Thursday, January 23, 2014

Dear Jigar

Hi Jigar, 

These Chinese plants that are 1300 to 1500 USD/kWp. Do you think this includes tracking equipment? The reason I ask is I'm trying to figure... China has plenty of 1400 to 1600 kWh/kWp zones using fixed systems. Would't this bump up to 1700 or 1800 kWh/kWp with tracking?

A $1300/kWp plant with 1700 kWh/kWp performance, 50% financing at 5%, 25 year system life, 5% discount rate, yadda yadda produces electricity for about 5.5 cents/kWh.  Tweak the interest rate to 3% and you're down to 5 cents/kWh. Tweak the inverter replacement costs and bump the system life up to 30 years and you're down to 4.5 cents/kWh. That's really cheap. So cheap that if you use the current FiT rates they have you get IRRs and NPVs that are off the charts. It's cheaper than the 7 cents/kWh FiT they have for their nukes. Cheaper than a modern coal plant with pollution controls. I'm not a fan of big solar farms but these are impressive numbers. 

I agree that China is experimenting with the logistics here. I expected a significantly larger market last year and was disappointed... but here now we have some preliminary figures from BNEF that suggest at least 12 GW of PV went in last year. I realize the figures are preliminary AND unreliable but wow... wow... wow... 

I saw the space shuttle launch at night once. It was awesome. It lit up the whole sky. The sound felt like it took 20 seconds to get from the launch pad across the water to where we were. This growth in China feels like that. A rocket lighting up the dark with a time delay while the sound crosses the water. 


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