Physical Insights

An independent scientist’s observations on society, technology, energy, science and the environment. “Modern science has been a voyage into the unknown, with a lesson in humility waiting at every stop. Many passengers would rather have stayed home.” – Carl Sagan

The outrageous cost of solar power.

with 26 comments

There is significant interest and excitement in Australia at present after plans were announced to build what will be the largest solar photovoltaic power station in the world, using advanced concentrating heliostatic photovoltaic solar collectors.

Here’s the report from The Age.

MOST of Mildura could be powered by solar energy following a $290 million agreement signed by TRUenergy and Melbourne-based Solar Systems for the world’s largest photovoltaic solar power station to be built in the north-west of Victoria.

Building of the $420 million, 154-megawatt power station starts next year, and is set to provide enough power for 45,000 homes by the time it is completed in 2013.

The signing of the agreement comes a week after Professor Ross Garnaut’s interim report suggested a widespread overhaul of Australia’s energy sector was needed. He said massive cuts in greenhouse emission levels by 2050 would be required to head off dangerous climate change.

TRUenergy’s managing director, Richard McIndoe, said investment in renewable sources would be a big part of its operations after pledging last year not to build any more coal-fired power stations.

TRUenergy, which operates the Yallourn coal-fired power station in the Latrobe Valley, is the only Australian energy company to commit to reducing emissions by 60% by 2050. Mr McIndoe said TRUenergy had no plans to increase its target, and doubted Professor Garnaut’s target was achievable.

“To have a 90% reduction by 2050 would mean completely new technologies in terms of renewables and would need existing fossil-fuel technologies, whether coal or gas, to be linked in with carbon capture and storage. Unless those new technologies are available and unless the CCS capabilities are available, and in the absence of anything like nuclear power, then that 90% reduction would be difficult to achieve,” he said.

It’s worth reading that last part again.

In the absence of anything like nuclear power, then that 90% reduction [in greenhouse gas emissions] would be difficult to achieve.

He basically just admitted that it is achievable, but that some sector of the government or the community – doesn’t want to achieve it. And that’s, frankly, deplorable.

This proposed solar energy plant will have a nameplate capacity of 154 MW, and will generate 270,000 MWh per annum.

[That’s a capacity factor of 20%, in case anybody was wondering.]

The plant is quoted as having a cost of 420 million [Australian] dollars. I will assume that this is just the capital cost to construct the facility, and independent of operational costs.

[The Australian dollar is trading very close to parity with the US dollar at present, so if, for simplicity’s sake, you prefer to simply think of these values as USD, then that’s fairly accurate.]

It sounds like a positive move for everybody, right? Well, sure – it is a good thing. But I’m just a little bit skeptical of just how much difference it makes, on the large scale, in the grand scheme of things, and whether it represents a particularly sensible overall investment.

Now, for comparison, let’s consider the Hazelwood Power Station, a typical coal-fired power station, also in Victoria, Australia, with a nameplate capacity of 1600 MW. I don’t have the data to hand for the specific capacity factor of this station – but let’s assume something around 90%, for typical modern base load coal-fired  plant.

This proposed photovoltaic plant therefore generates about two percent of the energy output of one quite average – not especially large – coal fired power plant. Such a plant would have to be built 50 times over, just to replace this one single coal-fired plant. Remember, this plant will be the largest solar photovoltaic installation in the world.

Assuming no economy of scale comes into effect – which of course it does, to some extent, in practice – that’s twenty-one billion dollars worth of solar photovoltaic plant needed, to replace just one coal-fired plant.

However, just one typical two-unit nuclear generating plant can “drop in” as a clean replacement for all the electricity output of such a coal plant, and then some. Calvert Cliffs in the US, for example, has a nameplate capacity of about 1800 MW, total. Capacity factors are comparable – around 90%, at least, on average.

Let’s assume that a nuclear power plant, generating 1 GWe, from a single reactor unit, with a capacity factor of 90% – typical for the US nuclear power industry – operates for 50 years, and costs $2 billion dollars to construct – typical for a modern 1 GWe nuclear power plant.

$2 billion is a very high estimate for the capital cost of such a plant, but we’ll conservatively assume such a high figure, for what would, in our hypothetical example, be Australia’s first nuclear power plant.

The capital cost is therefore 5.07 dollars per MWh over 50 years.

(This is an “overnight cost”, ignoring interest, but the same is true for the costs we’re considering for the solar plant.)

Operational costs in the US commercial nuclear power industry – which includes the fund which is saved up to pay for the permanent disposal of waste – are around 17 dollars per MWh.

With a construction cost of 420 million dollars, and a lifetime which we will again assume to be 50 years, the construction cost is therefore 31 dollars per MWh over 50 years.

Just in terms of capital cost, it costs over 6 times more for the solar plant!

Let’s not forget that solar photovoltaics have the highest whole-of-life-cycle greenhouse gas emissions intensity of any of the “green” energy technologies, such as wind, hydro or nuclear – by a large margin, since they’re so energy intensive and technologically intensive to construct. (This greenhouse gas emissions intensity is of course far superior to any fossil fuels, though.)

