Clean Power

Published on July 10th, 2015 | by Nicholas Brown

52

Price of Solar Hits Record Low Again!

July 10th, 2015 by  

Originally published on Kompulsa (some edits).

NV Energy, a Berkshire Hathaway-owned utility company, has signed a PPA to purchase electricity from the 100 MW Playa Solar 2 power plant at a stunningly low price of $0.0387/kWh!

CleanTechnica just reported on “the world’s cheapest solar” landing in Austin, Texas, with bids under 4 cents/kWh (and the assumed unsubsidized price of solar thus being below 5.71 cents/kWh), and that was incredible news, but it looks like that staggering news wasn’t even the highlight of the month!

Note that 3.87 cents/kWh is approximately 68% cheaper than the national average electricity price. I’s also well below the low levelized cost of electricity of coal, natural gas, or nuclear, according to Lazard. The only electricity generation option that can compete with that is wind energy. Furthermore, it’s much lower than the low of 6 cents/kWh that Lazard was predicting for solar in 2017, even if you add in the expected federal subsidy boost (which brings the price up to 5.53 cents/kWh).

Lazard wind energy

“That’s probably the cheapest PPA I’ve ever seen in the US,” Bloomberg Intelligence utility analyst Kit Konolige said. “It helps a lot that they’re in the Southwest where there’s good sun.”

Certainly. More sunlight translates to more power per solar panel, resulting in a lower cost per kWh.

The growth of the solar industry contributes to the price decline we’ve been seeing over the years. The declining cost of solar PV technology certainly helps too. If solar panels get extremely cheap (and at this rate, that might happen), that makes the idea of purchasing extra solar panels to compensate for cloudy weather (as opposed to energy storage or gas backup) more attractive.

Ian Clover from PV Magazine noted:

“Having paid $0.1377/kWh for renewable energy in 2014, this new, lower price is an encouraging reflection of the rapid decline in solar costs over the past 12 months. Nevada’s Public Utilities Commission, which oversaw the submission of the 20-year, fixed-rate PPA, called the price point ‘very reasonable’ when compared to both existing solar contracts and other fossil-driven generation sources.”

The cost of solar power will continue to decline across the nation as older solar power plants are upgraded or replaced with the newer, cheaper panels from First Solar — the supplier of the solar panels for this record-cheap solar power plant — and other manufacturers. Doing this will help solar power plant owners to stay in the game and compete with not only the fossil fuel plants, but also the renewable ones. The future of solar is glowing!





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About the Author

writes on CleanTechnica, Gas2, Kleef&Co, and Green Building Elements. He has a keen interest in physics-intensive topics such as electricity generation, refrigeration and air conditioning technology, energy storage, and geography. His website is: Kompulsa.com.



  • ithelpme dot com

    Does this take into account the escalation costs? I know when I was getting estimates from SolarCity, they started off really low, like .07 cents but throughout the years, the costs would rise.

    • Bob_Wallace

      The article missed the built in price increase in the Playa Solar PPA. It starts at a record low price but rises over the years. It may, in fact, turn out to be little more expensive than the other PPAs which are fixed price.

      However, it’s more complicated than that. Paying less in year one and paying more in year 20 with ‘deflated’ dollars might be a better deal than a 20 year fixed price.

      The difference probably isn’t large, either way but there’s no way to figure it out since we don’t know what inflation might look going forward.

  • SeanReynoldsCS

    Where is the Buy Now button?

  • Jouni Valkonen

    This is very misleading article. First, solar power isis 100% high value day time electricity that correlates with the need for AC. Secondly, solar panels have significantly longer operational life than what is used for calculating the PPA. Thirdly, solar power does not have any external costs associated to it. And fourth, Solar power is also distributed power and hence is creating local jobs.

    Therefore solar power is much cheaper in real life thanthan what these raw cost figures are telling to us.

    • Keanwood

      How was the article misleading? It mearly stated that a 20 year PPA was signed in Nevada for $0.0378/KWh.

      Everything in the article was true.

      Your first point is true.
      Your second point is false.
      Your third point is debatable
      Your fourth point from the utilitys perspective is irrelevant.

