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Traditional market for PV has been – Small cattle stations – Indigenous outstations – Lifestyle accommodation eg Beach houses Typically Renewable component not larger than 30kW But that’s all changed…
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Photovoltaic Systems: Market Drivers, economics and opportunities
Lyndon FrearsonGeneral ManagerCAT Projects
CAT Projects• Engineering consultancy based in Alice Springs• Specialising in:
– Remote Area Project Management– Energy and Power Systems Engineering– Community and Stakeholder Engagement
• Owned by and Indigenous NGO with 30 years experience in remote areas
• Traditional market for PV has been– Small cattle stations– Indigenous outstations– Lifestyle accommodation eg Beach houses
• Typically Renewable component not larger than 30kW
• But that’s all changed…
Installed Capacity
2011, Australian PV Association
Installation per annum
2011, Australian PV Association
Challenging time for industry:• FiTs ending• Solar Credits
– 5X to 3X to 2X– $37 to $27
• Solar Schools & Solar Cities winding down• Notable negative commentary on PV (see
IPART Hearings)
More change ahead:• Carbon Price
– At $23/Ton ~2c/kWh increase– Some compensation
• Network charges increasing by 40%• Enhanced Renewable Energy Target
– RE Energy Certificates can be sold:– currently >$40/MWh (4c/kWh) – highest predictions $70/MWh
Economic viability:• Generally getting better, IRRs>15% achievable
with >25 year asset life• Cheaper to install in new build although more
co-ordination• Integrated PV can be very affordable where
glass curtains/atriums etc are to be installed anyway
• Standardised investment model• Validated by super funds• Looks at:
– Capital Cost– Operating Cost– Revenue– WACC– Depreciation– Maintenance etc
General InputsElec Price Indexation 5.00%
Inflation 3.00%REC Inflation 0.00%
Tax 30.00%Weighted Average Cost of Capital 11.20%
Cost of Equity 16.00%Franking 70.00%
System size (kWp) 500System output (kWh/pa/kWp) 1700
installed cost ($/Wp) 6.75$
Capital CostPower Station 3,375,000
Other Costs 1 (insert description) 0Other Costs 2 (insert description) 0
Total Capital 3,375,000 Grant
Total Proponent Contribution 3,375,000
Annual Ongoing Costs (initial year)Operating & maintenance 1,500 Additional operating costs 0
Insurance 800Warranty 0
Lease of land 0
FinancingDebt 100%
Interest Rate 9%Loan (years) 20
Power ValueSPS Output per annum (kwh) 850,000
Output degradation per annum 0.5%PPA Value $/kWh) 0.26
REC Starting Price ($/MWH) 50
Useful LifeContract Term 20
Tax Life 20Depreciation per annum 168,750
Start Date 1-Jul-12Terminal Value (% of cost) 0%
Influence on IRR
0.16 0.17
0.18 0.19
0.20 0.21
0.22 0.23
0.24 0.25
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$2.0
0
$2.5
0
$3.0
0
$3.5
0
$4.0
0
$4.5
0
$5.0
0
$5.5
0
$6.0
0
$6.5
0
IRR
Installed $/W
Capital Cost vs Yield impact on IRR
25.0%-30.0%
20.0%-25.0%
15.0%-20.0%
10.0%-15.0%
5.0%-10.0%
0.0%-5.0%
Starting Electricity Price $/kWh
100% Energy Supply
Demand profile(night/day,
usage types)
Environmental influences (cloudy/sunny, hot/cold)
Supply characteristics(Demand charges, TOU tarrifs,PV performance)
Optimised power system – MAX use
of RE
Crowne Plaza Alice Springs• Total hotel energy consumption in
2008:– 3800MWh electricity– 2700Gj gas
• Solar System save 504MWh/year• 14% saving• Peak output of 80% of load
Case Study
• 1326 solar panels• 52 inverters• Saves 420tonnes CO2 annually• Total Energy Efficiency investment including PV
>$4.0M• Final Target, reduce Gas, Electricity and water by
50%, 40% and 30% respectively• Actual savings: 56%, 41% and 27% respectively
