Please keep this discussion focussed by following the guidelines at the bottom of this article. In particular, all comments comparing energy options like nuclear and renewables are off-topic.
What is meant by “internalized costs”?
Internalized costs are the costs which can be accurately accounted for in our current systems. In energy production, these costs typically consist of capital costs, financing costs, operation and maintenance costs, and exploration costs. Some energy options incur these costs in various stages such as extraction, transportation and refinement. Profits and taxes are excluded wherever possible in order to isolate the pure cost of production.
Internalized costs of distibuted solar PV
Solar power costs depend strongly on several factors, the most important of which being the capital costs, capacity factor and discount rate. The current status of the internalized costs of distributed solar PV is well summarized in two recent reports from the IEA and BNEF.
To get an overview of capital costs, a graph compiled by the IEA Medium-Term Renewable Energy Market Report is given below (two graphs on the right).
The BNEF World Energy Perspective document gives capacity factors of global solar farms in the range of 11-21%. But distributed solar will generally have significantly lower capacity factors due to the restriction that panels must be installed at the point of consumption and that panels are often not installed at the ideal angle.
Discount rates for onshore wind were discussed in the IEA Medium-Term Renewable Energy Market Report where examples were given for a developed nation (Germany) and a developing nation (South Africa). The risk involved in distributed solar should be similar to that of onshore wind where the smaller scale of distributed PV installations reduce the risk while the total policy dependency increases the risk.
The LCOE of distributed solar PV is given below as a function of the capacity factor for different capital costs (at 6% financing costs) and financing costs (at $3200/kW capital costs). Other assumptions include O&M costs of $30/kW/yr and a plant lifetime of 30 years. The Excel file from which these figures were compiled can be downloaded here.
The cost of using distributed solar power for heat is given below.
Transport costs related to other electricity generation technologies in this series are based on projected synfuel costs, but distributed solar PV is most often associated with electrified transportation. For this reason, transport costs in this article will be estimated based on more efficient, but more expensive battery electric vehiciels (BEVs).
As a reference, the e-Golf and the Golf TSI SEL can be compared as they have essentially identical features. Compared to the TSI SEL, the e-Golf is $8450 more expensive, 3x more fuel efficient, has a 4x smaller range and is 30% slower to 60 mph. Comparisons will also be made to the Toyota Prius Four which is at a similar trim level as the e-Golf. Here, the e-Golf is $7005 more expensive, 2x more fuel efficient, has a 6x smaller range and similar 0-60 mph acceleration. Prices are shown here.
In order to get a meaningful comparison, the energy costs of an electric vehicle will be estimated as standard energy costs divided by 3 (for comparison with a conventional car) or 2 (for comparison to a hybrid) plus the additional capital costs of the more expensive vehicle spread over the total amount of fuel used over a 5 year ownership period. 60% depreciation is assumed over the 5 year ownership period and an additional 44% of the depreciation cost is added to account for interest and insurance. An additional scenario of accelerated depreciation of EVs is also considered where the vehicle loses 80% of its value in 5 years. Full details of the calculation can be found in the Excel sheet associated with this article.
In order to assist in finding the consensus view on the internalized costs of distributed solar PV, please follow these simple commenting guidelines:
Three types of comments are welcome, each introduced by a keyword:
- DATA: Please give your opinion on any of the numbers presented in the article. Of particular interest is the average global capital cost of distributed solar PV ($/kW), average global capacity factors and average global financing costs (%). Each DATA comment will be weighted by the number of “likes” when the data is ultimately processed.
- REBUTTAL: If you strongly disagree with an existing DATA comment, please write a short rebuttal. The “likes” received by a REBUTTAL comment will subtract from the “likes” of the DATA comment. A REBUTTAL comment can once again be rebutted to reduce its weighting.
- CORRECTION: If you see a serious error in the numbers presented in the above analysis, please correct me so that I can correct the article.
- Make sure your comment gives only one piece of information (use multiple comments for multiple pieces of information).
- Keep things short.
- Please try to be as objective as at all possible. For this process to work, we all need to be in the mindset of dialectic instead of debate.
- Externalities, potential technological breakthroughs and other energy options are off-topic.
Many comments are welcome. More data = greater accuracy.