      • Mike333

        If you haven’t gotten the message the Global Warming is real yet, you’re not qualified to debate Any subject.

        Tar Sands releases more carbon into the atmosphere than any other fuel except coal. These pollutants, the waste product have absolutely No Accounting Cost in the US. But, there is a massive cost being paid Right Now in California, Oregon and Washington State.

        http://droughtmonitor.unl.edu

        – Drought
        – Wildfires.

        California is a US breadbasket, we are now losing crop productivity from Global Warming.

        As for coal, the industry Still is not paying anything for the decades long pollution of Every Lake and Stream in America with Mercury pollution. Every fish now contains mercury. The mercury pollution is so high that even the fish caught of the Chilean coast are polluted with large doses of mercury.

        It takes a Republican to be Totally in the Dark about the Destructive Economics of the Coal & Tar Sand industry and Global Warming.

        • Keanwood

          Please don’t lump me into the anti-science, heads in the sand crowd. I do belive Climate change is real. And I firmly believe coal/oil/gas should be forced to pay for their external costs. Not that they have enough money to cover the damage.

          And come November I am voting with a pro solar/wind critiera. (Which essentially disqualifies any Republican candidate)

      • Bob_Wallace

        “Secondly, solar panels have significantly longer operational life than what is used for calculating the PPA”

        “Your second point is false.”

        You’re wrong Kean. Solar panels last far longer than 20 years.
        —-

        ” Thirdly, solar power does not have any external costs associated to it.”

        “Your third point is debatable”

        Present some external costs for PV solar.
        —-

        ” Solar power is also distributed power and hence is creating local jobs.”

        “Your fourth point from the utilitys perspective is irrelevant.”

        But totally relevant overall.

        • Keanwood

          Yes solar panels will last much longer than 20 years. But the PPA is a deal between two parties. After the 20 years the plant operator is free to make a deal with someone else. The PPA is $0.0378. Sure the LCOE will be lower because the panels will last probably twice as long.

          External cost can be almost anything. Yes for solar they are very minor. And in comparison to coal essentially zero. I will say it again. Compared to coal/oil/gas solar is perfect.

          For the fourth point, yes there is real positive value to local jobs. But no utility is going to take that into consideration. As as society its a positive thing. And government policy should reflect that. (I know it doesn’t yet.) But the utility executives don’t take that into consideration.

          In my previous post I just wanted to point out that the article was not misleading.

          • Bob_Wallace

            “the LCOE will be lower”

            No, the lifetime cost of power will be lower. LCOEs are generally calculated for a 20 year period. Utilities are looking at new capacity and asking “How do these options compare over the next 20 years?”

            BTW, the 3.78c/kWh price is a bit misleading. That particular PPA has a 3% inflation factor built in when other (at least some other) solar PPAs are fixed. Over a 20 year period the Buffett PPA will cost the same or a bit more per kWh than other current PPAs.

          • Keanwood

            “BTW, the 3.78c/kWh price is a bit misleading. That particular PPA has a 3% inflation factor built in…”

            Okay. If that is the case then the article was misleading because it stated it was a fixed rate.

            Regardless the important part is that solar is incredibly cheap. If I had to make very conservative guess it would be that by 2020 100% of new capacity will be solar and wind.

          • JamesWimberley

            “But the utility executives don’t take that into consideration.” You can bet your cotton socks that local and state policymakers do take it into consideration. These local benefits are significant forces on the political side of wind and solar, and have helped it beat off sabotage from the fossil interests, who are far more concentrated.

  • vensonata

    “…that makes the idea of purchasing extra solar panels to compensate for cloudy weather (as opposed to energy storage or gas backup) more attractive.” Yes, this is really a point to focus on and to tease out the implications. As we all know the panels are cheap but the balance of system is 2 to 3 times the cost of the panels. Soooo, add a lot more panels which the inverters cannot handle on peak but which are there for cloudy days. Racking is the other expense. Stationary racking is cheaper for those “cloudy day” panels. This is how wind is working now, some days which are windy they curtail some turbines, but on slow wind days they allow all to spin.

