‘Least cost’ procurement policies can obscure factors that add long-term value
WASHINGTON, DC -- As energy industry news stories tout record lows in utility-scale solar prices in a handful of jurisdictions across the country, a growing number of utilities are considering integrating these projects into their resource portfolios.
But, as a new report from the Solar Electric Power Association (SEPA) says, not all solar projects are created equal. Utilities looking to procure cost-competitive, high-value solar projects need to evaluate a range of factors, from regional solar resource intensity to local labor and permitting costs to system design issues, such as whether to use a fixed-tilt or single axis tracking system. The report was produced in partnership with solar project developer Recurrent Energy, a subsidiary of Canadian Solar.
"Project costs tell only one side of the story and can obscure the true economics of a utility-scale installation," said John Sterling, SEPA's Senior Director of Research and Advisory Services and co-author of the report. "Understanding how all of the characteristics of a solar project act in concert to deliver value to a utility will be critical in adding more sophistication to how utility-scale projects are modeled, which in turn can help drive broader adoption."
Other key report takeaways include:
• Utility-scale projects can now achieve levelized costs of energy (LCOE) of less than $70 per megawatt hour (MWh) in poor solar resource areas and less than $50 per MWh in good-to-strong resource areas. LCOE will fall as hardware and "soft" costs -- such as labor and permitting -- also decline.
• Design strategies that leverage project orientation and tracking can boost a project's capacity factor and lower LCOE. For example, a west-facing system can provide additional capacity at peak hours, as can a project with single-axis tracking.
• Determining a solar project's desired value proposition in advance and communicating it to bidders can result in proposals customized to meet specific needs. Providing templates for bidders to submit key response data can also cut review time and minimize the risk of errors.
"We worked with Recurrent Energy to ensure the insights in this report reflect current industry conditions on the ground," said Julia Hamm, President and CEO of SEPA. "Two seemingly similar solar projects can have different factors that drive project economics and long-term resource value. While variations in regional solar resource and system costs are a market reality, well-executed solar projects can add value to a utility's generation mix across any geography."
"Utility-Scale Solar: The Path to Cost-Competitive, High-Value Projects" is available here.
SEPA Media contact: K Kaufmann, email@example.com
Recurrent Media contact: Kelley Vendeland, firstname.lastname@example.org
The Solar Electric Power Association (SEPA) is an education nonprofit that facilitates the utility industry's smart transition to a clean energy future. Through education, research and collaboration SEPA enables the integration and deployment of solar, demand response, other distributed energy resources and supporting technologies onto the grid. As of April 11, SEPA will change its name to the Smart Electric Power Alliance. For more information, visit www.solarelectricpower.org.
About Recurrent Energy
Recurrent Energy, a subsidiary of Canadian Solar Inc. (NASDAQ: CSIQ), is redefining what it means to be a mainstream clean energy company, with utility-scale solar plants that provide competitive clean electricity. The company has more than 4 gigawatts of solar projects in development in North America. Additional details are available at: www.recurrentenergy.com.