I love Casey Handmer's vision. I first came across his idea when he published his piece in Asterisk last year. But I can't get behind Casey's numbers. I work in project finance in solar and battery storage development and the numbers he uses as current prices are way off for what utility-scale solar and storage developers can get for pricing. I'm not saying his idea is wrong, or that we shouldn't do it, but I am saying that it will be more expensive than he is projecting for a number of years.
Folks love talking about how cheap solar panels are getting, but 1) most of those prices are not attainable for projects in the US due to tariffs/restrictions on buying panels from Chinese slave labor 2) modules only are part of the cost stack. I just saw quotes for modules at $0.30/W. NREL shows capex for utility scale solar near $1.50/W, which sounds high to me, I reckon it's closer to $1.10-$1.20/W for large projects (https://atb.nrel.gov/electricity/2024/2023/utility-scale_pv). That link has storage pricing too. Installation costs are getting MORE expensive as labor costs rise. Solar power is cheap, but it's not too cheap to meter, and I don't think it will be for some time yet, if ever.
I feel like Casey and the utility-scale solar folks are talking past each other to some extent. See for example the critiques linked in pt. 1 here: https://www.astralcodexten.com/p/open-thread-353
I agree that utility-scale solar connected to the grid won't get dramatically cheaper. Even as the panels fall in cost, all the permitting costs, batteries, and equipment required to connect to the grid (and AC conversion losses) will keep costs steady.
What I'm more interested in is projects that aren't connected to the grid at all. With a load so cheap that you can afford to run your process only while the sun is shining. This is feasible in theory for making things like methanol, and with cheap enough methanol you can replace much of the chemical industry.
In this case, I struggle to find a lower bound on energy costs (though I'm sure it exists). Land is cheap, panels are getting cheaper, and tariffs are a solvable political problem (and I'm optimistic other countries can produce cheap panels, I heard a rumor that panels briefly cost $0.07/W in Germany recently). The racking is another issue, but can't the racks be mass manufactured too? Automating the installation and cleaning of the panels is tricky, but all the innovation in drones and humanoid robots makes me optimistic.
I'm interested to hear your thoughts on this. Can on-site solar without batteries achieve ~$10/MWh prices? Or am I missing something?
Prices in the teens have been achieved in PPAs in 2019-2021, but prices have crept up since then (https://commercialsolarguy.com/lowest-solar-power-prices-in-the-world/). As the commenter you linked mentioned, though, many of these international deals in the middle east and such are likely fudged.
The thing to note about many of those projects is that they likely don't pencil at those low PPA rates. The expected useful life of a solar panel is usually around 35 years. These PPAs are often 10-25 year PPAs. The developers have to be assuming large merchant tails in their financial models because the projects won't even pay for themselves at those rates (see this rough financial model I just threw together here: https://docs.google.com/spreadsheets/d/1XUhEAnXMoqSaryw-1vdsT5Qx-_d1LpmOgsty3B1zu5E/edit?usp=sharing). You can play with the PPA rate, term, merchant assumptions, and costs in there. I think the only way that these kind of deals can work is if the developers are willing to make aggressive assumptions on the post-PPA merchant revenue. Without aggressive assumptions, you won't even make your money back on the project, much less achieve a competitive financial return on the project (just look at the IRR...).
I love Casey Handmer's vision. I first came across his idea when he published his piece in Asterisk last year. But I can't get behind Casey's numbers. I work in project finance in solar and battery storage development and the numbers he uses as current prices are way off for what utility-scale solar and storage developers can get for pricing. I'm not saying his idea is wrong, or that we shouldn't do it, but I am saying that it will be more expensive than he is projecting for a number of years.
Folks love talking about how cheap solar panels are getting, but 1) most of those prices are not attainable for projects in the US due to tariffs/restrictions on buying panels from Chinese slave labor 2) modules only are part of the cost stack. I just saw quotes for modules at $0.30/W. NREL shows capex for utility scale solar near $1.50/W, which sounds high to me, I reckon it's closer to $1.10-$1.20/W for large projects (https://atb.nrel.gov/electricity/2024/2023/utility-scale_pv). That link has storage pricing too. Installation costs are getting MORE expensive as labor costs rise. Solar power is cheap, but it's not too cheap to meter, and I don't think it will be for some time yet, if ever.
Thanks for giving me some perspective on this!
I feel like Casey and the utility-scale solar folks are talking past each other to some extent. See for example the critiques linked in pt. 1 here: https://www.astralcodexten.com/p/open-thread-353
I agree that utility-scale solar connected to the grid won't get dramatically cheaper. Even as the panels fall in cost, all the permitting costs, batteries, and equipment required to connect to the grid (and AC conversion losses) will keep costs steady.
What I'm more interested in is projects that aren't connected to the grid at all. With a load so cheap that you can afford to run your process only while the sun is shining. This is feasible in theory for making things like methanol, and with cheap enough methanol you can replace much of the chemical industry.
In this case, I struggle to find a lower bound on energy costs (though I'm sure it exists). Land is cheap, panels are getting cheaper, and tariffs are a solvable political problem (and I'm optimistic other countries can produce cheap panels, I heard a rumor that panels briefly cost $0.07/W in Germany recently). The racking is another issue, but can't the racks be mass manufactured too? Automating the installation and cleaning of the panels is tricky, but all the innovation in drones and humanoid robots makes me optimistic.
I'm interested to hear your thoughts on this. Can on-site solar without batteries achieve ~$10/MWh prices? Or am I missing something?
Prices in the teens have been achieved in PPAs in 2019-2021, but prices have crept up since then (https://commercialsolarguy.com/lowest-solar-power-prices-in-the-world/). As the commenter you linked mentioned, though, many of these international deals in the middle east and such are likely fudged.
The thing to note about many of those projects is that they likely don't pencil at those low PPA rates. The expected useful life of a solar panel is usually around 35 years. These PPAs are often 10-25 year PPAs. The developers have to be assuming large merchant tails in their financial models because the projects won't even pay for themselves at those rates (see this rough financial model I just threw together here: https://docs.google.com/spreadsheets/d/1XUhEAnXMoqSaryw-1vdsT5Qx-_d1LpmOgsty3B1zu5E/edit?usp=sharing). You can play with the PPA rate, term, merchant assumptions, and costs in there. I think the only way that these kind of deals can work is if the developers are willing to make aggressive assumptions on the post-PPA merchant revenue. Without aggressive assumptions, you won't even make your money back on the project, much less achieve a competitive financial return on the project (just look at the IRR...).