Trying again on solar power pricing

OK, so that last time around I was given a great big raspberry (several in fact) for not understanding the basic units etc etc.

So, let me ask the same question in a different way. With a bit of background so that people can understand why I\’m asking this question.

Forget domestic, forget lights, fridges, all that stuff. Think industrial power.

No, not even commercial power, industrial, manufacturing.

The biggies in this world in emissions are iron and steel, cement and then a series of things that require lots of \’leccie.

We can\’t do much about emissions from virgin iron or steel production because it\’s the chemical reaction that makes the stuff, not the power. We really do need the carbon in there. Sure, we can move to recycling more, for this can be done with electric power and the advanced nations are indeed replacing really quite large amounts of their virgin production with recycling. This is sort of self-solving over the decades as it\’s a usual assumption that no one will ever build a blast furnace in an advanced nation again. As those we have come to the end of their working lives we\’ll simply end up recycling the stock of steel we\’ve already got.

Cement, really not much we can do here as the production of cement is the process of driving off the CO2.

But those other \’leccie heavy industrial production methods. For example, aluminium production. Last time I looked it took $900 worth of \’leccie to make 1 tonne of Al. Much of this is currently done with hydro power but by no means all.

Zone refining of metals like germanium: hugely energy intensive and we do want to be able to do this as we make the next generation of solar cells with Ge. Similarly, gallium refining, energy heavy, ditto solar cells.

There\’s also a series of other metals that we can refine in different ways. Cheap \’leccie would lead us to desiring to refine them using cathode/anode systems (as we do for copper, and the tin we use in electronics etc already) which don\’t inherently, have any emissions providing the \’leccie itself is emission free or low.

We\’ve also got current pricing of coal derived grid power at 10 pence per unit.

So, what I want to know is, when does solar compete with this for those above uses.

Even more than that, what I want to know is, when does it become worthwhile to stick those \’leccie hungry metal production processes in a desert with lots of sunlight because solar PV has become so damn cheap that the reduction in energy costs just eats the transport costs?

Sure, I doubt it\’ll be in my working lifetime but I\’m still interested to know. At what point does the 1 p per unit cost (a pretned number) of solar PV mean we refine all our copper in the Atacama/Mojave/Sahara? And working back from that, what price do solar PV panels have to be per Watt (which is the usual current pricing method, prices running at about $1.20, $1,30 per watt currently) in order for that shift of industrial processes to solar PV in deserts?

Remember, the number I really want is, what is the wholesale cost of a solar PV panel per Watt which makes us all stick the factories in deserts?

20 thoughts on “Trying again on solar power pricing”

  1. Don’t all these processes run 24/7? what will they do at night ( there is no round teh world electricity grid.. Can’t shut down – cooling furnaces/crucibles crack et so they will have to use conventional electricity then – so any economic argument must be based on only n hours use of solar electricity

    n = 12 hours all year round only at equator so factor in different day lengths as year changes according to the latitude you are building at

    Also cant use peak (noon) figure for incident light – must weight it for the fact that solar PV is less efficient at dawn and dusk

    Tim adds: No, most of them are batch processes. So it is feasible (even if not desirable, given the capital cost of the plants) to run them 12/24 or 10/24.

  2. Sort of lateral, but wouldn’t heliostats (concentrated sunlight) be a better bet for some of this?
    If you’re only interested in heat production the efficiency is way up & the attainable temperatures stratospheric. (isn’t it the way scientists achieved mega temperatures for experimental purposes?) If it’s leccy you want you can run steam turbines & molten salt heat storage might let you generate 24/7.

  3. The quick answer to “when does solar compete with this for those above uses” is “not this generation”.
    The great thing about solar power is that it can be produced (and in small quantities stored) where needed, cutting out transmission losses. The price of gas going into the grid in the UK is about 2p per KwH, the price of electricity delivered to my home is 11.5p. The best gas-fired power stations have thermal efficiencies in excess of 50% (CHP ones are even better). Solar power has been economic for homes in California against delivered price of domestic electricity for several years, but it is not in England which is why New Labour introduced a subsidy from other users of electricity. Nearly a decade ago BP was building solar PV for villages (the example that I remember is in the Philippines) that were a long way from the grid and solar costs have better than halved since then, but to get to the point where you can build an array of PV cells and enough storage to guarantee uninterrupted supply and compete with existing power generators with transmission losses working against solar power (the array would be in the Sahara or Arizona and the continuous process industry is in Germany or Michigan) you need not one but two quantum changes in solar costs.
    What we need is sensible use of solar power (such as making it compulsory for all new office buildings to use solar power to run their air-conditioning systems) while research continues to make PV more efficient so that it can be used to replace the new-build fossil-fuel generators when they wear out.

