Cost of Solar Continues to Decrease

[Jay McKinsey + 1,489]

2 hours ago, KeyboardWarrior said:

It honestly baffles me that people don't analyze real projects and do the simple math. Who wants to make money after 20 years of operation?

https://www.cbc.ca/news/canada/calgary/travers-solar-investment-1.5450846

I read elsewhere that $155 M was already present before this cash injection, so let's run some numbers!

We'll be generous and total the plant's cost at $600 M.

The plant is rated at 400 MW. In alberta, the average amount of electricity produced by 1 kw panels yearly is about 1250 kilowatt hours. Using this, we see that 400,000 kW yields 500 million kilowatt hours annually. (the article tells a fat lie and claims 800 million kilowatt hours, which is higher than a desert solar farm output of the same damned size). 

Okay, so 500,000,000 kilowatt hours yearly. Now we just need a rate. The average seems to be 7.5 cents per kilowatt hour. Fine. 

500,000,000 * 0.07 = $35,000,000

$35,000,000/$600,000,000 = 0.058

5.8% annual return anybody? This will take twenty years to pay back its initial investment, and that does NOT mean it doubles, since the panels will have been paid for and cannot be liquidated. 20 year old panels are nearing the end of their use.

This was a 2019 project, with the so called "$1 per watt" floating around. 

Obviously tax credits are about the only good thing that could come from this. 

 

The project is expecting a 35 year life. No reason to think the panels will be failing in 20 years. The other major source of revenue is probably selling carbon offsets as part of the carbon pricing plan. Regardless, it is hard to believe that a $500M investment is being made without some rather solid certainty about an adequate rate of return.

[0R0 + 6,251]

On 4/30/2020 at 2:06 AM, Jay McKinsey said:

No doubt because the text doesn't exist. You misread the article or just made it all up and can't admit it. Lame💩

But then I never expect much from an Austrian.🙄

It came from one of your URLs or linked out from it. Got the message, didn't bookmark it. It is the argument and facts that matter, not the authority of the source. 

Austrians are cool economists, but need some updating and numerical analysis. 

[0R0 + 6,251]

18 minutes ago, Jay McKinsey said:

The other major source of revenue is probably selling carbon offsets as part of the carbon pricing plan

Meaning subsidy.

[Jay McKinsey + 1,489]

22 minutes ago, 0R0 said:

It came from one of your URLs or linked out from it. Got the message, didn't bookmark it. It is the argument and facts that matter, not the authority of the source. 

Austrians are cool economists, but need some updating and numerical analysis. 

I think I found it: "Should such a pace of module production capacity growth continue in 2018, the ITRPV warns that a critical oversupply situation may occur." Here is what has happened:

 

[Jay McKinsey + 1,489]

1 hour ago, 0R0 said:

Meaning subsidy.

Makes up for Alberta's oil subsidies. 😋 https://calgaryherald.com/business/local-business/alberta-government-subsidies-to-oil-and-gas-sector-growing-report/

[Douglas Buckland + 6,308]

On 4/30/2020 at 2:06 PM, Jay McKinsey said:

No doubt because the text doesn't exist. You misread the article or just made it all up and can't admit it. Lame💩

But then I never expect much from an Austrian.🙄

A fairly asinine comment....but what we have come to expect from you...

[Jay McKinsey + 1,489]

2 minutes ago, Douglas Buckland said:

A fairly asinine comment....but what we have come to expect from you...

Are you an Austrian?

[Jay McKinsey + 1,489]

1 hour ago, 0R0 said:

Austrians are cool economists, but need some updating and numerical analysis. 

Numerical analysis!?! HERESY! 

Might as well ask a flat earther to come up with a working model. 😆

 

[Jay McKinsey + 1,489]

On 4/29/2020 at 8:19 PM, 0R0 said:

Silicone wafer production excess capacity is discussed in your reference article as the driver for the reduced prices, as installations are not keeping up with production. That is an all too familiar glut condition. It should be followed by some years of reduced capacity additions till installations catch up. Current prices do not cover costs. So improvement from this point will require a few years till new more efficient product and production facilities get put up. 

