Big solar plants are getting cheaper to run and expectations for
their useful operational lives keep getting longer,according to a
new survey of U.S. solar industry professionals.
By the end of 2019, a cumulative total of
76 gigawatts of solar had been installed in the United States,
according to Solar Energy Industries Association and Wood Mackenzie
Power & Renewables. The learning-by-doing involved with growing
the sector is reflected in steadily improving performance
The assumed useful life of projects now averages 32.5 years, up
from 21.5 years in 2007, according to a
canvassing of solar project developers, sponsors, asset owners,
and consultants conducted by researchers at Lawrence Berkeley
At the same time, the industry has managed to slash the costs to
operate projects by half, with levelized lifetime operational
expenditures (OpEx) falling from an average of $35 per kilowatt
(kW)DC-year for projects built in 2007 to $17/kWDC-year for
projects built in 2019.
Berkeley Lab finds that the levelized cost of energy (LCOE) of
U.S. utility-scale PV projects declined from an average of $305 per
megawatt-hour (MWh) for projects built in 2007-2009 to $51/MWh for
projects built in 2019. The researchers attributed much of that
cost reduction to lower upfront capital expenditures, including
less expensive PV modules. But longer-lived, cheaper-to-run
projects shaved costs, too.
Absent the project life and OpEx improvements, the LCOE for
projects built in 2019 would have increased by 43 percent to an
average of $73/MWh.
â€œWe are not surprised to see operational lifespans increasing
from the original 25-year design life,” Daniel Liu, principal
analyst, Wood Mackenzie Power & Renewables, said in an email.
“We’ve seen the same in wind: some asset owners now expect to run
the latest wind turbines for 30 years,â€
The benefits of longer-lived solar projects
The expanded useful life of solar projects â€” essentially the
period during which ongoing revenue is greater than ongoing costs
â€” comes with many benefits for plant owners.
Longer lifetimes give plants owners more years of revenue
to recover upfront capital costs and any necessary component
replacements or refurbishments, helping to drive down
LCOE, the Berkeley Lab authors
Longer project viability can also translate into a longer
â€œmerchant tailâ€ in the years after the expiry of an initial
fixed-price power purchase agreement (PPA), when owners sell power
into competitive wholesale markets.
â€œExpectations for a profitable merchant tail (which may or may
not ultimately be fulfilled) help enable aggressive pricing for
initial power sales agreements,â€ according to
â€œAt the end of a 20-year PPA, the project should have been
paid off already, so any further revenue in a merchant tail period
is almost completely marginal profit,â€ WoodMac’s Liu said.
â€œMost of the U.S. solar fleet is still less than 20 years old,
but as these projects age, I’d expect operators to try â€˜run to
failureâ€™ as many of their developments as possible.â€
Running out of options for lowering solar O&M costs
Solar energy plants may be living longer and more productive
lives, but the industry may be running out of room when it comes to
further lowering operations and maintenance (O&M) costs.
O&M, the largest single piece of utility-scale project OpEx,
is “now offered at rock-bottom prices, with relatively few
opportunities for further reductions,â€ according to the Berkeley
â€œI agree with the rock bottom statement,â€ said WoodMac’s
Liu. â€œWe are either there already or will reach it in the next
The Berkeley Lab report cites factors that could even push solar
OpEx costs higher going forward, among them higher land-lease
costs, fewer property tax abatements from local governments, and
increased on-site security costs.
In their zeal to cut OpEx, many project owners are
already excluding critical measures from the scope of service
contracts. â€œInevitably, squeezing O&M scope means that
certain activities will be put off, and somebody will eventually
have to pay for activities such as corrective maintenance and
inverter failures in the future,â€ said Liu.
But as the solar industry matures, it is gradually pivoting
toward a focus on optimizing a plant’s performance over the long
run rather than ruthless cost-cutting, he said. â€œThe thinking is
that in some cases, O&M costs may be higher, but the trade-off
is that overall plant availability â€” and therefore energy
production â€” will increase.â€
Source: FS – GreenTech Media
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