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Solar Energy Cheaper Than Coal Foreseen By German Solar CEO

Tina Casey's picture
Cleantechnica.com / TriplePundit.com
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  • Jul 12, 2013 12:00 am GMT
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In a new interview with Deutsche Welle, the CEO of a Germany-based global solar developer made a good case for the potential for solar power to become cheaper than coal sooner rather than later. That would be Bernhard Beck, CEO of BELECTRIC. In the interview Beck had some interesting things to say about the direction of the global solar market and the potential for growth in large-scale solar power generating plants, and if anything, we think his forecast could come true even sooner than he thinks.

Belectric CEO predicts solar power cheaper than coal.

Coal mine by Bert Kaufmann.

Solar Power Cheaper Than Coal

BELECTRIC specializes in utility-scale solar power plants as well as rooftop solar, and the former area is where the focus of the Deutsche Welle interview takes place.

According to Beck, large scale solar power in Germany is already “approaching the costs” of conventional power, at 10 euro cents per kilowatt-hour (kWh).

Beck was reluctant to lay out a specific timetable, but he did predict that with additional technological improvements, the cost of solar power in Germany (and by extension, other relatively sun-poor countries), will ultimately fall below the cost of conventional energy.

He foresees a much shorter time span in “sun-rich” countries, where the trend is rapidly moving in the direction of solar power for less than 10 euro cents per kWh. That could put solar power below the cost of wind power as well as coal or gas.

However, Beck indicates that these countries have some obstacles to overcome. By “sun-rich” he means countries with a less developed transmission infrastructure, which puts large scale power plants at a disadvantage in terms of operating costs. Also contributing to higher operating costs is the characteristic dust-heavy environment of the “sun-rich” countries to which he refers, which translates into higher costs for cleaning and maintaining solar panels.

Cheaper Solar Power And The Grid

Regardless of those obstacles, overall Beck is optimistic about the potential for future innovation to drive down costs. That optimism is partly based on his own company’s track record, which goes beyond advanced thin film solar cell technology to embrace the key area of grid integration.

In that regard, BELECTRIC won this year’s InterSolar Award in the Solar Projects category, for its new utility scale solar power plant in Templin, Brandenburg.

The Templin solar array, which is currently billed as the largest thin film, ground-mounted solar plant in Europe, was designed as an “integrated intelligent power plant” that self-adjusts to ensure a stable operating voltage while compensating for grid fluctuations in real time.

The Templin plant also involves a couple of other cost-related factors that Beck does not mention in the interview, but which could become deciding factors when siting new power plants in densely developed regions.

First, the construction involved use of a previously developed brownfield for a construction site, rather than impinging on valuable farmland or open space. It occupies the site of a former Soviet military airport, which at one time was the largest in central Europe.

Along those lines, consider that the actual construction took only four months, and weigh that against the cost and the timeline for constructing a coal powered generating plant with advance pollution controls.

Another factor that could affect future cost parity is transportation. The shortest line between a solar power plant and its fuel supply is, literally, the shortest distance between two points. Compare that to coal, which is increasingly making a laborious international trek across oceans, into congested inland shipping routes.

Some of these factors are already coming into play in the US, where earlier this year the El Paso Electric Company and First Solar collaborated in a major deal to sell solar-generated electricity for less than coal (the First Solar price was reported as 5.8 cents per kWh and “new” coal is currently in the 10-14 cent range).

More Danger Signs Ahead For Fossil Fuels

The cost of financing new power plants is also going to have a significant effect on parity between solar and fossil fuels, and the warning signs have already been floated where fossil fuels are concerned.

Earlier this spring we noted that Moody’s foresees dark skies ahead for conventional thermal power plants in Europe due to the strength of the renewables sector. Just about the only thing keeping the conventional sector afloat is the need to satisfy peak demand, but the rapid development of advanced energy storage solutions could make that a moot point sooner rather than later.

That naturally includes utility scale energy storage, ranging from pumped hydro to a massive dry cell battery array in Texas.

 

Aside from that, small-scale energy storage is also rapidly emerging as a big time player in the peak demand game. Aside from the potential for storing energy from rooftop solar arrays in the form of fuel cells, Navigant is one research company that foresees growth in the use of electric vehicle batteries to store energy for peak periods.

Here in the US you can see that EV/peak energy storage trend hard at work in Ford’s MyEnergi Lifestyle system, which recently upped the ante by partnering with the major US home builder KB Home’s ZeroHouse 2.0.

And since you regulars know that CleanTechnica is all over the US military’s adoption of advanced clean technology, let’s not fail to mention that the Department of Defense kicked off 2013 by announcing a $20 million EV leasing program that will involve 500 vehicles integrated with energy storage, smart grid and renewable energy generating systems.

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Mike V's picture
Mike V on Jul 11, 2013

 

Is Beck’s 10 euro cents per kWh before or after feed-in tariff?