IIRC, the Lazard study takes NG at >$3. so overstates costs vs. today's prices. 

This is happening, but the temporary acceleration downwards is not representative of trend, but a temporary condition of increased supply and slowly growing demand. Lower NG and LNG prices did that. So that isn't exactly a sustainable solution. 

 

Learning curves are cumulative curves. The 23.5% is the curve from the beginning of the industry, 1976. 2018 costs were a big drop from 2017 on a year by year basis but the historical curve only increased by a much smaller amount. 

2017 = 22.8%

2018 = 23.2%

2019 = 23.5%

The 23.5% appears very sustainable. The excitement has been because of the curve since 2005 becoming much steeper!

sorry I got annoyed 

[Jan van Eck + 7,558]

1 hour ago, Jay McKinsey said:

sorry I got annoyed 

You should be. Poor form, not properly British.

[Jan van Eck + 7,558]

On 4/29/2020 at 10:19 AM, Douglas Buckland said:

This topic has been flogged to death long before @Jay McKinsey joined the forum. I am not interested in a rehash, but you guys carry on if you like.

I have not looked into the underlyhing costing structures yet suspect, but cannot confirm to you, that the real factor driving down the price of solar panels is the exchange rate between the country of production  (China) and the country of consumption (India, USA, Germany, whomever).  It is apparent that the Chinese are manipulating the currency exchange rate in order to maintain their output.  Further, the Chinese are incentivizing their producers as part of their Communist Party central plan to be the dominant player in solar panel production.  So what you are seeing is (likely, because I have not studied the issue in depth, this is just my hunch) an artificial construct.

this is not to say that pricing does not drop with expanded production runs, as costs drop.  That is typically the case across a very wide range of products, including such prosaic things as electric motors.  Are the longer solar productin runs due to internal costing developments, or it is a function of manipulation by the Chinese authorities?  Peersonally, I would pick some combination, but think the externals are (so far) a big factor here. 

Doug, as you, I cannot get into it, I have a busy day here.  I am going out to see if I can buy an abandoned, rather decrepit, fctory building today, fix it up and put it back to work.  As the economy tanks, productioin facilities are going to take it on the chin, along with the workers, and society will become progressively poorer.  the USA is headed for the Italy Experience, with ghost plants, high costs, lots of unemployment, and a wrecked economy.  Now if I can get that plant then I will install a bandsaw sawmill in there, and start up converting local logs into dimensional lumber.  There is a lot of wood that is not being harvested, the woodsmen going without work, as the paper industry has been collapsing. 

What to do with the wood?   The softwood I will mill into thin planks, likely 5/4 or 2-inch, then use them as foundation materials for glueing up onto laminated beams and cross-laminated decking plate.  That gets kitted into 85-foot lengths, as pre-fabricated bridge sections. Glued-up, laminated beams are incredibly strong, and make a direct substitute for steel and concrete.  I will sell those bridges to various States that need to replace their crumbling stuff which they cannot afford to do in steel and cement.  Now the big advantage of laminated wood is that it becomes impervious to being wrecked by road salt.   So the life-span is measured in centuries, not 40 years.   This little factory will end up putting over 400 men at work at decent wages,  plus make me some coin, and rejuvenate a depressed area and market segment.  What's not to like?

What society needs right now is to unlesh its equity capital into new projects.  Those projects are out there.  Yes, it includes risk, but capital is inherently risk capital.  Can it fall flat?  Sure it can; risk is part of it, and that is what capitalism is all about.  But don't kid yourself: it is the entrepreneurs that will pull the USA out of the mess it has slid in, not trading with China or building military hardware to go bomb Iran, or other foolish projects.   Time for America to get back to work.      

[Jay McKinsey + 1,489]

1 hour ago, Jan van Eck said:

I have not looked into the underlyhing costing structures yet suspect, but cannot confirm to you, that the real factor driving down the price of solar panels is the exchange rate between the country of production  (China) and the country of consumption (India, USA, Germany, whomever).  It is apparent that the Chinese are manipulating the currency exchange rate in order to maintain their output.  Further, the Chinese are incentivizing their producers as part of their Communist Party central plan to be the dominant player in solar panel production.  So what you are seeing is (likely, because I have not studied the issue in depth, this is just my hunch) an artificial construct.

this is not to say that pricing does not drop with expanded production runs, as costs drop.  That is typically the case across a very wide range of products, including such prosaic things as electric motors.  Are the longer solar productin runs due to internal costing developments, or it is a function of manipulation by the Chinese authorities?  Peersonally, I would pick some combination, but think the externals are (so far) a big factor here. 