  4. CXan’t help with your question, but can tell you I was amused by a remark from a friend who has installed solar panels on his roof. “It’s wonderful seeing the electricity meter running backwards even when the tumble drier is running.”

  5. Actually, there is huge capacity to drastically reduce both the energy consumption and CO2 emissions of cement production – see for instance Novacem’s cement using magnesium silicate, Geopolymer concrete or even British-Indian rice and ash based concrete. China is making significant headway on this; why do we not focus on this more?

  6. Answer – already given – less than 0.01 pence per watt.

    You HAVE to understand the units to understand your question and that it cannot be answered on the terms you ask.

    You are not comparing like with like. You are comparing a fixed capital cost for equipment amortized over 20 years and with no production cost – sunlight is free – with no fixed cost for equipment and a continuous production cost, coal/gas.

    Solar electricity costs zero to produce. So there is a virtual cost, not a real cost of production per unit.

    The equipment cost will depend on the size of the array needed to provide peak demand, not average demand. The unit cost will depend on this initial cost divided by the units used, not produced, over the lifetime of the panels.

    These factors will vary from customer to customer.

    Doing the sort of calculation you invite Tim, will not yield one single cost per watt for a solar panel that would be competitive for all users in all circumstances – hence the answer I have given of less than 0.01 pence per watt which would give a competitive price for all users in all circumstances.

    If you are talking about solar arrays owned by third parties and connected to a grid rather than being installed by individual factories, then you would have to add up the total cost of solar equipment and divide this by the number of kW or watt if you prefer, it will have to provide and compare this with the cost of building equivalent fossil fuel stations, divided by the number of kW or watts plus a per kW (or watt) amount for the cost of fossil fuels.

    Then you get an answer.

    At present the cost of a solar arrays is much higher than an equivalent output fossil fuel installation, and in the absence of battery storage for solar, you would still need the fossil fuel generator.

    With current technology, solar panels can not be competitive with fossil fuels or nuclear.

    However it would still have to be less than 0.01 pence per watt however you arrive at the answer.

  7. Demand is about twice as much in the day as at night, so solar PV may have a future without batteries. (Wind and tide won’t.)
    However, once the subsidised tariffs go then your array will be better used in-house. Household demand peaks between 1600 and 1900 hrs. Stand by for junk mail from the scammers offering to switch your array from south facing to west facing.

  8. I’ll just drop in that I heard that Iceland had built an Al smelter as a means of exporting geothermal electricity. I don’t know whether this was before their economy blew up or not.

  9. “Iceland had built an Al smelter as a means of exporting geothermal electricity”: that’s equivalent to those places that export hydroelectricity as aluminium – e.g. NZ.

    I’ve stocked up on aluminium foil as part of my savings against economic armageddon.

  10. You must include the cost of conventional generating capacity into the cost of your solar array (unless you want to be without power whenever the solar rig is not generating). So you pay X for the solar rig, plus Y for your share of a conventional generating plant. At the moment Y is included in your utility bill, but its a cost that must be borne somewhere in the system when you install solar.

  11. Solar will be competitive when the solar industry starts using unsubsidized solar energy as the primary source used to manufacture their product.

    In other words. Long after we are dead.

  12. In other words, nobody knows the answer to Tim’s actual question.

    BACK OF ENVELOPING EPICALLY – it’s still viable, but by all accounts only just, for Rio Tinto to run the power plant and 310MW smelter at Lynemouth, at a cost of about 2.5p/kWh (coal costs 1p/kWh; thermal efficiency of a coal plant is about 40%). So that gives us 2.5p/kWh as the current ceiling energy price for aluminium smelting to be more profitable than closing the factory.

    Let’s handwave away all non-fuel costs associated with coal, and all maintenance costs associated with solar (the former will actually be far higher than the latter, obviously). Transmission costs can be handwaved as well, since our new 310MW solar plant is right next door to the smelter we’re building.

    Solar panels have a 10 year life, which means a 5 year generating life if they’re on half the time (e.g. the Sahara). That’s 43,800 hours. Multiply by 0.025, and you get a capital cost requirement of GBP1095 per KW, or GBP1.095 per W. Of course, that’s NPV not absolute capital cost, so the cost right now needs to be 67p per watt to achieve that (assuming 5% discount rate).

