Solar — $1.20/Watt In Europe (Unsubsidized), & Much More Solar $ Fun
Originally published on Solar Love.
We’re in the midst of a massive cleantech revolution. Solar power is beginning to disrupt the hell out of the power industry. Electric vehicles are on the verge of putting gasmobiles to sleep. Wind power is already one of the cheapest options for new electricity generation in the world — if not the cheapest. The movement is exciting to watch. And, in a decade or so, we might need to change our name from CleanTechnica to Your Life. The solar revolution is certainly one of the more exciting things to watch. Below is some solar number fun that should get your blood pumping. Full disclosure: much of the legwork for this piece was done by one of our excellent readers — we’ll just call him CleanTechnica advisor #1.
Low Solar Prices Around the World
EU solar without subsidies as low as $1.20/watt: Deutsche Bank has reported that about ⅓ of small- to mid-sized solar installations in the EU are now going in without subsidies. Furthermore, “Multi-megawatt projects were being built south of Rome for €90c/W,” as RenewEconomy notes. “This was delivering electricity costs (LCOE – with 80 per cent self consumption) of around €80/MWh (€8c/kWh).” That’s about $1.20/W and 10–11¢/kWh.
UK solar down to $1.59/watt: The UK’s largest solar far, a new 34-megawatt solar farm near Leicestershire in the English Midlands, is said to cost just over one pound a watt ($1.59/W). That’s about 20% less than the UK’s Department of Energy and Climate Change number for large-scale solar in 2012.
Spain unsubsidized solar down to $1.47/watt: A completely unsubsidized 250 MW solar farm being developed in the northwestern region of Cádiz, Spain, is reportedly going to come in at €275 million, which would be about €1.1/watt or $1.47/watt.
Germany’s average solar PV price at $2.08/watt (unsubsidized): The Photovoltaik-Preisindex from photovoltaik-guide.de has the average solar power system price in Germany (including utility, commercial, and residential solar PV system) at €1.56 ($2.08) in July. The lowest price it hit on that index was €1.50, or $2.00/watt, in February.
India solar farm comes in at $1.52/watt: Shifting over to India, the price is not all that different from the UK and Spain. A 100-megawatt solar farm in the Ramanathapuram district of Tamil Nadu is supposed to cost ₹920 billion ($15.16 million at the moment), which would be about $1.52/watt.
Australia getting/giving rooftop solar for as low as $1.90(USD)/watt for residential solar (before subsidies): Since I’ve used USD above, I’m using it here, too. Solar Choice’s July Solar PV Price Index indicates a before-subsidy low of AUD$2.06/watt (USD$1.90/watt) for residential solar. After relevant feed-in tariffs, the low is AUD$1.38/watt (USD$1.27/watt). The AUD$2.06/watt low was in both Western Australia and Tasmania. The after-subsidy low of AUD$1.38/watt was in Western Australia (Perth). After incentives, the average price of residential solar down under was AUD$1.76/watt (USD$1.62/watt) in July. Impressive.
Translating To ¢/kWh, And The US Situation
The $/watt numbers are interesting, but what we often want to know is actually ¢/kWh. That helps us compare to our electricity bills and to other types of power plants. To do a location-based comparison, we also need a solar insolation map. Given that the largest number of our readers are American (as well as the two of us writing this article), we’ve decided to focus on the US in this section.
Using 20-year, 5% financing, the EIA’s 1c/kWh projection for fixed O&M (no subsidies), and the US solar insolation map above, we get these numbers:
$1.20/W =
- 7.3¢ per kWh in Zone 5 (4.2 solar hours, 17.5% capacity — Northeast/Midwest)
- 5.8¢ per kWh in Zone 2 (5.5 solar hours, 23% capacity — Southwest)
$1.50/W =
- 8.3¢ per kWh in Zone 5
- 7¢ per kWh in Zone 2
$2.00/W =
- 11.4¢ per kWh in Zone 5
- 9.9¢ per kWh in Zone 2
To put that into better perspective, the average price of electricity in the US was 11.8¢ per kWh in May, according to the EIA. (And, assuming 3% inflation, the 20-year average cost of electricity would be 16¢ per kWh.)
- In New York, the average price of residential electricity was 18.3¢ per kWh.
- In Illinois, it was 10.5¢ per kWh.
- In Michigan, it was 14.2¢ per kWh.
- In Florida (which is in Zone 4 of that solar insolation map), it was 11.3¢ per kWh.
