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Levelized Cost of Solar Photovalics in North Carolina
 

Levelized Cost of Solar Photovalics in North Carolina

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A Parametric Analysis Using System Advisor Model. Presentation created for SAM Virtual Conference, July 23, 2013 by Miriam Makhyoun and Polly Tao Jingxian.

A Parametric Analysis Using System Advisor Model. Presentation created for SAM Virtual Conference, July 23, 2013 by Miriam Makhyoun and Polly Tao Jingxian.

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    Levelized Cost of Solar Photovalics in North Carolina Levelized Cost of Solar Photovalics in North Carolina Presentation Transcript

    • Levelized Cost of Solar Photovoltaics in North Carolina A Parametric Analysis using System Advisor Model Miriam Makhyoun Manager of Market Intelligence North Carolina Sustainable Energy Association Miriam@energync.org 919-832-7601 Ext. 114 Jingxian, Polly Tao Duke University Master Candidate in Energy 919-433-6767 National Renewable Energy Laboratory SAM Virtual Conference July 23, 2013
    • North Carolina Leads in Solar Ranked 5th for 2012 Installed Capacity and 6th for Cumulative Capacity by SEIA and GTM
    • Registered Solar PV Capacity in NC from 2006-2012 Solar PV System Capacity MW DC Cost Year 2006 2007 2008 2009 2010 2011 2012 TOTAL Capacity No. of MW DC Systems 0.1 1.0 11.7 29.6 42.9 70.8 477.9 634.1 23 57 133 207 374 541 725 2,060 0-5 kW 5-10 kW 10-150 kW 0.1 0.1 0.3 0.4 0.6 1.0 1.3 3.6 0.0 0.1 0.1 0.4 0.7 0.7 1.1 3.1 0.0 0.3 0.6 0.9 2.4 2.6 1.6 8.5 Source: North Carolina Utilities Commission Small Power Producer Dockets Notes: Solar PV systems produce electricity in direct current (DC), which is converted by inverters to alternating current (AC), the typical current used throughout the U.S. electric grid. As a result, it is normal industry practice to report solar PV capacity in DC units. For systems reported in AC, an 84% DC to AC derate factor was applied. 1501000 kW >1 MW 0.0 0.5 8.5 4.7 11.4 18.9 22.3 66.2 0.0 0.0 2.3 23.3 27.8 47.6 451.7 552.6
    • Methodology LCOE, Avoided Cost, “Grid Parity” and Forecast to 2020
    • PV Levelized Cost of Energy (LCOE) Calculation This equation yields a net present value in cents per kilowatt-hour (kWh) of electricity generated based on the following: System cost Financing Insurance Operations and Maintenance Depreciation Incentives Note: The System Advisor Model (SAM), developed by the National Renewable Energy Laboratory, was used to generate the LCOE of PV using a parametric analysis for the application of tax credits and the evolving past and projected installed costs.
    • Changing Policy Environment Modeled: Reduction of federal investment tax credit at the end of 2016 from 30% to 10% Expiration state tax credit at the end of 2015 Not Modeled: The 2013 sequestration of tax credits issued by the Department of Treasury might also affect future solar PV development. County and city ordinances regulating solar may also play a role. Source: “Levelized Cost of Solar PV in NC, 2013” report by NCSEA
    • SAM Fields 0-5 kW; 5-10 kW 10-150 kW; 150-1000kW; >1000 kW SAM Financing Option Residential Commercial PPA Federal Taxes Marginal Income Tax Rate 28% Federal Taxes Investment Tax Credit 30% 30% North Carolina Taxes Marginal Income Tax Rate 7% 6.9% North Carolina Taxes Tax Credit(a) 25.2% (max = $10,500) 23.1% (max = $2.5 million) Property Tax County & City Tax Rate 0.9075% 0.9075% Property Tax Assessed Percent 0% 20% Depreciation No Depreciation 5-year modified accelerated cost recovery system Loan ≥2% IRR 34% 7.75% for 10 years for 50% 6% interest for 10 years for 50% of the total of the total cost cost Tilt of System 36 degree tilt 36 degree tilt Derate Factor System Degradation Rate Economic Life of System Geographic Location 84% DC to AC 0.5% per year 20 years Raleigh, North Carolina 84% DC to AC 0.5% per year 20 years Raleigh, North Carolina
    • Market Performance Solar LCOE Trends and Grid Parity with Retail Electricity Prices and Avoided Cost
    • The Cost of Solar PV in NC is Dropping NC Actual & Projected Solar LCOE ¢/kWh Solar PV installed cost in NC decreased 52% from $7.1/W in 2006 to $3.4/W in 2012. ¢35.0 0-5 kW 5-10 kW ¢30.0 10-500 kW ¢25.0 150-1000 kW ¢20.0 1000- kW ¢15.0 0-5 kW Assuming Continuation of Tax Credits ¢10.0 5-10 kW Assuming Continuation of Tax Credits 10-500 kW Assuming Continuation of Tax Credits ¢5.0 150-1000 kW Assuming Continuation of Tax Credits ¢0.0 1000- kW Assuming Continuation of Tax Credits
    • Percentage of Electric Utilities at Grid Parity with LCOE of Solar PV Systems from 2006-2020 100% Percent of Electric Utilities 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: NC Utilities Commission; “Levelized Cost of Solar PV in NC, 2013” report by NCSEA Note: Systems of 10 kW or less are assumed to have residential ownership for tax purposes. 0-5 kW (residential) 5-10 kW (residential) 10-150 kW (commercial) 150-1000 kW (commercial) >1000 kW (commercial) 1-5 MW (IOU avoided cost)
