BP’s Partner Says Eight Banks Back Australian Solar Project

[OKIsItJustMe]

http://www.businessweek.com/news/2011-02-21/bp-s-partner-says-eight-banks-back-australian-solar-project.html

BP’s Partner Says Eight Banks Back Australian Solar Project

February 21, 2011, 11:26 PM EST

By James Paton

Feb. 22 (Bloomberg) -- BP Plc’s partner in a proposed Australian solar power project said BNP Paribas, Banco Santander SA and National Australia Bank Ltd. are among eight banks that have agreed to help finance the venture.

The 150-megawatt solar project in New South Wales state, among developments competing for Australian government funding, is expected to cost as much as A$900 million ($903 million) over its lifetime, Fotowatio Renewable Ventures said.

“Australia is a key market,” Javier Huergo, Fotowatio’s head of business development, said by phone from Sydney. “Our intention is to have a long-term presence here.”

Australia, which set a target of generating 20 percent of its electricity from renewable energy by 2020, has accepted funding applications from projects shortlisted in the government’s A$1.5 billion Solar Flagships program. A decision on the winning projects is due in the middle of 2011.

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[msongs]

1. rooftop solar for every roof and stuff corporations and B of A nt

[Statistical]

2. Centralized solar makes no damn sense.

Solar is expensive per watt and per kWh the two advantages it has are
a) it can be deployed everywhere
b) no need for transmission

by building it at the source of the consumption you can eliminate the transmission cost.

Average Retail electricity in the US = ~11 cents per kWh (solar built on your house needs to compete with this).
Average Wholesale generation price in the US = ~6 cents per kWh (large scale commercial solar needs to compete with this).

It is far easier to make the ROI% workout when targeting 11 cent comparison than 6 cent comparison.

[OKIsItJustMe]

3. Centralized generation makes sense economically

It’s less expensive (per kWh) to construct "solar farms."

http://www.solarbuzz.com/facts-and-figures/retail-price-environment/solar-electricity-prices

…Notes

The commercial and industrial solar electricity indexes benefit from discounts against retail prices that can be secured on volume purchases. When purchasing a residential solar energy system through a large government or utility programs, it may be possible to secure a prices more consistent with the industrial price index.

No solar energy rebate programs have been built into the data. Many governments and utilities have incentives to reduce the cost of solar electricity, recognizing the broad economic benefits of stimulating a self-sustaining local solar energy market.

Financing cost is a significant factor in the index and is assumed to be 5% per annum, amortized over a 20 year life. The economic payback page on this site includes a discussion on ways to enhance solar energy’s economic equation.

The index is based upon a climate with 5.5 hours of sunshine average over the year. This is typical of locations like US Sunbelt States, much of Latin America, most of Africa, the Middle East, India and Australia. Mediterranean Countries, followed by Japan and then Northern Europe have progressively lower average hours. Saharan and southern Africa, and the areas centered on Saudi Arabia, central Australia, Peru and Bolivia are higher.

Solar power generally means a large up-front outlay of cash, which the installer hopes to recoup though lower electric bills.

http://www.solarbuzz.com/going-solar/using/economic-payback

…
For example, if your average electricity rate is US$0.20 per kilowatt hour and your installed cost was US$4.00 per watt, your payback time would be just over 15 years. If you are exposed to peak pricing on electricity rates, by taking account of tax incentives (available for corporate purchasers), payback may be closer to 10 years.

Payback time can also be affected by weather conditions and the cost of finance. In less sunny locations, such as Germany, the United Kingdom, or Japan, the average sunlight level may be closer to 2.5 sun-hours per day. In this scenario, a system priced at $8/W will take significantly longer for payback, perhaps 10-20 years.

Over the last 20 years the cost of solar energy systems has come down seven fold. As the demand for systems rises and manufacturing volume increases, costs will decrease and the economic payback time will also decrease.

[Statistical]

4. You are missing the point.

Generation cost by conventional sources is 6-8 cents per kWh. Transmission adds another 2-3 cents. The power bill you see includes generation costs, transmission costs, and compliance costs. Thus if your power bill is $0.10 per kWh you can break even if the lifetime power from your solar panels is <= $0.10 per kWh. Now the reality is that if your power bill is $0.10 per kWh the actual generation cost of power on the grid was much lower more like 5-7 cents.

