made over the current cost of electricity.

          For example – If you’re paying 20 UKP a year (to keep the maths simple) for something and someone says, buy this generating equipment for 100 UKP and it will give you exactly the same thing for only 1 UKP, then the profit is in the difference between the 20UKP and the 1UKP = 19 UKP per year.
          .
          If you look at the figures over just one year, then it’s more expensive (101 vs 20) but over the next few years it makes more sense (102 vs 40), (103 vs 60), (104 vs 80), (105 vs 100), (106 vs 120), (107 vs 140) etc

          So, your profit after only 6 years is 14 UKP (120-106), then 33 UKP (140-107) etc. i.e. 19 UKP per year and, in the case of solar, probably for the next 30+ years for no real extra cost.

          The added bonus is that the cheaper generating equipment helps save the world from climate problems compared with the more expensive equipment.

          If you can find someone who’s willing to pay, say, 10 UKP for the spare electricity that you produce then you get even more profit!

        • Thanks. Needed that reminder!

    • dudebuddypal

      Don’t tell me, you’re from LA or NYC? Austin is as worthy a city as either of those and has an interesting history, great people, lots to see and do. So take your “Austin isn’t worthy” attitude somewhere that people will listen to you like NYC. Austin may not be a subtropical zone but it gets a reasonable amount of rain and is green most of the year. You clearly don’t know what you’re talking about. But yeah it gets hot here.

      • Calamity_Jean

        Please keep in mind that anyone who can read and write English can comment here no matter where they live. For all we know, Mr. Wimberley could be in Australia, South Africa, or Great Britain.

      • Bob_Wallace

        Actually James is European and spends some of his time in South America.
        His impression of Austin and things Texan might be an indication of the reputation Texas has created for itself in the greater world.

        As long as Texas takes pride in ignorance and elects people like Perry and Cruz expect to be viewed as a state full of buffoons.

        • super390

          I wish that bad reputation led to the greater world disinvesting in our rural and suburban reactionaries and teaching them a lesson, but the yahoos will find brutal ways to scapegoat the cities and shift the costs to them. Kristallnacht is coming.

    • super390

      The population has grown from half a million in 1990 to 900,000 today. And it’s not a desert.

  • Frank

    I realized a while back that the only way renewables were going to become important is if they became cost competitive. There are, and still getting better.

    Now we just need the EPA to not only consider costs, but add the cost of those externalities to FF generation, and to prevent old FF generators like First Energy from locking in any 15 year deals so they can avoid competing with renewables.

    I know, I’m dreaming about the externalities. But economically, it would be so nice to have the invisible hand pushing us forward, instead of slowing us down.

    • Matt

      Frank, call me crazy, but with no real proof to back me up. I think we will see cost of externals being added to FF in most of the developed world by 2020. It will not be the full cost at first, but its a tipping point game. Once halve the developed world goes with FF externals, with WTO approved tariffs on those that do not. There will be no reason for other to join in also.

      • Bob_Wallace

        I doubt we’ll see the external costs add to FFs but if we all work at spreading the word then the public should have a better understanding of how the coal and oil industries have their tentacles in each of our bank accounts.

        At the minimum we should help people see how renewables are a much better deal than they thought.

        • Will E

          True, Renewables are a much better deal. Its politics laws and regulations on renewables that scare people.
          You know the Solar problems in Spain by change of politics laws and regulations on Solar.

  • Will E

    what is the international formula to get to a price for Solar Kwh.
    panels differ in size, panels differ in effectiveness. there is Kwpeak and Kwh/year.
    some say Mgw installation, but how many panels or M2 is that. and how many Kwh/y is produced by a Mgw solar installation?
    Solar radiation index is different everywhere.
    time of production, can be 20, 25, 30 and rumours state 50 year of power production.
    and solar panel prices differ everywhere.
    you state that Solar power is 4 cent or 6 cent or can go to 2 cent.
    but what is the formula to make people understand and believe.

    for example
    I have 20 panels, 25 M2 rooftop Solar. 16 % 4000 Kwh/year SRI is 1.
    25 years of production.
    25 x 4000 is 100,000 Kwh.
    installation cost was 5000 euro.
    5000 euro divided by 100,000 Kwh is 5 cent a Kwh.
    My price is 5 cent a Kwh.
    when SRI is 2, divide 5 cent by 2 is 2.5 cent a Kwh.
    When Production time is not 25 years but 50 years
    divide again by 2 and get 1.25 cent a Kwh.
    When installation cost fall from 5000 euro to 2500 euro
    you get a 0.625 cent a Kwh.
    when 16 % gets to 32 % you get a Kwh price of 0.3125 a Kwh.

    Can you aske some math professor
    to figure out a formula for cost of Solar Power.

    Today hottest day ever in the Netherlands, 38.2 Celcius

    • vensonata

      Will, the formulas include mysterious things like “the cost of money”. Like the interest rate on a house added in to the mortgage payments. Even if you pay cash, the cash has value that could be earned from another investment etc. This is reflected in the price per kwh. And that is where some very funny things can happen. Such things as inflation and taxes. These are wild cards in the poker game called the “real cost of energy”. Anyway these contracts are signed by people who want to make money and so somehow they can make money off of solar in Texas, which does have good solar resources, at 4 cents kwh. Yes, remember that 4cents is a price which returns a profit!

  • vensonata

    Sunshot has landed. “One small step for a man…” By any measure, the “Sunshot” aim of 6cents kwh by 2020 for PV has arrived 5 years early. And batteries are rushing up in the rearview mirror at a delightful rate. When the combined rate of PV and Storage hits 12cents, the U.S. grid retail average, the barriers are gone.

  • nakedChimp

    cool

  • Leigh Goodson

    <-************* Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6000 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $177 per hour.

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