Hi.
I'm David Feldman.
In this section, we will discuss our new efforts
to more comprehensively benchmark the cost
of PV plus storage through a new metric, the
levelized cost of solar plus storage.
The intent of this area of research is to
go beyond CAPEX when benchmarking the cost
of solar plus storage, to better assess lifecycle
costs, and to provide a better comparison
to other energy generation technologies.
It is important to remember that LCOSS does
not necessarily tell us which option is the
most economically viable.
While LCOSS and LCOE provide benchmarks for
comparison, they do not necessarily reflect
the overall competitiveness of a technology
and design within the marketplace.
There are other tools, such as capacity expansion
models, which provide a more robust assessment
of economic viability.
There are different ways to operate a solar
plant with storage, and the intent of the
operation will have an impact on how it is
designed, built, and operated, and the associated
costs with those.
On this screen is the equation we formulated
to calculate LCOSS, and we'll go over the
variables briefly.
In the numerator, we have the initial CAPEX,
the cost associated with building the plant.
Next, we have any follow-on CAPEX, so any
capital expenditure that happened after the
initial build of the project, which might
include battery replacement or inverter replacement,
or any other thing.
Next we have depreciation benefits, so the
tax benefits of owning the plant.
We also have O&M costs, and the cost of electricity
bought from electric grid, so all the costs
associated with operating and maintaining
the plant, and any costs associated with purchasing
electricity from the grid and storing it in
the batteries.
Finally, in the numerator, we have residual
value, so this represents the value calculated
beyond our initial financial time horizon.
In the denominator, we have the electricity
produced by PV system and fed to the grid
or demand source.
We also have the electricity produced by the
PV system and fed to the battery, which accounted
for any losses from taking the electricity
and putting it into the battery, and then
eventually going to the grid or demand source.
Finally, we have any electricity that's fed
from the grid to the battery, and back to
the grid again, or demand source, obviously,
accounting for those losses, which may differ
from the other losses we mentioned.
It's also important to remember that all of
these are discounted.
In this slide, we see our 2018 and 2019 CAPEX
benchmarks for a 100-megawatt PV system with
four hours of storage.
The left side is our DC-coupled design system,
and the right side is our AC-coupled design
system, again, with four hours of storage.
This table covers the remainder of the assumptions
used in the LCOSS equation.
I will touch upon the key variables we are
benchmarking in addition to CAPEX, briefly.
The first is battery lifetime.
We assume that 20 percent of the battery capacity
is degraded after ten years and, therefore,
must be replaced.
We assume that the cost of such replacement
is 20 percent less than the original price
in real dollars.
In Year 20, we assume that another 20 percent
of the battery capacity has degraded, and
that cost is 40 percent less than the original
price in real dollars.
Integral to PV system design and cost is how
the battery is intended to be used.
We assume a 75 percent discharge rate of battery
capacity per day for a four-hour, 60-megawatt
battery.
Now, the amount of electricity that's fed
to the battery as a percentage of total generated
from the PV system will vary depending on
location, as sunnier locations will generate
more electricity and, therefore, a lower percentage
of that will go to the battery.
These different percentages reflect different
places in the United States.
Next, we have battery losses, so we're calculating
the roundtrip energy losses from feeding the
electricity from the PV system to the battery,
and then to the grid or demand source, or
from the grid to the battery and back to the
grid, which may differ.
Next, we have system configuration, so we
are assuming that the system is designed and
operated such that the majority, or in this
case, all of the electricity that the battery
uses comes from the PV system.
This is done because in order for the battery
to qualify for investment tax credit, the
vast majority of electricity must come from
the PV system.
Therefore, we just assume that all of it does.
This could change over time as, after five
years, they could change uses, but this calculation
contemplates sort of that initial five-year
period where all of the electricity that the
battery is using to be charged comes from
the PV system itself.
We also assume that in addition to the normal
O&M cost of operating a PV system, that there
is an additional $10.00 per kilowatt per year
for operating and maintaining the battery
above and beyond any battery replacement costs
that we covered earlier.
Here are our results.
For LCOSS, we calculated that it varies from
$55.00 per megawatt hour to $91.00 per megawatt
hour without the ITC in the case of Phoenix
and New York, and from $42.00 per megawatt
hour to $69.00 per megawatt hour with the
30 percent ITC, again, from Phoenix to New
York.
These values are $23.00 per megawatt hour
to $39.00 per megawatt hour higher than the
standalone PV LCOE without the ITC, and $18.00
per megawatt hour to $30.00 per megawatt hour
higher with that 30 percent ITC.
How does this compare to the real world?
Well, according to an LBL report published
by Bollinger and Seel in 2018, they reported
that storage premiums for a PV system in terms
of the PPA add $5.00 to $15.00 per megawatt
hour to the price for systems built in 2017
and 2018, and obviously those systems would
include a 30 percent ITC.
Our numbers are a little bit higher than the
market, although we feel that they're reasonable
in the sense that individual systems that
were actually installed in 2017 and 2018 might
have different system characteristics from
the ones that we're modeling.
Next steps.
We plan on incorporating feedback from our
initial production of these numbers.
We plan on updating the values for 2020 to
account for any changes in costs or system
design, and we plan on expanding our LCOSS
analysis to cover residential and commercial
PV plus storage sectors.
Thank you very much for your time, and goodbye.