Doug, as you, I cannot get into it, I have a busy day here.  I am going out to see if I can buy an abandoned, rather decrepit, fctory building today, fix it up and put it back to work.  As the economy tanks, productioin facilities are going to take it on the chin, along with the workers, and society will become progressively poorer.  the USA is headed for the Italy Experience, with ghost plants, high costs, lots of unemployment, and a wrecked economy.  Now if I can get that plant then I will install a bandsaw sawmill in there, and start up converting local logs into dimensional lumber.  There is a lot of wood that is not being harvested, the woodsmen going without work, as the paper industry has been collapsing. 

What to do with the wood?   The softwood I will mill into thin planks, likely 5/4 or 2-inch, then use them as foundation materials for glueing up onto laminated beams and cross-laminated decking plate.  That gets kitted into 85-foot lengths, as pre-fabricated bridge sections. Glued-up, laminated beams are incredibly strong, and make a direct substitute for steel and concrete.  I will sell those bridges to various States that need to replace their crumbling stuff which they cannot afford to do in steel and cement.  Now the big advantage of laminated wood is that it becomes impervious to being wrecked by road salt.   So the life-span is measured in centuries, not 40 years.   This little factory will end up putting over 400 men at work at decent wages,  plus make me some coin, and rejuvenate a depressed area and market segment.  What's not to like?

What society needs right now is to unlesh its equity capital into new projects.  Those projects are out there.  Yes, it includes risk, but capital is inherently risk capital.  Can it fall flat?  Sure it can; risk is part of it, and that is what capitalism is all about.  But don't kid yourself: it is the entrepreneurs that will pull the USA out of the mess it has slid in, not trading with China or building military hardware to go bomb Iran, or other foolish projects.   Time for America to get back to work.      

Good luck with your factory! The solar cost decrease is an exponential function such as Moore's Law,not due to exchange rate. Below is the USD/Yuan exchange rate:

Edited May 1, 2020 by Jay McKinsey

[Jan van Eck + 7,558]

30 minutes ago, Jay McKinsey said:

Good luck with your factory!

"Luck" is for the unprepared.  "Success" lies with those who put in the hard work. 

And that hard work, that pluckiness, is the essence of America.  A unique quality, I might add.

[Jan van Eck + 7,558]

1 hour ago, Jay McKinsey said:

The solar cost decrease is an exponential function

Well, not quite.  More of a non-liner logarithmic regression.  Here is a short mathematical treatise:

https://www.r-bloggers.com/a-collection-of-self-starters-for-nonlinear-regression-in-r/

[Dan Warnick + 6,100]

2 hours ago, Jay McKinsey said:

Good luck with your factory! The solar cost decrease is an exponential function such as Moore's Law,not due to exchange rate. Below is the USD/Yuan exchange rate:

All well and good, Jay.  When will I receive an email offer or an offer with my current electric bill (used to be a knock on the door) telling me that all I need to do is choose solar over the current source of electricity to my home and I will enjoy reduced electric bills for evermore (with no part of the taxes I pay subsidising either one)?  "All you need to do, dear customer, is check here: __"

Sign me up!

[0R0 + 6,251]

4 hours ago, Jan van Eck said:

this is not to say that pricing does not drop with expanded production runs, as costs drop.  That is typically the case across a very wide range of products, including such prosaic things as electric motors.  Are the longer solar productin runs due to internal costing developments, or it is a function of manipulation by the Chinese authorities?  Peersonally, I would pick some combination, but think the externals are (so far) a big factor here. 

