Large-scale solar energy reaches € 0.02737-04939 / kWh LCOE in Sweden – pv magazine International
New research from Sweden showed that financing conditions and choice of location are decisive factors in reducing the equalized energy cost for solar energy parks that are built without subsidies in the Scandinavian country. According to the researchers, the project with the lowest LCOE in Sweden, at 0.02737 euros / kWh, is a plant with an expected life of 45 years, an annual decomposition rate of 2%, capex of 703,758 euros per installed megawatts, an annual fixed operation and maintenance cost of EUR 11 277 per megawatt and a nominal weighted average cost of capital per year of 0.2%.
The equalized energy cost (LCOE) for solar power plants on a public utility scale built without subsidies in Sweden reached a value of 0.02737 €–0.04939 / kWh 2019–20, according to a recent study from Chalmers University of Technology and Uppsala University.
“This is possible thanks to the very low capital costs and the good financing conditions that lenders offer in Sweden,” said the research’s corresponding author, Johan Lindhal. pv newspaper.
The research group analyzed in particular the economic parameters for six solar parks that were put into operation in the Scandinavian country between 2019 and 2020. The six facilities were built with a capex that ranged from € 603.20 to € 776 per kilowatt installed and an annual fixed operation and maintenance cost of € 4.20 to € 9.10 / kW installed. Their installed capacity ranges from three to 14MW and their life expectancy is estimated at between 20 and 45 years.
The the average debt financing level for the six photovoltaic parks was approximately 70% with average nominal interest rates averaging 2%, which resulted in a nominal cost of capital of approximately 3.4% on average, which corresponded to a real weighted average cost of capital per year of 1, 4%, below an inflation assumption of 2%. “In all new long-term scenario modeling studies conducted by Swedish authorities and academics, the real interest rates for PV have been assumed to be 5–7%. A capital cost of 5% and 7% – instead of 1.4% – would increase the LCOE for the studied solar parks from the average of 0.04079 € / kWh to 0.05785 € / kWh and 0.06899 € / kWh, respectively, ”Lindhal explained further. “Such a high LCOE for photovoltaic parks in Sweden would really make them economically unattractive in future models of power systems.”
The researchers specified that the average LCOE value is the result of the individually calculated LCOE values for each plant and not the result of an LCOE calculation with the mean values as input data. In addition, the owner of the plants considered a degree of degradation for solar modules that varied between 0.2% and 0.4% per year for the six projects, which are located in different geographical areas and over three electricity trading areas.
The project with the lowest LCOE, at 0.02737 € / kWh, is a plant with an expected life of 45 years, an annual deterioration of 2%, a capex of 703 758 € per installed megawatts, an annual fixed operating and maintenance cost of 11 277 € / MW and a nominal weighted average cost of capital per year of 0.2%. The long life, according to the owner, will be possible to achieve through two rounds of inverter replacement reinvestment and one reinvestment in a new transformation station, during the lifetime.
On the other hand, the solar park with the highest LCOE, at 0.04939 € / kWh, is a facility with a significantly higher nominal weighted average cost of capital per year of 3.1% and an expected life of 20 years – the lowest of the six projects. In addition, it has an estimated annual rate of deterioration of 0.3%, a capex of € 662,912 / MW installed and an annual fixed operating and maintenance cost of € 4,546 / MW.
“Size is an important factor for capex, but what this study showed is that, for example, the choice of location and site preparation had a greater influence on capex than size, and that the cost of capital was the most important factor in achieving a low LCOE “, Lindhal emphasized.
“When we compare the LCOE values from six of the photovoltaic parks that were put into operation between 2019 and 2020 in Sweden with the revenues from the spot market and salable green certificates in 2019 and 2020, we conclude that the profitability of photovoltaic parks can be achieved, but is not certain, during a business model for PV traders, “the newspaper concluded.” This suggests that there must be other direct or indirect economic values obtained through the different ownership structures or business models applied, and in fact all six parks in the interview study were either realized under corporate PPA or cooperatively owned business models. “
The results of the research were presented in the article “Economic analysis of the early market for centralized solar parks in Sweden,Published in Renewable energy.
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