- In California (which is mostly in Zone 3, but partly in Zones 1, 2, and 4), it was 15.8¢ per kWh.
- In Texas (which is mostly in Zone 3, but partly in Zone 2), it was 11.2¢ per kWh.
In other words, the average price of residential electricity in the above states (and the US on average) is considerably higher than solar at $1.50/watt or even $2.00/watt over 20 years, and the case would get even better if you included the rising electricity prices that are projected by basically everyone in the industry. (For non-residential electricity prices or prices for other states, check out the full EIA spreadsheet.)
Basically, when we could get to Australia’s or Europe’s solar price level, solar will blow up across the US even more so than is happening today.
What are the best US solar prices we’ve seen?
We’ve seen 5.8¢ per kWh in New Mexico after federal and state solar incentives, and about 10.8¢ per kWh before those incentives. Across all sectors, New Mexico retail electricity was 8.8¢ per kWh in May. In the residential sector, it was was 11.2¢ per kWh; in the commercial sector, it was was 9.2¢ per kWh; and in the industrial sector, it was 6.1¢ per kWh.
We’ve seen 6.9¢ per kWh in Palo Alto, California, after federal solar incentives, and about 9.9¢ per kWh before those incentives. Or, in a slight variation on those numbers, John Farrell writes: “the city of Palo Alto is buying subsidized electricity at 7¢, with an unsubsidized cost of 12¢ per kWh. For most residential electricity customers, this is still better than their marginal electricity price, which is between 13¢ and 17¢ per kWh. So Palo Alto, with relatively high rates and abundant sunshine, has already reached ‘Unsubsidized Solar Parity’.” (Notably, Palo Alto has seriously streamlined the “putting solar panels on your roof” process, and the city government has committed to purchasing 100% renewable electricity.)
I’m sure there are many more stories like these. The costs for many projects aren’t often revealed publicly. Notably, however, those two examples above are for large solar power plants. Still, in Q1 of 2013, US residential solar system prices were seen for less than $3.00/W. That would be less than 14.8¢ per kWh in a Zone 2 region, beating the 20-year average price of residential electricity (with 3% inflation) in all Zone 2 states (Arizona, New Mexico, Colorado, and Texas would be 15.9¢ per kWh; Utah would be 15.7¢ per kWh; Nevada would be 16¢ per kWh; and California would be 16.6¢ per kWh).
And, to be honest, your solar panels should last well over 20 years, even well over 30 years, and after a 20-year payoff the electricity becomes essentially free.
Ah, EIA Projections…
So, just to give a sense for how behind the times, the EIA can be, it is projecting US solar will be 13¢ per kWh in 2018, even using 30-year solar system lifespans.
To reiterate, Palo Alto got a solar farm for a cost of 9.9¢–12¢ per kWh (before subsidies) through a 30-year PPA, and New Mexico got one for 10.8¢ per kWh (before subsidies) through a 25-year PPA … 5 years before 2018.
Be cautious whose solar price projections you use.
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Poor Pacific Northwest skips Zone 5 entirely and goes right to Zone 6, ouch. Still only as bad as solar leader Germany! 🙂
A lot of the PNW is in Z4. Only the foggy Seattle coast is Z6. They need to put their panels inland a bit for best production.
Hey man that’s me in zone 6!
As much as a solar nut as I am, when friends ask me about using solar pv here in the Seattle area, I try to steer them toward solar thermal. I tell them if you want to help the solar pv cause then go for it. If you want to save on your electric bill then you should maybe wait a few years. Sorry, I’m an engineer. I try to be honest.
Our electric power costs in the Seattle area are relatively low because of all the hydro we have and our solar resource is the worst in the nation, with the exception of Alaska. Ouch is right. Eastern Washington State is a lot sunnier though.
Yeah, too bad too — one of the most progressive regions. Imagine solar would be booming.
Useful survey and the “isobars” are good.
“northwestern region of Cádiz, Spain”: Cádiz is a port south-west of Seville in Andalucia, Spain’s southernmost region. Look at PVwatts for the Seville insolation.
On Australia: “a before-subsidy low of AUD$2.06/watt (USD$1.90/watt) for residential
solar. After relevant feed-in tariffs, the low is AUD$1.38/watt (USD$1.27/watt).”
How can feed-in tariffs affect the installation cost? I thought Australia used up-front incentives instead.