Robert Hargraves's picture
Robert Hargraves on Jul 11, 2013

Solar power in the US is in the 24-30 cents/kWh range. Most of the cost is not the solar cells, but the infrastructure of mountings, cables, converters, motors, etc. For an analysis of the unsubsidized cost of solar, wind, coal, natural gas, biomass, and nuclear, please see THORIUM: energy cheaper than coal, at http://www.thoriumenergycheaperthancoal.com 

Nathan Wilson's picture
Nathan Wilson on Jul 12, 2013

It is misleading to directly compare the levelized cost of dispatchable and variable energy sources.

Adding energy storage (such as pumped hydro) to solar more than doubles the cost.  And no, batteries are not new technology that are poised to improve exponentially.  Lead-acid batteries, which are made by the tens of millions every year in the US alone, are still the low-price leaders, dispite decades of research on alternatives, but are still over double the cost of pumped hydro.

Without storage, solar needs fossil fuel backup (backup is needed even with storage for non-desert climates).  Once the fossil backup is built and produce their first kWh of energy, coal plants make additional power for $.02/kWh and natural gas is about $.03/kWh.  This “marginal” cost of energy is the correct metric to compare to the levelized cost of solar.

In every market where the energy pricing system creates the illusion that solar (or wind) is cheaper, this will become more and more apparent as renewables increase in market share.  The inevitable result will be a market restructuring to remove the illusion.

Gary Tulie's picture
Gary Tulie on Jul 12, 2013

Robert, you are missing the largest component of solar power costs in the US market – soft balance of system.

The cost of hardware for a solar array is of the order of $0.80 to $1.00 per watt for utility scale + around $0.20 to $0.30 per watt for labour of installation. Allowing a reasonable profit margin, it should therefore be possible to install utility scale solar for around $1.50 per watt. This is the price that utility scale solar arrays are now being installed at on the UK market 

At domestic scale, large installers can get their hardware for around $1 to $1.2 + $0.5 to $0.75 labour costs + a fixed cost for scaffolding. This allows UK installers to be installing domestic solar arrays for around $2.25 to $2.50 per watt for a 4 kW array.

In the US a utility scale solar farm would be lucky to install for the cost of a domestic array in the UK whilst domestic scale is still as I understand it around $4.00 to $4.50 per watt. 

US costs could drop possibly as much as 40% simply by adopting best European practice as regards the administrative aspects of getting solar power installed. That is

1. Allow installation without the need for planning permission in most cases.

2. Standardise federally and simplify all associated proceedures. (Presently there are around 19,000 jurisdictions with differing standards and rules). 

3. Adopt standards which allow (under controlled conditions) connection to the grid without grid studies or the need to seek permission from the grid operator.

4. Adopt an accreditation scheme by which approved installers can sign off their own work with occasional random inspections rather than inspections of every installation.  

Expected result an immediate reduction in solar costs to around $0.17 to $0.24. (I suspect actual costs are lower than Robert indicates, though I will base my estimates for cost reduction potential on them for now). 

I also disagree with Nathan on several points. 

1. Batteries – there are two main reasons why Lead Acid batteries are twice the cost of pumped storage which are limited battery life and poor cycling efficiency.

It looks like both of these have been resolved in the latest advanced Lead Acid batteries where carbon fibre has replaced lead as the structural component of the electrodes giving around a 5 to 6 fold increase in battery life. Carbon electrodes greatly increase electrical conductivity in the cell improving cycling efficiency, and block the formation of large sulfate crystals which along with corrosion are the main modes of battery failure. Presently, these batteries are more expensive on a per kW basis than good quality deep cycle Lead Acid however they are a very new technology and have not got very far into their learning curve. If these batteries match the current price of Lead Acid the levelised cost of electricity storage will drop substantially as replacement will be far less frequent, and due to their much better cycling efficiency, less power will need to go into the batteries to deliver a given output.

There are also a number of other promising battery technologies offering similar promise.

2. The value comparison with the marginal cost of coal and gas is in my view eronious particularly in the case of solar as solar generation tends to shave the daytime peak – so a value biased perhaps 70/30 or 80/20 towards the cost of peaking generation would seem to me to be a fairer valuation even disregarding the environmental impact aspects, external costs of coal and gas, and the polluter pays principle.  

Nathan Wilson's picture
Nathan Wilson on Jul 13, 2013

I’m most optimistic about NGK’s sodium-sulphur battery for grid-scale storage of solar power (because of the long life).  But I’m not holding my breath waiting for low prices.

“…solar generation tends to shave the daytime peak…”

This the price illusion I was referring to.  Daytime peak pricing is not high because of expensive generators coming on-line (the extra fuel cost of the least efficient generators burning the most expensive fuel is typically only about 5 cents/kWh more than baseload plants).  The main difference is the low capacity factor means that these peaking plants only get revenue for a small percentage of the hours in the year to cover their fixed costs.  Adding solar PV to the grid shaves the peaks some of the time (with 5 hours of storage in desert locations, solar gets full capacity credit, but in most other locations, fossil back up is still required).  So for non-desert locations, the fixed costs of backup generation must be passed on to ratepayers, whether PV covers the peaks on some days, or not.  This was easy to show during the days of monopoly utilities, but is still true today; it will just take a while for the markets to adapt to working with solar.

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