David's Blog

July 28, 2010 -

On Monday, The New York Times ran a piece suggesting that solar costs are now equal to nuclear.

“Solar photovoltaics have joined the ranks of lower-cost alternatives to new nuclear plants,” John O. Blackburn, a professor of economics at Duke University, and Sam Cunningham, a graduate student, wrote in the paper, “Solar and Nuclear Costs — The Historic Crossover,” according to the piece.

It’s true: solar PV costs are rapidly declining, for a number of reasons.

Here are a few of them:

1. China has entered the U.S. market by storm, and PV manufacturing costs are cheaper than they were during the recession.

I had an interesting interview today with Ron Kenedi, VP, Sharp Solar Energy Solutions Group. He said China is in high demand of U.S. and European solar developments in order to build their solar program. Right now, the Chinese government is backing solar with low interest loans and other incentives. While Sharp does not sell solar models in China, Kenedi said this influx of Chinese interest is affecting the U.S. solar market.

“We want to make solar more affordable to the average person, and the drops came very quickly,” Kenedi said.

Because PV manufacturing costs are dropping, business is good for the U.S. solar market sending products to China.

2. Falling silicon prices.

Silicon, the semiconducting material of choice used in solar panels, is not as high in demand as it was when solar first started heating up. In 2005-2007, the solar market grew faster than was expected, especially in Germany, resulting in a silicon shortage.

“Now silicon is coming down and due to come down more in the next year,” Kenedi said.

3. Productivity increases.

While solar power was first commercialized in the U.S. by Bell Lab s in the 1950s, it’s still a relatively newly developed industry. Therefore, solar companies are still discovering a sense of balance in system operations. In an interview I had last week with Tom Fair, VP of Renewables for NV Energy, he described this sense of balance to be an important part of the economic equation for PV.

“People are getting smarter about how to do projects. Every hole you drill, every bolt you fasten, everything becomes a balance down to the knit. That progress will continue as people become smarter.”

So PV prices are coming down. And according to The New York Times report, the costs of nuclear power have been rising over the past eight years, so that nuclear and solar’s crossover occurred at 16 cents per kilowatt hour.

But here’s the rub: Comparing the costs of various renewable resources is like comparing apples to oranges.

In his article, “How to Compare Power Generation Choices,” in Renewable Energy World, John Hynes, partner at Excidian, explains how base load determines true cost.

“It makes no sense to compare the cost per kWh to generate electricity from wind on land with the costs per kWh to generate electricity from coal because these two technologies satisfy two different customer needs,” Hynes writes.

While solar plants may be far cheaper to build than nuclear or power plants and not be restricted by EPA regulations and such, solar is not capable of operating 24/7 like nuclear or coal. Solar is what’s called “peak load generation,” meaning these plants operate at their maximum capacity for about 5 to 15 percent of the hours in a year. Why? Because the sun goes down at night. And while solar storage and molten salt reserves may turn that tide over time (more on that to be blogged latter), nuclear’s load factors exceed 75 percent and are usually more like 90 to 98 percent.

So is it even possible to compare solar and nuclear costs?

Yes, but you’d have to change one technology so that both technologies are in the same load factor category, Hynes suggests. Essentially, a nuclear power plant would have to be reduced to operate at its maximum capacity for only 5 to 15 percent of the hours in a year.

Only then could solar and nuclear start talking apples to apples.

Labels: NV Energy , solar costs , John O. Blackburn , nuclear costs , Excidian , Tom Fair , Ron Kenedi , Sharp Solar , Sam Cunningham , John Hynes , Bell Labs

posted by: noreply@blogger.com

100728 :Nuclear and solar costs are equal – or are they?

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4 Comments:

Bob Wallace said...

Let's use Cooper's median price and call electricity from new nuclear $0.16/kWh. And then let's recognize that to sell at that price the plant has to sell its power 24/365.

In a deregulated market that $0.16 is going to have to compete against wind a roughly $0.05. When there's plenty of wind blowing the nuclear plant will have to drop its selling price to a nickle, thus accepting an eleven cent loss. That loss will have to be made up by selling at a higher price some other time.

Then you've got PV solar coming in and taking away sunny hour profit, even creating another loss.

And you've got wind + CAES at around $0.13, basically any time around the clock. Another loss.

Now you're at the point where there are few times, if any, that there a less expensive source can't undercut nuclear's price.

Let's be really generous and call it 25% of the time (likely close to or at zero). You've got to sell your sixteen cent power at a very high price during that small window to make up for all that time that you couldn't collect sixteen cents.

So along comes natural gas turbines. Cheap to build, but somewhat costly to run. But since they can be spun from off to full power very quickly they will eat up that remaining "25%". And NG turbines can produce power at about $0.10/kWh. Even a carbon price on the CO2 released wouldn't bring the price up to what nuclear would need to charge.

Finally, there's no way to bring a significant amount of new nuclear on line in less than 15-20 years.

And all that time the cost of wind, geothermal, PV solar, CSP solar and storage will be dropping....
Wed Jul 28, 11:35:50 PM CDT

Bob Wallace said...

Sorry, meant to add this link to Craig Severance's article on the cost of electricity storage....

http://energyeconomyonline.com/Utility_Scale_Storage.html

Storage is what really kills new nuclear. If you've got an affordable way to store electricity when the supply exceeds demand and price is low then you can sell back when conditions reverse. It's what makes renewables 24/365.

BTW, Craig has a good analysis on the cost of new nuclear on his site. Well worth a read.
Wed Jul 28, 11:42:10 PM CDT

lmorris said...

Bob,
Thanks for sharing your insight to round out the blog. I enjoyed the elecricity storage article and I'm sure I'll refer to it in the future. If only we could figure out how to store ALL of that power...
Thu Jul 29, 08:35:38 AM CDT

Bob Wallace said...

I'm not quite sure what you mean by "store all that power".

The Severnce link I provided gives a map showing how extensively CAES sites occur in the US.

In addition the US has something like 80,000 existing dams. Only 2,500 or so are used for power generation. (Others were created for flood control, irrigation storage, and navigation purposes.)

Based on a study of dams on federal land at least 15% - 25% of those existing dams should be suitable for pump-up power storage.

We already have several pump-up hydro storage sites in the US and have been using this technology for 100 years. We also have one existing, profitable CAES site.

We don't have a shortage of places. We just haven't yet had the need to create more storage.

(And then there's utility scale battery storage. Already in wide use in Japan and to some extent in the US. And I didn't talk about "ice storage" which is also being installed in commercial buildings. It freezes water/cools salts when power is cheap to assist AC units when power is expensive.)

We're just now reaching the point where we need storage.
Thu Jul 29, 10:57:50 AM CDT

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Up In The Air

by Lindsay Morris
Associate Editor

The Up In The Air blog discusses what's floating around concerning EPA emissions rules, and what the power industry is doing to prepare for regulations. Principal blogger is Lindsay Morris, associate editor of Power Engineering magazine. Lindsay will also discuss Smart Grid and other developments pertinent to the power industry.

Nuclear and solar costs are equal – or are they?

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