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Analytical model for solar PV and CSP electricity costs: Present LCOE values and their future evolution

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  • Hernández-Moro, J.
  • Martínez-Duart, J.M.
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    Abstract

    In this paper we first make a review of the past annual production of electricity and the cumulative installed capacity for photovoltaic (PV) and concentrating solar power (CSP) technologies. This together with the annual costs of PV modules and CSP systems allows us the determination of the experience curves and the corresponding learning rates. Then, we go over a rigorous exposition of the methodology employed for the calculation of the value of the levelized cost of electricity (LCOE) for PV and CSP. Based on this knowledge, we proceed to establish a mathematical model which yields closed-form analytical expressions for the present value of the LCOE, as well as its future evolution (2010–2050) based on the International Energy Agency roadmaps for the cumulative installed capacity. Next, we explain in detail how specific values are assigned to the twelve independent variables which enter the LCOE formula: solar resource, discount and learning rates, initial cost and lifetime of the system, operational and maintenance costs, etc. With all this background, and making use of a simple computer simulation program, we can generate the following: sensitivity analysis curves, graphs on the evolution of the LCOE in the period 2010–2050, and calculations of the years at which grid parities will be reached. These representations prove to be very useful in energy planning policies, like tariff-in schemes, tax exemptions, etc., and in making investment decisions, since they allow, for a given location, to directly compare the costs of PV vs CSP power generation technologies for the period 2010–2050. Among solar technologies, PV seems always more appropriate for areas located in middle to high latitudes of the Earth, while CSP systems, preferably with thermal storage incorporated, yield their best performance in arid areas located at relatively low latitudes.

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    Bibliographic Info

    Article provided by Elsevier in its journal Renewable and Sustainable Energy Reviews.

    Volume (Year): 20 (2013)
    Issue (Month): C ()
    Pages: 119-132

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    Handle: RePEc:eee:rensus:v:20:y:2013:i:c:p:119-132

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    Related research

    Keywords: LCOE; Concentrating solar power; Photovoltaic; Grid parities; Solar electricity costs; Renewable energy economics;

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    Cited by:
    1. Felix Groba & Barbara Breitschopf, 2013. "Impact of Renewable Energy Policy and Use on Innovation: A Literature Review," Discussion Papers of DIW Berlin 1318, DIW Berlin, German Institute for Economic Research.
    2. Dong, Changgui & Wiser, Ryan, 2013. "The impact of city-level permitting processes on residential photovoltaic installation prices and development times: An empirical analysis of solar systems in California cities," Energy Policy, Elsevier, vol. 63(C), pages 531-542.

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