One of the key assumptions in determining the cost of electricity from a power plant is how long that power plant will be operational. Almost universally, that estimate is too low. But I think this “mistake” is particularly strong when it comes to solar power — both solar photovoltaics (PV) and concentrated solar thermal power (CSP).
In the case of CSP, the Solar Energy Generating Station (SEGS) project in Southern California, provides a great example of how CSP plants can just keep going and going.
SEGS was put into service in the 1980s (yep, about 3 decades ago). With capital costs paid off and its initial power purchase agreement (PPA) over, owners of the project have been able to put in bids for new electricity sales agreements that outcompete its competitors. In fact, it is now selling electricity to Southern California Edison for a very low rate.
Marc Ulrich, VP of Trading and Energy Operations at Southern California Edison (SCE), told CSP Today that SEGS is now selling electricity to SCE for about 5.57 cents per kWh. That’s a very, very low price.
“SEGS are getting paid about 6 cents a kilowatt hour, for energy they deliver to SCE. I rounded it up: it’s current rates are 5.57 cents, during the winter period. Next month in June we’ll go into summer period and prices will change again,” Ulrich said.
Pricing over the course of 30 or so years gets much more complicated, of course. But the point of the matter is that, even today, CSP plants can be competitive with any other form of electricity. Pretty exciting news.
The Energizer Bunny…
Notably, SEGS hasn’t been running without any changes for 30 years. It has benefited from numerous upgrades that have made it more efficient and able to keep competing.
“As the plants have aged, the cost of operations shifts from recouping the initial capital investment to maintaining and replacing ageing equipment,” says Brad Bergman, General Manager of Cogentrix, which owns two of the nine SEGS projects. “As we replace older materials in the solar field, we are able to take advantage of newer, advanced components that more efficiently convert the sun’s energy into electricity.”
While a CSP plant will need such upgrades, a CSP plant has a much simpler system than a coal or nuclear power plant. Plus, it doesn’t have fuel costs. So, the life of a CSP plant (like would be the case with a PV plant) can more easily be extended for cheap, keeping it competitive on the market.
Power Plant Lifespan & Cost Over Time
Power plant lifespan and cost over time are critical pieces of the cost of electricity equation. In study after study, the lifespans of solar energy projects are consistently underestimated, and the cost of the project over time is consistently overestimated. I understand there are sometimes financing reasons for that, but for the most part, the method and results are simply incorrect. How to solve the problem? Regarding the research, I’ll leave that to the researchers. But for us “lay experts,” I think it’s important we make this point loud and clear time after time in order to bring more reality to the energy discussion.