In essence solar power can be profitable because you avoid the overhead of transmission, compliance, and billing.
It is far easier for solar to compete when it has $0.00 transmission cost (installed on-site).

Notice your graph starts at 20 cents kWh. Average wholesale power (generation only) in the US is 6.8 cents per kWh.

If you are going to build a "farm" wind is far superior to solar. Solar's main advantage is that is can be deployed anywhere AND it can be deployed on-site. Building a farm and then connecting it via long distance transmission lines (adding compliance, billing, and transmission costs) defeats both of those advantages. Whatever price you can produce solar power at, transmission is going to add 2-3 cents. So onsite install is always going to be cheaper. Of course on-site installs makes the concept of power companies less relevant.

[OKIsItJustMe]

5. No, I didn’t miss your point

From a system viewpoint, on-site generation makes a lot of sense (I really like the idea of home solar panels.)

On the other hand there are a number of realities to support centralized generation.

For example, our house is surrounded by trees, sits on the north slope of a hill, and has a roof-line that heads almost directly north-south. (I’d love roof-top solar, but…)


From an economic standpoint, just as many people find it easiest to lease an automobile rather than to buy it outright, the up-front costs of a solar installation makes it difficult for them, even though over time it will pay off. (Remember the people who complained that CFL’s just were too expensive, even though, over time they’re less expensive?)


However, there's hope on the horizon…

http://www.nrel.gov/features/20110216_low-cost_solar.html

Super-Efficient Cells Key to Low-Cost Solar Power

February 16, 2011

Thinking big while focusing on small, a solar company and a national energy lab combined talents to develop a solar power concentrator that generates electricity at prices competitive with natural gas.

The Amonix 7700 Concentrated Photovoltaic (CPV) Solar Power Generator, developed by Amonix and the U.S. Department of Energy's National Renewable Energy Laboratory, is the size of an IMAX screen but costs much less than comparable generators, partly because of the efficiency of its small solar cells. It delivers more "energy per acre" than anything yet available in the solar energy world.

…

Expanding the Market to Everyone

Solar energy has found a niche on rooftops, especially of green-minded homeowners. But if it is to play a major role in the broader electricity market, it needs to come in at or below the costs of electricity generated from coal, which is projected to cost from 6 cents to 15 cents per kilowatt-hour in four years. The 7700's cost per kilowatt-hour is expected to be well within those price ranges as production and sales continue to grow.

"This development and R&D investment enabled the entire CPV industry," Symko-Davies said. "This could truly shake up the world and add competition to the flat-plate technologies being deployed at utility scale."

…

[Statistical]

6. For people who would like a lease option we need a govt program.

Imagine I have the money, you want solar power. I can install it, and lease it to you. Say 10 year lease.
Rather than pay the power company you pay your solar provider and after 10 years the system is yours.

The reason you need govt involved is because what happens if the leasee moves, the property gets foreclosed, or the system damaged. You need a legal mechanism to bind the lease to the property. You buy the property you also buy the attached lease. Of course the new owner could simply pay a contingency and be released from the lease early.

There is no technical reason we can't have a lease to own system in the US right now. It is a policy issue not a technical one.

[OKIsItJustMe]

8. Oh, I agree

I really like the business model of http://www.sunedison.com/">SunEdison etc.

However, that still doesn’t mean that solar farms don’t make sense in some situations.

[kristopher]

7. That is not a relevant comparison

The large scale solar projects are primarily competing against peak generation costs which often are in excess of $1/kwh. Because of demand driven by mid-day air conditioning use solar has a natural slot where it it very often a better solution than even today's less expensive natural gas.

The current expanding market for solar is also large scale (although not as large as utility driven projects) - big box stores and large users that pay higher rates for peak demand. As that market becomes saturated investments in solar manufacturing infrastructure will have driven the price down to where the next market niche starts to become cost effective - residential rooftops.

From previous discussions it is established that you are well aware of the marketing of electricity and the way solar actually fits into the system; so perhaps you wouldn't mind explaining your use of a false paradigm that maligns solar?