Sunrise --
Wake up every day to....
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20 Years,
What's your cost?
$/kWh
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It's not just a number,
it's a ratio!
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The 20 year figure Has its basis in the lifetime that is used to compute the cost of energy that can be achieved from various generating
technologies. For the traditional systems like coal, oil, or gas
fired plants the capital cost of the system is usually dwarfed by the
fuel cost over even a modest number of years. Most of us learned
this lesson as kids. The first hurdle was a nice turntable, and by
time we had even a modest collection of albums the stereo was only a
fraction of the value of our collection.
Renewable Energy Systems
Are invariable based on the collection and capture of low density
energy, a breeze the flow of water, and of course sunshine. So
when we contrast renewable energy equipment to fuel fired machinery the
cost of the former is significantly greater than the latter.
How we compute the magic number
The computation is actually quite simple:
Price of S&T in $/W installed ($3/W)
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Life in years (20y) X
Days of sunshine per year (240d/y) X
Hours of sunshine per day (8h/d) X 0.001(kW/W)
That simplifies to:
S&T @ $3/W
----------------------------------------
20y X 240d/y X 8h/d X .001kW/W
And the cost of the of energy is:
$0.078125/kWh for S&T electricity
Based on the arbitrary 20 years, and an assumed (yes, I know) 240
days per year of sunshine. We also assume that the system can
capture 8 hours per day of sunshine. which is reasonable because we
employ single axis tracking parabolic troughs.
That's it. Granted it takes 20 years, but we are talking about
capital investments. You do believe you'll be using electricity 20
years from now. don't you?
Why the huge differences
Between S&T and the average PV estimate? That's easy, PV
has 2 numbers that are far less attractive then S&T. Let me
show you.
PV @ $8.50/W
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20 X 240 X 4 X .001
Works out to:
$0.446875/kWh for PV electricity
And that's simply because the the price is almost triple, and the
most common PV system uses fixed flat panels. We kept the years
and the days of sunshine the same, but since the sun is off axis to the
panels for most of the day the output of non-tracking PV falls off as
1-cosine() of the solar angle before and after solar noon. The other
problem with PV is the efficiency is known to fall off at 2% per year as
the silicon ages and degrades, and the current generation of inverters
is only rated for 10 years of life. I only mention this in
passing, this calculation ignores those factors.
What about a faster ROI
This is the most common question we get. Businesses want to
depreciate the system is as little as 5 years and expect to break even
in as little as 2 to 3 years. There is no simple answer to
that. Your accountant is the only one that can answer those
questions based on your business situation.
What we've shown here is the simplest example, no interest, no
depreciation, no opportunity cost, and no incentives. All of these
variables will effect the final number. All I can say here is that
those variables will effect both S&T and PV in a similar way.
Suppose you cut the economic lifetime to 10 years for both
systems. The cost of each unit of energy will simply double for
both: That pushes the cost of S&T electricity to $0.15625/kWh
-- almost as high as residential power here in New England. But
look at the PV if jumps to a whopping $0.89375/kWh that's 5.5 times my
residential rate. No wonder nobody's buying...
Phoenix Logo (c) and the Swirling Rays image (c) Solar & Thermal
Systems, Inc.
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