    • Percentage of Electric Customers at Grid Parity with LCOE of Solar PV Systems from 2006-2020 100% Percent of Utility Customers 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: NC Utilities Commission; “Levelized Cost of Solar PV in NC, 2013” report by NCSEA Note: Systems of 10 kW or less are assumed to have residential ownership for tax purposes. 0-5 kW (residential) 5-10 kW (residential) 10-150 kW (commercial) 150-1000 kW (commercial) >1000 kW (commercial) 1-5 MW (IOU avoided cost)
    • Conclusions “Grid Parity” by Capacity Class in North Carolina
    • Grid Parity for NC PV Systems with Retail Price of Electricity and Avoided Cost for Investor-Owned Utilities (Tax Credits Applied) Capacity Cooperatives Municipals Investor-Owned Utilities Progress Duke Dominion 0-5 kW (residential) 2019 2019 N/A N/A N/A 5-10 kW (residential) 2013 2013 2015 2019 2019 10-150 kW (commercial) 2013 2013 2014 2015 2014 150-1000 kW (commercial) 2011 2011 2012 2013 2013 >1000 kW (commercial) 2011 2011 2012 2013 2012 1-5 MW 2012 (IOU avoided cost) - - NO YES(Opti on B) NO
    • Residential PV Under 5 kW ¢50 Investor-Owned Utilities Residential Electricity Prices Residential Ownership of PV System 5 kW or Less Price per Kilowatt Hour ¢45 ¢40 ¢35 ¢30 Progress Energy (Residential) Duke Energy (Residential) Dominion North Carolina (Residential) 5 kW or less (Residential with incentives) 5 kW or less (Residential without incentives) ¢25 ¢20 ¢15 ¢10 ¢5 ¢0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent of Utilities and Number of Residential Customers at Grid Parity with Tax Credits 100% 3,000,000 2,500,000 75% Percentage of IOUs not at grid parity 2,000,000 50% 1,500,000 1,000,000 25% 500,000 0% 0 Percentage of IOUs at grid parity Customers at Grid Parity
    • Residential PV 5-10 kW Investor-Owned Utilities Residential Electricity Prices Residential Ownership of PV System 5 kW through 10 kW ¢45 Price per Kilowatt Hour ¢40 ¢35 ¢30 Progress Energy (Residential) ¢25 Duke Energy (Residential) ¢20 ¢15 Dominion North Carolina (Residential) ¢10 Greater than 5 kW through 10 kW (Residential with incentives) ¢5 ¢0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Greater than 5 kW through 10 kW (Residential without incentives) 2020 Percent of Utilities and Number of Residential Customers at Grid Parity with Tax Credits 100% 3,000,000 Percentage of IOUs not at grid parity 75% 2,000,000 Percentage of IOUs at grid parity 50% 1,000,000 25% 0% 0 Customers at Grid Parity
    • Commercial PV 10-150 kW ¢40 Investor-Owned Utilities Commercial Electricity Prices Commercial Ownership of PV System 10 kW through 150 kW Price per Kilowatt Hour ¢35 ¢30 ¢25 Progress Energy (Commercial) Duke Energy (Commercial) Dominion North Carolina (Commercial) Greater than 10 kW through 150 kW (Commercial with incentives) Greater than 10 kW through 150 kW (Commercial without incentives) ¢20 ¢15 ¢10 ¢5 ¢0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent of Utilities and Number of Commercial Customers at Grid Parity with Tax Credits 100% 75% 500,000 400,000 300,000 50% Percentage of IOUs not at grid parity Percentage of IOUs at grid parity 200,000 25% 0% 100,000 0 Customers at Grid Parity
    • Commercial PV 150 kW- 1 MW Investor-Owned Utilities Commercial Electricity Prices Commercial Ownership of PV System 150 kW through 1 MW ¢25 Price per Kilowatt Hour ¢20 Progress Energy (commercial) Duke Energy (commercial) Dominion North Carolina (commercial) Greater than 150 kW through 1 MW (commercial with incentives) Greater than 150 kW through 1 MW (Commercial without incentives) ¢15 ¢10 ¢5 ¢0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent of Utilities and Number of Commercial Customers at Grid Parity with Tax Credits 100% 75% 500,000 400,000 300,000 50% Percentage of IOUs not at grid parity Percentage of IOUs at grid parity 200,000 25% 0% 100,000 0 Customers at Grid Parity
    • Commercial PV over 1 MW Investor-Owned Utilities Commercial Electricity Prices Commercial Ownership of PV System Over 1 MW Price per Kilowatt Hour ¢25 ¢20 Progress Energy (Commercial) Duke Energy (Commercial) Dominion North Carolina (Commercial) Greater than 1 MW (Commercial with incentives) Greater than 1 MW (Commercial without incentives) ¢15 ¢10 ¢5 ¢0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent of Utilities and Number of Commercial Customers at Grid Parity with Tax Credits 100% 75% 500,000 400,000 300,000 50% Percentage of IOUs not at grid parity Percentage of IOUs at grid parity 200,000 25% 0% 100,000 0 Customers at Grid Parity
    • Key Findings • PV systems greater than 10 kW will be at “grid parity” before 2015. • All solar PV systems will be at “grid parity” before 2020 (except for systems under 5 kW with investor-owned utility prices). • For solar PV systems larger than 1 MW and smaller than 5 MW, it is more difficult to reach “grid parity” with avoided costs than electricity prices. • Systems larger than 150 kW are less affected by tax credit changes.
    • Thank you Questions? Levelized Cost of Solar Photovoltaics in North Carolina Jingxian, Polly Tao Miriam Makhyoun Duke University Master of Energy Manager of Market Intelligence North Carolina Sustainable Energy Association Management Candidate 919-433-6767 Miriam@energync.org 919-832-7601 Ext. 114