Solar vs Coal: Who Wins?

Posted by Max Dunn Wed, 02 Jan 2008 00:09:00 GMT

A new solar power plant just opened up at Nellis Air Force Base in southern Nevada [1]. Currently it is the largest solar photovoltaic system in North America with a capability of 14 megawatts (mW) of peak power, and producing about 25 million kilowatt-hours (kWh) of electricity per year [2].

However, it cost $100 million to build, which is about $7,000 per kilowatt (kW). This is a lot more than a coal-powered plants which costs about $3,000 per kW to build [3]. But since the sun is free and coal-powered plants have to pay for the coal, shouldn’t this make up for the additional cost of solar systems?

It turns out, that it doesn’t. To see why, let’s look at the numbers.

A coal-fired power plant will cost about $3,000 per kW to build. The plant should last about 30 years and have a capacity factor of about 50% [6] . This means that each 1 kW of power capability will produce about 130,000 kilowatt hours (kWh) of energy over the life of the plant, which results in an amortization cost of $0.023 for each kWh of energy produced. For the fuel costs, one ton of coal costs about $50 [4] and will produce about 2500 kilowatt hours (kWh) [5] of electricity so the cost of coal is just $0.02 per kWh, for a total cost of $0.043 per kWh.

These numbers make sense since wholesale electricity is sold for about $0.05 per kWh.

Now let’s look at the solar power. A tracking solar system will have a load capacity of approaching only 20% since the sun doesn’t shine brightly all the time. So in addition to being more expensive to build, solar systems also turn out less energy than coal plants. This means that for each kW of power capacity a photovoltaic system has, it will produce about 50,000 kWh of energy over it’s lifetime. Since it costs about $7,000 per kW of power for a photovoltaic system, it will cost $0.14 per kWh for the system.

So even though a solar photovoltaic system gets free energy from the sun, it still costs about $0.14 per kWh of energy produced versus $0.05 for coal-fired power plants.

Eventually, solar photovoltaic plants should be competitive with coal [7], but we are not there yet.

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Comments

  1. J.R. said about 1 hour later:

    Very interesting analysis. Here’s a slightly different calculation, however. If the solar plant generates 30M kWh/yr (from your footnote 1) and lasts for 40 years (my #), then it will produce 1200M kWh over it’s lifetime. Since it cost $100M to build, isn’t that 12kWhr per dollar, or $0.083/kWh? That’s pretty damn close to the cost of coal! Now consider the cost of exhaust scrubbers and labor costs to run a coal plant. Solar’s a pretty clear winner now don’t you think?

  2. Max Dunn said about 1 hour later:

    I was using 25M kWh/yr (as from reference #2) and rounded up, which accounts for part of the difference in our costs for solar power. However, the biggest difference is that I used a 30-year lifetime while you used a 40-year lifetime. Do you have any references to support a 40-year lifetime for solar panels?

  3. Max Dunn said about 1 hour later:

    If coal had to cleanup its emissions, it would likely double the cost of its power. Then solar would have a much better chance of being able to compete. However, telling almost everyone in the world (including everyone in the Third World) that they are going to pay double for electricity probably wouldn’t go over very well.

  4. Max Dunn said 112 days later:

    Another way of looking at this is that solar only needs to come down to $2,500 per kW in order to be competitive with coal. Since some thin-film solar cells are approaching $1,000kW, it shouldn’t be long before complete solar plants will be cheaper than coal.

  5. Gary Keene said 1207 days later:

    The U.S. government subsidizes the coal industry for billions of dollars per year. Elsewhere I have read that if coal subsidies were ended, than solar power costs would be on par with coal power costs. Have you included or excluded government subsidies in your cost calculations?

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