 

It is typical of Chinese policy driven industrial expansion that it continues till it overwhelms demand by a 50% margin and then some, so crushes profitability to less than nothing, and never responds with rationalization of the industry to take lines off till inventory is piled up everywhere in the world, and they just can't sell any more. Then they cut production, usually by stopping private production but keeping SOEs producing regardless of productivity, quality or profitability (typically not consistently profitable). 

[Jan van Eck + 7,558]

1 hour ago, 0R0 said:

It is typical of Chinese policy driven industrial expansion that it continues till it overwhelms demand by a 50% margin and then some, so crushes profitability to less than nothing, and never responds with rationalization of the industry to take lines off till inventory is piled up everywhere in the world, and they just can't sell any more. Then they cut production, usually by stopping private production but keeping SOEs producing regardless of productivity, quality or profitability (typically not consistently profitable). 

I would concur.  Your descriptive is Chinese Industrial Policy in a nutshell. 

They even have done this with very big-ticket items such as commercial ships.  I think right now the Chinese shipyards command some 50% of all production world-wide, with the Japanese and South Koreans far behind but also big players.  The shipyards got into so muchover-capacity that the Government took a chunk of the prive ones over and consolidated them into a SOE, but still with lots of over-capacity.  the Japanese still hold some ground with large tankers, and the Koreans are moving over to LNG from their previous dominance of containerships, which I suspect at this moment in time has no market.  All done there.

I have to wonder what the Buyers of those monster containerships, the 19,000-TEU class, are going to do with those huge investments.  How do they anticipate utilizing a containership that can hold 19,000 containers?  When there is no trade of any substance?  How do you pay for that?  Maersk Lines must be in a world of hurt. 

[KeyboardWarrior + 527]

12 hours ago, Jay McKinsey said:

The project is expecting a 35 year life. No reason to think the panels will be failing in 20 years. The other major source of revenue is probably selling carbon offsets as part of the carbon pricing plan. Regardless, it is hard to believe that a $500M investment is being made without some rather solid certainty about an adequate rate of return.

I think power output drops after 25 years, unless these panels are improved in some way. The carbon offsets can certainly be another source of revenue, but to me this doesn't justify solar on a grand scale, since the carbon credits don't have any intrinsic value. They're an artificial means to boost the profitability of an energy solution, at the expense of profitable solutions like natural gas. IE they charge for carbon usage to give solar a fake advantage. 

As far as the last statement, I'm inclined to believe you, except for the fact that I see all kinds of instances where the "professionals" are pursuing and believing absolute twaddle. California being the star example of bad investments. 

For the record, I don't hate solar. I wish it would work now, but it needs more time. I'll be ready for it when I can receive a ten year payoff. Production of commodities results in even more revenue loss, and since this is my primary interest as far as value creation, I can't touch it for even longer. An easy example is that hydrogen's commodity value is lower than its energy value, since it can be stripped from methane for much less energy cost than stripping it from water. 

Edited May 1, 2020 by KeyboardWarrior

[Jay McKinsey + 1,489]

18 minutes ago, KeyboardWarrior said:

I think power output drops after 25 years, unless these panels are improved in some way. The carbon offsets can certainly be another source of revenue, but to me this doesn't justify solar on a grand scale, since the carbon credits don't have any intrinsic value. They're an artificial means to boost the profitability of an energy solution, at the expense of profitable solutions like natural gas. IE they charge for carbon usage to give solar a fake advantage. 

As far as the last statement, I'm inclined to believe you, except for the fact that I see all kinds of instances where the "professionals" are pursuing and believing absolute twaddle. California being the star example of bad investments. 

NREL indicates that some panels are well below .5% year degradation, especially in colder climates like Alberta. https://www.nrel.gov/state-local-tribal/blog/posts/stat-faqs-part2-lifetime-of-pv-panels.html

Though with the expected decrease in panel costs and increase in efficiency I suspect they are planning on re-powering it half way through.

Other than the train to nowhere and Ivanpah and our hydrogen refueling stations I don't think we've invested that badly. 😋

[0R0 + 6,251]

1 hour ago, Jan van Eck said:

I would concur.  Your descriptive is Chinese Industrial Policy in a nutshell. 

