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Solar farm in Masdar City, Abu Dhabi, UAE. Image Credit: Marika Krakowiak / CleanTechnica

Clean Power

What $0.36/W Solar Means (Reader Post)

After we published the GTM Research projection that the cost of photovoltaic solar panels would drop to 36 cents per watt by 2017, I of course shared the article on Google+. I received the following comment from Per Siden, which I thought was very interesting and worth a share here on CleanTechnica (image added):

Solar farm in Masdar City, Abu Dhabi, UAE.  Image Credit: Marika Krakowiak / CleanTechnica

Solar PV farm in Masdar City, Abu Dhabi, UAE.
Image Credit: Marika Krakowiak / CleanTechnica

I calculated a plausible cost of generating electricity from PV panels this cheap and the result surprised me.

At $0.36/W the manufacturing cost is $360,000/MW nominal capacity ($0.36 times 1,000,000). With an additional 50% cost to get the panels on site and in operation, which I think is plausible for a system this big, the total cost amounts to $540,000/MW.

Assuming a capacity factor of 18% and an expected lifetime of 30 years, the system will produce a total of 47,336 MWh/MW (18% of 24 times 365.25 times 30). Electricity production cost would be around $11/MWh ($540,000/47,336 MWh). That’s less than half of what CitiGroup predicted!

For comparison, the average (base) spot price on the major European wholesale market, EEX, the European Energy Exchange, was €42.6/MWh, or $55.4/MWh, in 2012. $11/MWh is only 1/5 of the EEX average price!

At EEX average prices, ROI for a 1 MW PV system would be 6 years ($540,000 in costs divided by $87,420 revenue per year based on 1578 MWh produced per year times the average EEX price of $55.4). After that follows 24 years of practically no costs and pure profit.

I know I have left some parameters out, but still, PV is becoming astonishingly cheap!

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Written By

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


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