Evaluating solar projects: It is important to consider cost per kWh rather than cost per kW


The input for a project is Sun Radiation which is very conducive to setup a Solar PV plant across country.

 

The economical land is feasible, as India has sufficient deserted space without residential / agricultural or commercial use and has plenty of Roof Tops.

 

The technology is within reach and most technology providers are started focusing India, the knowledge base is developed with execution of >1000MW capacity addition in last 2 years.

 

There is an acute power shortage thus needy user to pay for energy generated.

 

All the elements are available in India, except the big challenge of making financial sense from the investments i.e. to understand who delivers the Lowest Cost per kWh over the Lifetime of the Project. i.e. $/kWh (cost per kilo watt hour) and not cost per watt peak. The return is governed from what is generated and not what is the installed capacity!

 

In other words, High returns or capacity factor = lower BOS cost per watt or more kWh/kW or maximum energy per square meter.

Following chart summarizes the capital cost (Rs Cr/MW) and capacity utilization factor (%) for various solar PV project installations as proposed by project developers.

It is recognized that capital cost of the Solar PV power project shall be greatly influenced by the cost of PV modules, balance of plant and power conditioning system costs, taxes and duties, inter-connection costs etc. whereas the performance of the PV project shall depend upon the insolation, ambient conditions, conversion efficiencies, total system design and quality of execution, O&M etc.

It is recognized that capital cost of the Solar PV power project shall be greatly influenced by the cost of PV modules, balance of plant and power conditioning system costs, taxes and duties, inter-connection costs etc. whereas the performance of the PV project shall depend upon the insolation, ambient conditions, conversion efficiencies, total system design and quality of execution, O&M etc.

The capital cost and capacity utilization factor has varied over wide range. However, there exists a positive co-relation between capital cost and capacity utilization factor over this range.

Further, it is envisaged that with worldwide proliferation of the solar PV based installations, the economies of scale would ensure that the capital cost for Solar PV installations would decrease over the period. Most predictions promises that the cost of generation for Solar PV based installations can be comparable with that of conventional power generation by 2015-16. However these projections are older and what they projected for 2015-16, the market has achieved those price level currently.

 

 

 

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2 responses to “Evaluating solar projects: It is important to consider cost per kWh rather than cost per kW

    • Thanks for your feedback Archana.
      This motivates us to write more and make our blog much useful to our readers. I am organising a second workshop on Solar Power Projects Development on 20-21st Sept 2012. You can attend the same.

      B Regards.

      Sanjay Vashishtha

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