Photovoltaics energy: Improved modeling and analysis of the levelized cost of energy (LCOE) and grid parity – Egypt case study

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Photovoltaics energy: Improved modeling and analysis of the levelized cost of energy (LCOE) and grid parity – Egypt case study[edit | edit source]

This paper presents improved modeling and analysis of the levelized cost of energy (LCOE) associated with photovoltaic (PV) power plants.

Points covered[edit | edit source]

The presented model considers the effective lifetime of various PV technologies rather than the usual use of the financial lifetime. Parametric and sensitivity studies are also presented for overcoming the uncertainties in the input data and for searching of the significant options for LCOE reduction. The salient outcome of this paper is that the effective lifetime has a significant impact on both the LCOE and the lifetime energy production.

Introduction[edit | edit source]

There are 3 main Solar technologies:

Photovoltaic solar systems (PV) Solar Thermal Panels and Passive solar design Concentrated solar power This paper mainly focuses on direct Solar conversion (Solar PV) There are 3 main designs for of Solar Photovoltatic Panels:[1]

  1. Crystalline Silicon PV (c-Si) (90%of market)
    • Monocrystalline Silicon Solar Cells
    • Polycrystalline Silicon Solar Cells
  2. Thin-Film Solar Cells (TFSC) (10-12%market)
    • Amporphous silicon (a-Si)
    • Cadmium Telluride (CdTe)
    • Copper indium gallium selenide (CIS/CIGS)
    • Organic Photo Cells (OPC)
  3. Concentrating PV cell (CPV)(R&D) or Concentrated solar power (CSP)

Only 0.2% of the gloabal market utilize the solar Photovoltaic(PV) for generation of electricity, the main reason is its cost. But over time the cost has gone done and now is around $1(US-Dollar) per Watt for most systems. The levelized cost of electricity(LCOE) is sensitive to small changes in the input variables and assumptions. The main input variables are the discount rate, average system cost, financing method and incentives, average system lifetime, and degradation of energy generation over the lifetime. The Grid parity and Break even cost of the Solar PV are basically the point at which the cost of Solar generated electricity is equal to the cost of the electricity purchased by the grid.

Model LCOE and grid parity[edit | edit source]

The LCOE captures capital costs, ongoing system-related costs and fuel costs – along with the amount of electricity generated– and converts them into a common metric: $/kWh.2 the sum of the present value of the LCOE multiplied by the energy generated should be equal to the net present value of costs.

Net Annual Present Value Costs[edit | edit source]

  • PVLCOE=Levelized Cost of Energy generation from solar PV
  • PVCosts=Total cost of over the life time of the solar PV system
  • Energy= Energy Generated
[math]\sum PVLCOE * Energy = Net PVcosts [/math]

The net annual cost of the project include all the cost paid at the beginning of the project- initial cost, maintenance and operation cost and even rate of interest of the year. In this paper no incentives have been considered. Consequently, the LCOE is usually determined as the average cost of energy over the lifetime of the project such that the net present value (NPV) becomes zero in the discounted cash flow (DCF) analysis.

Efficiency/Degradation[edit | edit source]

In general, the efficiency of power plants is reduced with time; the time-dependent reduction in the efficiency is called output degradation. As any power plant, PV generators exhibit output degradation too. The energy generated in a given year (Et) is then equals to the rated energy output per year (Eo) multiplied by the degradation factor(1-d)^t. For this paper SAM has been used to determine the energy production and the LCOE. It uses the NREL meteorological irradiance data for analysis. In the SAM, two important factors should be taken into consideration. These two factors are Analysis Period and Loan Term. Analysis period is defined as the number of years covered by the analysis and determines the number of years in the project cash flow while the loan term defines as the number of years required to repay a loan.

Lifetimes[edit | edit source]

There are two life times for a PV financial and effective. Financial life time is the duration the PV works. And effective life time even considers the degradation of the PV system. In the SAM, two important factors should be taken into consideration. These two factors are Analysis Period=effective life time and Loan Term=financial life time. Thus depending on whether the effective life time is greater then the financial life time we get two equation for LCOE Even the inverter replacement , operation and maintenance cost should be considered while calculating the LCOE. Determining grid parity depends on various factors including local price of electricity, solar PV system price can depend on size and supplier, geographical region and available sunlight.

Case study results[edit | edit source]

The study shows that the region where the cost is maximum is base of system cost, maintenance and operation cost, installation cost respectively. If effective life time is not considered the data regarding the LCOE and the energy generation estimated by the software greatly varies. In other words including effective time we get improved performance of PV system in terms of LCOE na d Energy generation. Sensitivity analysis shows that the BOS and loan rate shows significant impact on LCOE.