I really do not believe that it is economically feasible to construct multiple plants of this type, unless very significant economies of scale are coming into effect. As such, I doubt strongly that such technology will lead to significant displacement of fossil fuel generating capacity – and hence, displacement of greenhouse gas emissions – in the grand scheme of things, in Australia.

As such, I’m almost inclined to believe that this is less about really making a difference to the greenhouse gas intensity of our energy systems, and more about making it look like our politicians are really making  accomplishments in implementing sustainable energy in order to displace fossil fuels.

It seems to me that such expenditure on efforts to realize “large scale” solar generation are a vastly inefficient use of money and resources, and that these same funds could be far better spent realizing a much larger amount of clean, sustainable nuclear electricity generation. Yes, I do appreciate the irony of that last paragraph – given that anti-nuclear activists say exactly the same thing about “renewable” energy as opposed to nuclear energy.


Written by Luke Weston

March 3, 2008 at 1:09 am

26 Responses

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  1. That solar plant is not going to last 50 years.

    Meanwhile, modern nuclear plants have a design life of 60 years.


    March 3, 2008 at 6:54 am

  2. I’ve always been confused by the concentrating PV concept- isn’t that kind of the worst of both worlds? Maybe it’s acceptable given the weather conditions in Australia, but wouldn’t it be less effective in conditions with cloud cover than conventional PV?


    March 3, 2008 at 4:13 pm

  3. $450M to be payed in 20 years with 10% interest means selling for $4.34M per month, $52M per year, divided by electricity production it means selling for 20 c/kWh to pay back the construction costs only without any maintenance costs.

    Total nuclear cost is ~6.5 c/kWh.

    Meanwhile, this nearly half a billion dollars in not invested in research and development of solar PV, but wasted on current crystalline technology.


    March 17, 2008 at 6:59 am

  4. Very good comments. Here are some others: Today, subsidies provide 30 cnts/ kilowatt-hour in the US and there aren’t that many takers. This whole solar scheme assumes that costs will come down, and maybe they will. But maybe they won’t. Solar power is a pipe-dream, except maybe in rural or out-of-the-way places. Only with massive subsidies and gov’t mandates does it have even the whisper of a chance. And lest we forget, fossil fuel technologies have brought the cost of fossil fuel plants down as well. Furthermore, as often as not, we’re talking about the incremental costs of generating power. I’d aver that they’re on the order of 3c/KWH, based on the the prices of wholesale electricity — using coal for the most part.

    david russell

    April 16, 2008 at 9:03 pm

  5. David is correct when he says solar PV in the U.S. is a hard sell. And it’s no wonder; even with rebates of up to 50%, it still costs the average homeowner $10,000 out of pocket for a system that will meet only 15% of their annual power needs.

    Sam Streubel

    June 27, 2008 at 12:18 am

  6. How about atomic power?

    1,300 new ones should be build according to the International Energy Association.
    That’s 1,300 times US $,4000 = US $ 39,014,316,320,200,000 MONEY not Apples!
    You wanna pay?
    Also wanna pay higher getting Uranium costs?
    Assurcance for an atomic reactor?
    That’s up to US $ 5,000,000,000,000 for each reactor.

    Compare this with Solar power.

    Fusion? Will be ready in the fall of 2050.
    Costs (planned by the E.U.): US $,0000




    August 10, 2008 at 1:48 pm

  7. [quote]…costs the average homeowner $10,000 out of pocket for a system that will meet only 15% of their annual power needs.[/quote]

    But he doesn’t have to pay for electricity prices anymore – which are selfmade by the atomic power plant operators.




    August 10, 2008 at 1:54 pm

  8. Let us look at nature’s natural resistence when on one exploits its energy reserves like man does. The laws of thermodynamics prevent from converting thermal energy into electricity limited to at best 35-45%. Rest goes out to environemnt as heat. If we blast atoms to convert matter into energy, the consequences are that it leaves heavy trial of radiactive substances for thousands of years. So the freely avialable ones are Geothermal( very sparse), wind (only location specific) and Solar. Solar is too diffused and it’s the nature way of giving the earth only what is required to keep it warm and not feed the greed of its energy consusmption driven by industrial progress. Therefore if we can really exploit Sun even in small measure for generating electricity , it is indeed great achievement for mankind. Take it from me, 100 years down the road only poeple and countries having Sun, Water, Wind and Land will survive. All artifical nations will suffer termianl fate likes of Dubai, UAE, Singapore, etc to name a few. While Asia, Australia, US, Canada and Latin Amercan with big countries will be successful as nature’s bounty giving oil, coal will really become most expensive, At that point in time Solar would look like gift of God at throw away cost and those who stay away will pay heavy price. Economist may say Solar is very expensive today, but once built the real value lies in its perpetual supply capability. Even Solar Panels last 30 years or more. With subsidy and lowering of price per watt due to market forces and tecchnological advances, experts are predicting meeting the Grid parity by 2012. It is not such a distant future that mankind could not afford to bet on!


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