TheDriversofTheLevelizedCostofelectricityforUtility-ScalePhotovoltaicssunpowerCorporaTion14August2008sunpower2TheDriverSofTheLeveLizeDCoSTofeLeCTriCiTyforUTiLiTy-SCaLePhoTovoLTaiCSeXeCuTivesuMMarYFormorethanthreedecades,utility-scalesolargeneratedelectricityhasbeendismissedastoocostly.Butthecostofsolargeneratedelectricityisconsistentlycomingdown,whilethecostofconventionalelectricityisincreasing.Advancesinsolarcelltechnology,conversionefficiencyandsysteminstallationhaveallowedutility-scalephotovoltaic(PV)toachievecoststructuresthatarecompetitivewithotherpeakingpowersources.Thecalculationofthelevelizedcostofelectricity(LCOE)providesacommonwaytocomparethecostofenergyacrosstechnologiesbecauseittakesintoaccounttheinstalledsystempriceandassociatedcostssuchasfinancing,land,insurance,transmission,operationandmaintenance,anddepreciation,amongotherexpenses.Carbonemissioncostsandsolarpanelefficiencycanalsobetakenintoaccount.TheLCOEisatrueapples-to-applescomparison.Aroundtheglobe,thesolarindustryhasinstalledapproximately10gigawattsofsolarPVsystems.PacificGas&ElectricCo.hasannouncedmorethan2gigawattsofagreementsinvolvingbothsolarthermalandPVtechnologies,including800megawattsofphotovoltaicpower–thelargestutility-scalecontractsforPVintheworld.SunPower’s250megawattcentralstation,high-efficiency,PVpowerplantinCaliforniaValleywillbethefirsttodeliverutility-scalePVpowertoPG&E.Thesesolarpowerplantsarevividexamplesofhowtheelectricityproductionlandscapeischangingrapidlytoembraceamuchbroaderportfolioofrenewableresources.TheLCOEequationsortsthroughtherelativecostsofsuchsystemsandpinpointstheincreasinglypositiveeconomicsforharvestingtheworld’smostabundantenergyresource–sunshine.Theeconomiesofscaleinherentinutility-scalesolarsystemsaresimilartothosefoundwithotherpoweroptions,butPVhasthebenefitofbeingcompletelymodular–PVworksata2kilowattresidentialscale,ata2megawattcommercialscaleorata250megawattutilityscale.PVhastheuniqueadvantageamongrenewableresourcesofbeingabletoproducepoweranywhere:deserts,citiesorsuburbs.SmallerscalePVcostsmoreonanLCOEbasis,butitcanbeselectivelydeployedonthegridwhereverandwheneverneededtoreducedistributioncapacityconstraintsandtransmissioncongestionwhileproducingpollution-freepower.AllPVcanbeconstructedquicklyandevenutility-scalepowerplantscanbegindeliveringpowerwithinafewquartersofcontractsigning–amajoradvantagewhencomparedtoconventionalpowerplants.AtSunPower,weservecustomersacrossthespectrum,fromsmall-scaletoutility-scalesolar,becauseeachapplicationhasdistinctiveadvantagesandwillcontributetodrivingsolarpowertobecomeamajorsourceofcarbon-freepower.TheLCoeequation–aKeytoevaluatingemergingenergyTechnologiesTheLCOEequationisanevaluationofthelife-cycleenergycostandlife-cycleenergyproduction.Itallowsalternativetechnologiestobecomparedwhendifferentscalesofoperation,investmentoroperatingtimeperiodsexist.Forexample,theLCOEcouldbeusedtocomparethecostofenergysunpower3TheDriverSofTheLeveLizeDCoSTofeLeCTriCiTyforUTiLiTy-SCaLePhoTovoLTaiCSgeneratedbyaPVpowerplantwiththatofafossilfuel-generatingunitoranotherrenewabletechnology.1Itcapturescapitalcosts,ongoingsystem-relatedcostsandfuelcosts–alongwiththeamountofelectricityproduced–andconvertsthemintoacommonmetric:$/kWh.whatdrivesLCoereductionforpv?Bothcapitalcostsandoperatingandmaintenancecostsaredrivenbythechoiceoftechnologyandtheareaofthesolarsystem.WeoutlineinthispaperhowthefollowingkeyfactorsdrivetheLCOEforsolarPVpowerplants.1)PanelEfficiency:SunPower’shigh-efficiencysolarpanelsgenerateupto50percentmorepowerthanconventionaltechnologyanduptofourtimesasmuchpowerasthinfilmtechnologies,therebyloweringarea-relatedcosts.2)CapacityFactor:SunPower’strackertechnologycanincreaseenergyproductionfromsolarpanelsbyupto30percent,furtherreducingarea-relatedcostsandcontributingmorehigh-valueenergyduringafternoonhoursthanfixed-tiltsystems.3)ReliableSystemPerformanceandLifetime:SunPower’sestablishedcrystallinesilicontechnology,withitshistoryofconsistent,predictableperformance,reducespowerplantfinancingcostsloweringtheLCOE.Sunlightisadiffuseenergyresource.MaximizingenergyproductionperpanelareaiscriticaltoachievethebestLCOEinautility-scalePVpowerplant.AsshowninFigure1,ifaPVpowerplantwith1terawatthour(TWh)ofannualenergyproductionisbuiltwithSunPowerhigh-efficiencyPVpanelsmountedonsolartrackers,upto75percentlesspanelareaisrequiredwhencomparedwiththinfilmtechnologymountedinafixedtiltconfiguration.ThisenergyproductiondensityleveragesalmostallPVpowerplantfixedplantandoperationandmaintenance(O&M)costs,directlyreducingthesystemLCOE.BasedontheLCOE,SunPower’shigh-efficiencypowerplantsgenerateenergyatapricecompetitivewithotherpeakpowerresources.GivenourtechnologyroadmapandLCOEforwardcostcurve,weexpectourhigh-efficiencysiliconPVtechnologytomaintainthatcompetitiveposition.1W.Short,D.Packey,T.Holt,“AManualfortheEconomicEvaluationofEnergyEfficiencyandRenewableEnergyTechnologies”,NationalRenewableEnergyLaboratory–March19950.00.51.01.52.02.5SunPowerT20Tracker11%CIGS/CdTeFixedTilt6%aSiFixedTiltSquareMilesofPVPan