This paper discusses the technical, financial, and economic principles underlying the levelized cost method of computing the cost of solar electricity. Topics include the levelized cost method, solar radiation, solar panel efficiency, depreciation, cost of capital, fixed and variable operating and maintenance costs, and taxes. The paper includes the worksheet, “Levelized Cost Worksheet for a 1 kW Solar Electric Generating Plant.” Its benchmark values are for a model solar plant located in Chicago, IL. The paper discusses these benchmark values as it analyzes the worksheet’s constants (capacity-1 kW, 8,760 hr/yr), independent variables (capital cost-$/kW, cost of capital-%, physical life-yr, standard sun hours, fixed and variable O & M expense), and dependent variables (capital amortization expense, capacity factor, cost of solar electricity).

Issue Section:
Technical Briefs
Keywords:
photovoltaic power systems, solar cell arrays, solar power stations, power generation economics, power engineering computing, spreadsheet programs
Topics:
Power stations, Solar energy, Maintenance
1.
Mortensen, J., 2001, “Factor Associated with Photovoltaic System Costs,” NREL/TP.620.29649, National Renewable Energy Laboratory, Golden, CO
2.
Stavy, M., 2001, “Computing the Cost (¢/kWh) of Electricity Generated at Grid Connected Photovoltaic (PV) Generating Plants,” Solar Forum 2001, Washington, DC, American Solar Energy Society, Boulder, CO.
3.
Wiser, R., and Kahn E., 1996, “Alternative Windpower Ownership Structures: Financing Terms and Project Costs,” LBNL-38921, Lawrence Berkeley National Laboratory, Berkley, CA.
4.
Committee E44 on Solar, Geothermal and Other Alternative Energy Sources, 1997, “Specification E927-91-Standard Specification for Solar Simulation for Terrestrial Photovoltaic Testing,” American Society For Testing and Materials, West Conshohocken, PA.
5.
Marion, W., and Wilcox, S., 1994, “Solar Radiation Data Manual for Flat-Plate and Concentrating Collectors,” NREL/TP-463-5607, National Renewable Energy Laboratory, Golden, CO.
6.
Marion, W., and Wilcox, S., “U.S. Solar Radiation Resource Maps: Atlas for the Solar Radiation Data Manual for Flat-Plate and Concentrating Collectors,” National Renewable Energy Laboratory, Golden, CO, http://rredc.nrel.gov/solar/old_data/nsrdb/redbook/atlas/. Last Modified: March 6, 2000; Accessed: July 25, 2001.
Copyright © 2002
 by ASME
You do not currently have access to this content.