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The price of solar power just fell 50% in 16 months

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Re: The price of solar power just fell 50% in 16 months

#161

Post by kragen »

A really interesting thing about this is that the price of solar panels has changed almost not at all in those 16 months: http://www.solarserver.com/service/pvx-spot-market-price-ind... shows that it's 0.49 to 0.63 € / Wp today, while 16 months earlier, it was 0.45 to 0.62. This is a dramatic contrast from the continuous 36% per year reductions from 2009 to 2012.

In large part because it's night half of the time, solar has a pretty low capacity factor, like in the 20% range (see https://en.wikipedia.org/wiki/Capacity_factor for details) so it matters whether this is 800MW peak or 800MW average. I think it's peak, which means that we're talking about something in the range of US$400M to US$500M worth of solar panels at current prices — which are the same prices as in 2014, when bids were twice as high! With a 35% capacity factor (Dubai is equatorial and sunny, although even Arizona only gets 19%), this project will have only 800 MW * 35% * $ 0.0299/kWh = US$73.4M/year of revenue, which is only a 16% return on investment — or ⅓ that, at 5⅓%, if we assume that the non-module costs of the project amount to ⅔ of the total cost, as shown in the bargraph on the article.

So, is the winning bidder (strangely, not named in the article!) really willing to accept a 5⅓% IRR for this investment, because PV solar park competition is really that cutthroat? Or are they betting that by the time they have to buy the modules, the prices will have fallen (returning to their former exponential decline?), and/or that the notorious "soft costs" that eat up half the project cost are becoming cheaper?

There's no real floor on the cost of silicon photovoltaic modules, since almost all of the cost of producing them from raw materials is energy, not the materials themselves.

Re: The price of solar power just fell 50% in 16 months

#162

Post by dragontamer »

ChuckMcM wrote: post #145
dragontamer wrote: post #138

Earlier quoted context omitted.

Unlikely. Solar Panels don't replace all of your electricity costs. Naturally, you'll still run your refrigerator at night, right? And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it. You'll recoup some of the costs through net-metering, but you usually buy back at wholesale prices and not at retail prices. Finally, I'd expect utility companies to change their pr…

You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess. So if you generate as much power as your going to use for the entire day from your panels, you pay nothing for that day. Even though you are drawing power at night. In the Bay Area, there are other things that screw up the numbers but the program "trues up" once a year (rath…

> You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess.

Depends on the state.

Sometimes, you buy at retail prices and sell at wholesale prices. Which honestly, is far more fair. You're basically using the utility's batteries / energy storage at no charge right now (if you're in a state with pure net metering laws)

And yes, purchasing a PowerWall is more "fair". Instead of relying on the service and tax-incentives to give you a free battery pack, its definitely more fair if you got your own.

Re: The price of solar power just fell 50% in 16 months

#163

Post by kragen »

ChuckMcM wrote: post #139
warmwaffles wrote: post #107

Earlier quoted context omitted.

How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels without maintenance fees for 33.33 years by your price point of 40k

That is a slightly more nuanced question than you might think. First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations. Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positi…

I think you're being a little unfair with the S&P comparison: you should be comparing the returns on your actual investment with the expected returns on the S&P, not its actual returns. The stock market got a 5.4% return over that time, yes, but that's above average; we should expect its long-run returns to be close to the rate of economic growth, or more like 3%. And it could easily have been zero or even negative over a short time like 13 years.

By comparison, the risk that your solar panels will stop producing electricity, or that someone will invent Mr. Fusion and drop the price of electricity through the floor in the next decade, is quite low.

Re: The price of solar power just fell 50% in 16 months

#164

Post by brianvan5155 »

stale2002 wrote: post #118
jmcgough wrote: post #80

Earlier quoted context omitted.

My gf is an electromechanical engineer at a solar power startup (and obviously supportive of solar power initiatives). Just asked her about this, and she said that: 1) the electrical grid wasn't designed for transferring power this way, and it can damage the grid 2) because solar power isn't a constant power source (say, a cloud blocks the sun for a minute), power companies need to keep power available for someone wh…

Solar power REDUCES peak grid usage; it does NOT increase it. When do you think solar power is producing the most electricity? In the afternoon on a hot summer day. When do you think peak grid electricity usage peaks? In the afternoon on a hot summer day! Solar power helps get rid of the peak electricity usage problem. If anything, power companies should be paying solar users even more, because they are reducing cost…

It's creating new peaks at previously non-peak times.

We don't know precisely what effect that will have on the grid utility business, or what effect that will have on overall grid supply price rates. One could argue that grid power should get cheaper... one could argue that there would be a net canceling effect among all the factors involved... or one could much more reasonably say that it's a chaotic system so no outcome is guaranteed.

Disruption!

