Solar-generated electricity has traditionally been considered one of the most expensive sources of electricity, particularly from solar photovoltaic devices. The growth in solar thermal–generating capacity is beginning to bring costs of these technologies down, but the biggest change in the past five years has been a dramatic fall in the cost of solar cells. This has been driven by technological advances and economies of scale as production volumes have risen, but one of the main factors has been fierce competition from manufacturers in countries, such as China, undercutting the prices from traditional manufacturers.

Solar Thermal Costs

The capital cost of operating solar thermal power plants varies widely and it is difficult to achieve a consensus on the realistic cost of this type of project. This is partly a consequence of the fact that many of them are either demonstration projects or early commercial projects, so costs will be both higher than for fully commercial rollout and extremely variable.

Solar trough power plants are the most widely used solar thermal plants and their costs are the most stable. Typical costs for existing plants are around !6000/kW in Spain and £4000/kW in the United States. Solar towers based on direct-steam systems have a cost of $4000/kW to $6000/kW, but the Gem- solar molten-salt system with extensive heat storage costs around $10,000/kW. The demonstration Maricopa solar dish scheme cost $13,000/kW, although single-dish projects appear to be much cheaper. Meanwhile, one Fresnel scheme in the Unied States has a claimed capital cost of $3000/kW.

Table 13.3 contains estimated costs of various solar thermal technologies from organizations such as the U.S. Energy Information Administration, Lazard, and the U.S. Department of Energy. These suggest the cost of parabolic trough plants to be in the region of $4500–5800/kW. Solar towers are slightly more expensive at $4800–6300/kW. The solar dish capital costs in Table 13.3 are those already quoted earlier: $3300–10,000/kW.

Estimates for the levelized cost of electricity from these plants vary widely. The cheapest is between $130/MW and $150/MWh based on esti- mates from Lazard. Other sources put the levelized cost of power at $260– 270/MWh.

Power Generation Technologies-0312

Solar cells were traditionally considered to be one of the most expensive sources of electricity, but the fall in costs in the past five years means that there is now talk of them being able to compete with other technologies without subsidy by the end of the second decade of the 21st century.

The cost of a crystalline silicon solar cell in Europe in 2009 was !2.62/W according to pvXchange, but by the beginning of 2013 the cost had fallen to !0.79/W. This is a result of both greater competition and larger volumes. Greenpeace and the European Photovoltaic Industry Association have esti- mated that solar cell costs have fallen by 22% each time the installed capacity has doubled. Similar trends can be seen for other solar cell types such as cadmium-telluride thin films.

While spot prices fall, module costs have fallen too but they vary substantially from region to region. In Germany, for example, the typical module price for small rooftop systems was !1.8/W ($1800/kW) in 2012 compared to per- haps !0.5/W in China. This is still only part of the cost of a rooftop installation but it is probable that the installed cost of large solar photovoltaic systems has fallen below !2000/kW in some countries.

The rate at which installation costs are falling is outstripping most predictions from energy organizations. There is scope for prices to fall much further and they could be below !1000/kW by 2025. The rate of change in prices also means that most estimates of the levelized cost of power from solar cell installations are much higher than actual costs. For example, the 2012 edition of the U.S. Energy Information Administration’s Annual Energy Outlook put the cost of electricity for a solar photovoltaic power plant entering service in 2018 at $144/MWh.1

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