Can we trust those anomalous US prices? The US tangle of incentives includes the PTC, an incentive to pad reported costs. In Europe at any rate, FITS do not go up with installation costs within a category, and VAT and social insurance costs create incentives in the small residential sector for understated invoices plus cash top-ups, though I’ve not seen actual evidence of this.
Thanks for the clear presentation of this cost data. Impressive progress.
In Central Texas (in 2013), installed systems are running ~$17K per 5kW system. If you want 10kW, then ~$34K, … If you live in area with local rebates, then these costs aren’t too bad. General electric rates are between $.098 – .16 per kWh. Local rebates (like Austin Energy) can be in the 30% range. When coupled with the Federal Tax credit, then I believe a 10kW system is a no-brainer. I would even consider a low-interest loan. My current provider does not provide any incentives. You really need to use something like PVWatts to determine the actual amount of kWh that will be produced. I can’t get the payback less than 14 years.
I can’t tell if you like EIA’s data or not. At one point, you use their 1c/kWh as a good thing, but later indicate their data is not very good.
The 1c/kwh is just for “operations and maintenance”: basically replacing the rare modules that break down, and, more frequently, inverters. It’s such a low figure that EIA’s probable over-caution doesn’t affect the LCOE significantly.
Zachary is right that EIA projections for wind and solar are a joke. In their reference scenario, these flatline from now on until 2030. In what universe is this possible – I don’t mean likely? In the worst imaginable case, the GOP sweeps the 2014 US elections and all incentives for renewables are dismantled. In that case, installation slumps for a few years to the zero-subsidy level, then starts growing fast again from the lower base. The US is only a small part of the global market, so the industry learning curves are unaffected.
PS: the software ate the link I provided for the EIA. Here: switchboard.nrdc.org/blogs/csteger/preliminary_renewables_forecas.html
This is simply beautiful work!
THANK YOU Mr/Ms CleanTechnica advisor #1
Thank you for posting this Zach.
mike
Zach,
Please make sure you’ve seen this article:
http://www.greentechmedia.com/articles/read/chart-2-3rds-of-global-solar-pv-has-been-connected-in-the-last-2.5-years – August 2013
“Chart: 2/3rds of Global Solar PV Has Been Installed in the Last 2.5 Years”
It is also very good. Mr. Lacey’s addition of area under the exponential curve calculations to indicate the total installed capacity very elegantly demonstrate the power of exponential growth, imho.
Please keep up the great work!
mike
Thanks. Caught that while traveling. 😀
Fantastic Article!
In Indian context, It is important to differentiate between price per watt for MW scale projects vs KW scale projects, right now for MW scale projects price is more like $1/W because INR has depreciated 20% in last few months
For KW scale projects price depends on off-grid vs on-grid, for on-grid its around $1.5/W and for off-grid its around $2/W because of storage costs
KW scale projects are not bankable, even though there is lot of demand for 1KW – 5KW in residential segment and 5KW-100KW commercial segment, due to lack of financing these projects are not taking off as payback period is more than 10 years with out financing
Can you document $1/watt? Link to specific solar farms size and price?
How about $1.50/watt for grid-tied solar?
Being able to put actual numbers on the table greatly strengthens an argument. It’s too easy for people to dismiss a comment.
Below is cost breakup for 1KW – 5KW
On-Grid
Solar Panels – Rs 65/Watt
Grid Interactive Solar Inverter with MPPT – Rs 12.5/Watt
Installation costs – Rs 10/Watt
Total – Rs 90/Watt = $1.5/Watt ($1 = Rs 63)
Off-Grid
Solar Panels – Rs 65/Watt
Grid Interactive Solar Inverter with MPPT – Rs 12.5/Watt
Installation costs – Rs 10/Watt
Battery Backup – Rs 50/Watt (24 hours backup)
Total – Rs 140/Watt = $2.1/Watt ($1 = Rs 63)
See this link for MW scale project pricing http://www.thehindubusinessline.com/companies/surana-ventures-offers-solar-plants-at-rs-6-crmw/article4360609.ece
Updating with another low price. $1/watt….
“Yingli chief strategy officer Yiyu Wang said that project costs for its current pipeline of 130MW in utility-scale solar projects in China are about $1.03-$1.05 a watt.”
“Wang suggested that Yingli would generate a return in the “higher mid teens” for these projects. “
http://cleantechnica.com/2013/09/12/how-the-solar-pv-industry-became-a-global-phenomenon/#comment-1045117247
$1/watt in the US would mean electricity for 5c/kWh (SW) to 6c/kWh (NE). That would be a fossil fuel and nuclear killer price.
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