    • Mike Dill

      I think we will soon find some interesting ways to store more of the ‘curtailed’ electrons. When the wholesale prices get close to zero, the round trip cost is close to the cost of the ‘storage’.

    • JamesWimberley

      “As we all know the panels are cheap but the balance of system is 2 to 3 times the cost of the panels.” Do you have a recent link for utility solar in the US? The NREL was estimating $1.92 per watt for q4 2012 quotations (link). That’s BOS of just 2 x module costs. The latest PPAs must have lower BOS.

      BOS is essentially a problem for residential and commercial PV in the USA, and a few other countries with comparably backward governance like Brazil. Countries with rational public administration (Australia, Germany, the UK) have cleared away the red tape and get much lower distributed BOS costs. I expect the same holds in countries with really terrible governance like Somalia. It depends on whether you count protection payoffs to warlords.

      • Bob_Wallace

        GMT Q1 2015 $1.58/watt for utility.

        BOS is less of a problem with commercial than residential for the last year or so.

        • vensonata

          Nice Info. I am guessing the panels at utility scale could be 65ents watt. So 40% of total. But if $1.58 watt installed means 5.7 cents per kwh (without the 30% subsidy) then that changes some formulas for calculating cost. The Sunshot estimate is that $1 watt installed = 6 cents per kwh. (My own calculations put it much lower) but I do not know the one critical factor…the interest rate that they assume.
          This is why this 5.7cent kwh price is so interesting, it gives a realistic sense of the true cost of solar as a profit making enterprise.

          • Bob_Wallace

            One place that the federal government might have an impact would be to make low cost loans available for wind and solar farms. Something just a bit over the T-bill rate which would allow the gov to make a little money.
            At least provide loan guarantees like it done for nuclear energy so that private money could be borrowed at lower rates.

            Everyone needs to remember to vote next November. We need a government that works to solve problems rather than one that works to create them….

          • Keanwood

            Out of the 22 candidates only 5, maybe 6, of them believe in climate change.

            On the Dem side 4 of 5 believe in science.

            On the GOP side 2or3 of 17 believe in science.

            Luckily, out of the 4 candidates who actually have a chance of winning,

            1 believes in climate change
            2 publicly say the ‘science isn’t conclusive’ but are relatively moderate overall.**
            1 denies climate science completely.

            **these two are smart men. I’m sure they know damn well the science is conclusive but they have to publicly pander to the GOP primary voter.

          • Mike333

            Jeb is backed by coal money. The Repubs have abandoned all pretense of governing for the benefit of the nation, and have switched allegiance to the Corporation.

            Notice the TPP “debate”, Absolute Silence from the Republican party and the tea party. Absolute Silence. It looks like the Republican Party is now nothing more than a Corporate Construct.

          • Keanwood

            I agree. I think it very important that the right person wins in 2016. Which basically means Hillary because she is the only one with a chance of winning who believes in climate science.

          • Fully agree.

            And it’s a shame — there are a lot of Republican voters who have good ideals and aims. But the leadership is almost 100% controlled by money, and largely dirty money.

          • super390

            Jeb also has billions of his clan’s wealth in funds tied to Saudi Arabia, US oil, etc. That wealth is why we keep getting one Bush after another inflicted on us when no right-wingers actually like them very much.

          • Jouni Valkonen

            This is good point. Wind and solar are zero risk Ventures and therefore proper interest rate should also be zero or even negative.

            Only risk associated to zero emission renewables is that the price of electricity plummets to near zero. For the case of this kind of positive disaster, government can happily cover the costs.

          • Bob_Wallace

            With PPAs wind and solar farm owners are protected against the falling price of electricity until their projects are paid off. At that point they are free to sell ~1c per kWh electricity (plus whatever profit the market will support).

            Loaning below the prime rate would be a subsidy. Loaning close to price rate would be a sweet deal for wind and solar and speed installation.