Re: The price of solar power just fell 50% in 16 months

#165

Post by criddell »

dragontamer wrote: post #138
krschultz wrote: post #111

Earlier quoted context omitted.

Payback of 6 years with the new cost, even for your low electric bill.

Unlikely. Solar Panels don't replace all of your electricity costs. Naturally, you'll still run your refrigerator at night, right? And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it. You'll recoup some of the costs through net-metering, but you usually buy back at wholesale prices and not at retail prices. Finally, I'd expect utility companies to change their pr…

> And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it.

I'm in Central Texas and I have two dogs at home. Even if I'm not there, I still leave the air condition going so they are comfortable. The last time I checked, my A/C system was the biggest power hog and so my electricity consumption aligns very closely with when the sun is shining.

Re: The price of solar power just fell 50% in 16 months

#166

Post by [deleted] »

thechao wrote: post #140
ChuckMcM wrote: post #103

The aggressiveness of the price drops on solar is pretty amazing. I just lost one of the inverters on my grid-tie system after it had run trouble free for 13 years. So we're looking at the first "major" repair to the system I installed in 2003. And in 2003 my 5.2kW of panels on my roof cost $38,000 before subsidies and $19,000 after. 28 panels, two 2.5kW inverters, net about 4.2kW of generation. I priced out replacin…

Is this DIY, or installed? If it's not DIY, mind passing along who you're using? Inquiring TX minds would like to know!

[deleted]

Re: The price of solar power just fell 50% in 16 months

#167

Post by mod »

d_theorist wrote: post #72
mod wrote: post #68

Earlier quoted context omitted.

But can it be improved with a "just?" "See what crazy change to solar just made energy purchasers sit up and pay attention!"

You clearly have a fantastically lucrative career in annoying-headline-writing ahead of you.

I'm trying to validate my product. Would you pay me $5/day for an annoying headline?

"10 Crazy ways to validate your product for free that startup gurus won't tell you about!"

PS: I don't know what the 10 ways are, I just write headlines.

Re: The price of solar power just fell 50% in 16 months

#168

Post by cakeface »

How much of these low bids in Dubai are due to the low cost of labor there? Also I am guessing that various building regulations are significantly cheaper to meet than in the US. I remember reading about the huge building boom in Dubai being possible because of large groups of extremely low paid laborers. I'd guess any other utility project in Dubai would benefit from this as well.

That isn't to say that there aren't improvements in solar cost. There are improvements. I just wouldn't compare a bid in Texas to one in Dubai.

Re: The price of solar power just fell 50% in 16 months

#169

Post by kragen »

dragontamer wrote: post #138
krschultz wrote: post #111

Earlier quoted context omitted.

Payback of 6 years with the new cost, even for your low electric bill.

Unlikely. Solar Panels don't replace all of your electricity costs. Naturally, you'll still run your refrigerator at night, right? And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it. You'll recoup some of the costs through net-metering, but you usually buy back at wholesale prices and not at retail prices. Finally, I'd expect utility companies to change their pr…

Unless it's dorm-fridge-sized, you can definitely run your refrigerator only during the day, generating ice to cool it during the night. Building HVAC systems often work this way, running the chiller to generate ice during the night (when electricity prices are low or even negative) and running the resulting chilled water through heat-exchanger coils during the day. And superinsulated fridges like Sunfrost models can stay cool during the night even without such extra thermal reservoirs.

A thing I haven't seen, but which ought to be practical, is a solar thermal fridge — for example, using the ammonia-absorption cycle that propane-powered fridges use, but heated with sunlight instead of flames. PV panels are typically 16% efficient, but it's easy for solar thermal collectors to reach 50% efficient, and they're also about five times cheaper per unit area (still). So you'd think it would make sense to power the fridge directly from sunlight.

Re: The price of solar power just fell 50% in 16 months

#170

Post by danjayh »

SwellJoe wrote: post #23
giarc wrote: post #6

Earlier quoted context omitted.

At which point would it be financially beneficial for a farmer to turn a field into a solar farm rather than plant a crop? I have no knowledge in economics of either so I couldn't even estimate.

There's a lot of farmland and ranch land in the US that shouldn't be farmland or ranch land. They're too dry, too hot, and competing for water resources with people and natural (sometimes endangered) ecosystems. So, maybe it's something that should be encouraged; the food those farms and ranches produce would need to be replaced by food grown in more appropriate climates, and we'd need to rethink our recent "local fo…

Disagree with agriculture being a disaster everywhere. Here in the midwest (Michigan, in my case) we get so much rain that there's rarely, if ever a need to artificially irrigate. Personally, the land that my horse pastures are on is so good that I threw seed on it and it just started growing. I do put a little bit of fertilizer down every few years, but mostly to replace the nutrients that are removed (baling, etc. will eventually deplete the land if you don't). Stuff grows here with very little encouragement.
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