    This is per *average* watt, not peak watt. Average output in tropical latitudes is about 1/3 of peak output, so we’re looking at 22p per peak watt. Or about a quarter of the current price.

  13. OK, so I also ran the calculations for leaving the plant idle for 12 hours compared with 24/7 working.

    The Soha smelter in Oman cost $2.2bn to build for 325kt annual output. Lynemouth has 181kt annual output, so at Omani prices our New Lynemouth On Sahara would cost $1.2bn, or $2.0bn at the 5% discount rate. Running it at 50% capacity means you’re effectively losing $1bn = GBP600m in wasted capex over the plant’s lifetime. The problem here is, running Lynemouth for 10 years solidly only uses up GBP679m worth of coal.

    So basically, if you’ve got a low-capital, high-energy industrial process that you need to carry out somewhere, then solar could be viable for it within a few years. But because the energy costs for aluminium smelting are about the same as the capital costs, the solar aluminium idea is unlikely to be viable pretty much ever.

  14. @john b
    If you run the smelter 12 hours per day you will have to reline it weekly
    You do not get peak sunlight for 12 hours of every day (the sun will shine at an acute angle to the cell except at noon), so need to divide by “pi” instead of two.
    You are also handwaving all the transport costs which are very considerable if you are not using ships (why do you think virtually all basic iron-making blast furnaces are on the coast?). Carting all the materials into the desert and carrying the finished product out again will use thousands of tonnes of oil (no, you can’t use donkeys because it’s a desert so there’s no water for them to drink!).
    The answer to Tim’s question as put is “never because that’s not the right way to use solar power – it’s better to put up with transmission losses between the desert and the coast than to build the plant in the desert”. OK, that’s not very helpful, so let us suppose 10% power loss from the Sahara to a coastal plant or 30% to UK; gas price of 2p per KwH and CCG efficiency of 50% , average input price for solar power needs to be 5.7p, so, generously assuming a 10% discount rate and ignoring the relatively trivial manning costs, the total capital cost of the entire system – solar cells, structure, storage capacity (which needs to be about 15 hours of supply, absorb between 8am and 4pm and releasing between 4pm and 8am as the two hours after sunrise and before sunset generate less than the plant transmits) needs to be less than £990 per Kw of peak production. The construction costs would far exceed that so the price of solar cells comes out negative. Assuming a factory on the Atlantic or Mediterranean coast the cost per Kw could be £1273, but the only power storage facility big enough is Dinorwig which cost over £4 billion in today’s money to build (even the 1974 cost of £425 million is more than the budget for the whole set-up). So you cannot use a solar array to run a big continuous process plant like Lynemouth. For specialist uses we’re talking about capital costs of the whole plant, not just the solar cell of around £1 per watt

  15. John77 – I took the average output as being 1/6 of the peak output (12 hours a day, and then peak output divided by 3-to-approximate-pi during the day).

    Although transport costs on a freight railway aren’t much below sea shipping costs. Just as with the inland mines in Australia, you’d build a railway from the port to the plant – it’s cheap compared with the plant and panels capex.

    I’m sceptical about the relining point, but if that is the case then the entire process is unusable, because storage isn’t viable.

  16. Solar arrays with tracking can produce (projected) outputs of about 80% of peak over 12 hours at latitudes of 30 degrees or less. There are three pilot solar generating stations currently going commercial in Arizona. Two have tracking with “traditional” cells and one with “thin film” cells without tracking. a few years of experiance will determine what the expected output will be.

  17. @John77: “If you run the smelter 12 hours per day you will have to reline it weekly.”

    For this thought experiment, assume that you change the process as well. If you have to feed heat into a smelter when it is idle to maintain it, that is an additional energy requirement (ie energy provision when the sun does not shine from source X) or redesign the smelter. I’m not suggesting that either is trivial but that’s how you have to think to make it work.

    Aluminium smelting is traditionally conducted close to a port (mass import of raw material) and close to an electricity supplier. Given that the inputs other than bauxite are tiny and the mass/volume of waste is so large, it is worth considering how to smelt at the source of production.

    Imagine further that your solar powered smelter seemed achievable. You’ve hypothetically paid for most of the infrastructure so why not increase the area of panels to generate electricity for something else?

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