          • vensonata

            This puzzles me: Here are the U.S. “Sunshot” goals for 2020, from the Dept of Energy.
            $1watt utility = 6cents kwh;
            $1.25 watt commercial = (they don’t say but the math would be 7.5Cents kwh);
            residential $1.50 watt (again they don’t say but that is 9cents kwh).
            So it means that we have hit $1watt installed or it means that the original estimates were wrong between the cost per watt and the price per kwh. It could have been pessimistically calculated with a 20 year lifespan and now they realize that has changed. Beats me. Anybody know more?

          • Bob_Wallace

            Running a LCOE.

            Solar $1/watt. CF 18.75% (4.5 solar hours per day, US median) 1c/kWh operating costs, 5%, 20 year financing.

            5.9c/kWh.

            Ran a LCOE.

            I would guess that ‘best case’ utility is very close to $1/watt. End of first quarter GMT said the average installed price of utility was $1.58/watt. It could be that with vertical integration First Solar is getting close to $1.

            I’ve never seen any organization talk about lifetime/lifespan prices for solar. Assuming a 40 year life 5.9c for the first 20 and 1c for the second 20 would mean about 3.5c/kWh.

          • Doug Cutler

            $1/watt is the tipping point target set by the Federal Sunshot Initiative originating under George W. Bush. If we’re approaching that number now its well ahead of schedule, nominally 2020.

  • Mike Dill

    New ‘anything but renewable’ is now truly dead. It will still take some utilities some time to fully comprehend that fact.

    • Matt

      Looking at build data for the last year, new coal (world wide) and NG (even in EU and USA) are still going in. Looking a Zac’x June 6 post on Jan-May 2015 additions in USA we see NG still 25%. Which is a big improvement, but not truly dead. Headed in the right direction, and yes those NG plants were planned years ago before current price drops. I guess it is kind of like the difference in direction, velocity, and acceleration. But need to increase the pressure on the RE acceleration pedal and on the FF brake pedal. And if it opens in Dec the TVA Watts Bar 2 plant will be first new nuke in USA in 20 years. So if we could look into utility board rooms how many FF plants are they looking to start the planning process on? In NA and EU you might be correct that it is zero; less clear that we are there for whole world yet.

      • Dirk Knapen

        Well for the part of the world between the 40° latitude where solar production and cooling demand coincide and storage is only needed for nights and maybe a few days, solar would be cheaper than crude oil anyway. So for most of the world by now solar would be the obvious choice provided the up front financing can be found.

        • Ivor O’Connor

          Germany seems to be doing fine with solar and they are what, like 52°?

          • Dirk Knapen

            47 – 55°N, yes, but with a support scheme, what I was talking about was without support, just cost divided by production. Even in Sweden PV is installed without subsidies, but with a tax on CO2.
            Belgium 49 30 – 51 30°N did quite well too, but again with heavy subsidies. Of course our consumer power prices are high, up to 30 €ct/kWh, partially reflecting support costs paid through a levy in distribution network costs.

          • Ivor O’Connor

            True. So many particulars it is hard to make generalized statements.

          • Dirk Knapen

            Well, that only is the case for technologies enjoying some kind of support. It would be great if we could get the true technical cost of production + the external costs separately. In Saudi Arabia solar PV is still cheaper than crude oil, so it seems logic to me that the Saudis protect their share of the left over fossil fuel market by pushing the most expensive drilling technologies and locations out of the market.

          • Ivor O’Connor

            Unfortunately the energy sector is so riddled with crony capitalism everything is supported. Whether it be natural gas, coal, bio, nuclear, solar, or wind.

            Ideally we’d be able to buy solar panels from China at something like ten cents a watt and install them ourselves for nothing. Ideally.

          • Dirk Knapen

            I think that is what we will increasingly see happen in regions with little or no grid in Africa, India,…Since oil still has to be refined and transported over sometimes nearly non-existing roads, I assume we will see an energy introduction there similar to the mobile phone and internet without any grids. The rest of the world may soon take the lead over Europe and the US.

          • Ivor O’Connor

            It’s just not happening fast enough for me.