They even have done this with very big-ticket items such as commercial ships.  I think right now the Chinese shipyards command some 50% of all production world-wide, with the Japanese and South Koreans far behind but also big players.  The shipyards got into so muchover-capacity that the Government took a chunk of the prive ones over and consolidated them into a SOE, but still with lots of over-capacity.  the Japanese still hold some ground with large tankers, and the Koreans are moving over to LNG from their previous dominance of containerships, which I suspect at this moment in time has no market.  All done there.

I have to wonder what the Buyers of those monster containerships, the 19,000-TEU class, are going to do with those huge investments.  How do they anticipate utilizing a containership that can hold 19,000 containers?  When there is no trade of any substance?  How do you pay for that?  Maersk Lines must be in a world of hurt. 

So far they are running across the oceans at 20% of capacity. Day rates are rising though, so things must be improving

http://marine-transportation.capitallink.com/indices/capital_link_maritime_chart.html?ticker=CLCI

[KeyboardWarrior + 527]

3 hours ago, Jay McKinsey said:

NREL indicates that some panels are well below .5% year degradation, especially in colder climates like Alberta. https://www.nrel.gov/state-local-tribal/blog/posts/stat-faqs-part2-lifetime-of-pv-panels.html

Though with the expected decrease in panel costs and increase in efficiency I suspect they are planning on re-powering it half way through.

Other than the train to nowhere and Ivanpah and our hydrogen refueling stations I don't think we've invested that badly. 😋

Right. So about 5% return annually for this farm without artificial incentives. 

Some figures on revenue from tax credits and carbon credits would be useful. 

Solar in the desert makes much more sense, since power output is 50%  greater and they're not wasting farm ground. If efficiencies could improve we might finally achieve a solar farm with a 10 year breakeven. It's going to be tough to beat combined or allam cycle though. When gas is $3 per million btu these places have a 5 year breakeven. 

Edited May 1, 2020 by KeyboardWarrior

[KeyboardWarrior + 527]

Found it. 

$30 per ton of carbon. That's not going to do much, because a ton of C is a lot of fucking power, and a solar farm isn't going to match a ton of carbon in a few seconds. 

Edited May 1, 2020 by KeyboardWarrior

[nsdp + 449]

On 4/29/2020 at 9:36 AM, Irina said:

 

It will not be that simple.

Read more at:
https://economictimes.indiatimes.com/https://economictimes.indiatimes.com/industry/energy/power/will-not-stop-coal-based-power-plants-immediately-without-a-plan-rk-singh-at-et-gbs-2020/articleshow/74526090.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Also in the end of 2019 India and Russia signed MOU for coking coal from Russian Far East, the plam is to ship Russian coking coal to India via the Northern Sea Route.

Coking coal is NOT for use in powerplants as it will destroy the water walls of the boiler.   It is used to reduce the amount of oxygen in iron (Fe2O3)ore so as to allow iron ore  to be turned into steel.   Most Indian coal has too low of a heat value to be used in a blast furnace.

[NickW + 2,714]

On 4/29/2020 at 3:19 PM, Douglas Buckland said:

This topic has been flogged to death long before @Jay McKinsey joined the forum. I am not interested in a rehash, but you guys carry on if you like.

To be fair to Jay this is the renewables section hence the appropriate place to start such discussions. 

[NickW + 2,714]

On 4/29/2020 at 3:36 PM, Irina said:

 

It will not be that simple.

Read more at:
https://economictimes.indiatimes.com/https://economictimes.indiatimes.com/industry/energy/power/will-not-stop-coal-based-power-plants-immediately-without-a-plan-rk-singh-at-et-gbs-2020/articleshow/74526090.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Also in the end of 2019 India and Russia signed MOU for coking coal from Russian Far East, the plam is to ship Russian coking coal to India via the Northern Sea Route.

Coking coal is not used in power stations.Even the UK  has opened a new coking coal mine 

RE India. If the Nepalese would kick out the Maoists (payrolled by China) then they  could develop its huge Hydro potential (might as well as all the glaciers are going to melt) and supply electricity to India. That would massively curtail Coal demand. 

On a practical level India replacing old inefficient coal fired plant with modern units* make sense - less local pollution and Co2 per kwh of output. 

* I hope the investment is in modern units.