          • Bob_Wallace

            The average cost of extending the grid to people not now connected is fairly high. Micro solar can be installed for relatively small money so micro solar is starting to take off all through unserved countries.

          • Mike333

            Solar panels from China? You’re asking for trouble.

          • nakedChimp

            they said that about cars from Japan too..
            Btw, the quality seal ‘Made in Germany’ was given by the Britons to protect their local market from imported goods that then needed to work with this ‘blemish’ and actually got better than the local products, turning the ‘Made in ‘ from a ‘Warning’ sign into one of quality.

            The only company from the US that is actually worldwide known (to me) is Sunpower.. anything else comes out of Asia.. give those Chinese 5 more years and with all the R&D then completely located close to the manufacturing plants they will excel in this too, technologically and economically.
            I bet Sunpower will be bought up within 10 years by some Asian vertically integrated manufacturer..

      • Shiggity

        Coal is more dead than a lot of people think. All the primary coal countries have hit their limits and cannot even grow on coal if they WANTED to.

        They want to keep building coal but they literally cannot.

        India and China are the two biggest coal users.

        India’s infrastructure *cannot* handle the load, that is why they had the biggest blackout in the history of the world a few years back. They had the power plants and the coal, but they just couldn’t ship the coal from their ports to the plants fast enough. It’s a logistics problem.

        China is at the same environmental limit that the US hit in the 1960s when we created the EPA. Their environment is so bad now that they will literally have to shut down airports, schools, malls, etc because of the smog. You can say whatever you want about CO2 pollution or the like, but when smog is so bad that you have to shut down core economic facilities vital to your region, then it’s a problem.

        A lot of people think you can simply just keep scaling your economy off coal forever if you have enough. It doesn’t work like that. The economic limits have been reached.

        • Mike Dill

          I think that some utilities are trying to keep an open mind, and are hedging with NG for those infrequent times when there is no wind or solar.

          My opinion is that storage will find a way to make even that hedge uneconomic in a few years, but the NG plants will be paid for in our electric bills for the next thirty years even if they are never used.

      • eveee

        In the US, a lot a big part of the NG plants were in Florida. A product of the abysmal Florida politics, perhaps?

        Meanwhile, a battle is raging for solar.

        http://thinkprogress.org/climate/2015/06/16/3669561/floridians-solar-choice-proposal-opposition/

        Time to put this question to the national candidates for election.

        • super390

          You know how that will go. The candidates will spout outdated data, outright myths, and red-baiting insinuations. Very few people outside of these forums seem to know that solar is actually cheaper than coal in a growing number of circumstances. Most still think that it’s a “sacrifice” for the environment, which to some is a worthy individual goal and to others literally a false god. Thus there’s no pressure for a national-scale changeover.

          • Bob_Wallace

            Do what you can to spread the news about wind and solar prices.

            All of us have access to web sites where we can post numbers for others to see. We can all write letters (email) newspaper editors. Most of us talk to other people from time to time.

            If each of us would seek out one opportunity to inform others of the current price of renewables and the very high external cost of burning coal we could reach dozens/hundreds/thousands of people each day.

          • eveee

            Egads, solar was cheaper than coal a while ago. Of course it depends on location. But a few years back nobody expected cheap wind and solar anywhere competing with coal and NG was more expensive.
            My have things changed.
            I think its time for us to kill the “it will cost more” meme. I mean if the Green Tea group has figured out solar is cheaper, its time for us all to get the idea.

  • JamesWimberley

    The Paris climate talks will still have the latest IPCC mitigation report as a reference point. This said that a 2 degree mitigation pathway will cost about the same as BAU, ignoring health and other benefits. In fact, once you update to current real contractual prices for wind and solar, the transition policy is much cheaper.

    • Ross

      If they don’t do the right thing by the world economy and environment in Paris it won’t be through lack of information.

      • Frank

        As long as they don’t take eia projections seriously. I think the surgeon general should make them put a warning on it. Something like “This could actually be the projections for solar installations on the New Horizons spacecraft”

        • margaret_davis3
    • Larry

      In English please. Remember, a lot of people like myself come here to get an education. (We have to start somewhere)

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