How Have Expectations For Useful Life Of Utility-Scale PV Plants In The US Changed Over Time?
There is good news for utility-scale photovoltaic (PV) projects: useful life expectations have increased and lifetime operating expenses (OpEx) estimates have declined. Those conclusions emerge in a new report from Berkeley Lab. Its survey of US solar industry professionals determined that, overall, the assumed useful life of PV projects now exceeds 30 years, with OpEx dropping by 50% over the last decade.
The declines in levelized cost of energy (LCOE) were predominantly caused by:
- reductions in up-front expenditures
- some changes in capacity factors, financing costs, and tax rates
- improvements in project life
Project life extensions and OpEx reductions have had similarly sized impacts on LCOE over this period. The authors suggest that the results may provide useful benchmarks to the solar industry, helping developers and assets owners compare their expectations for project life and OpEx with those of their peers.
The report, titled, “Benchmarking Utility-Scale PV Operational Expenses and Project Lifetimes: Results from a Survey of U.S. Solar Industry Professionals,” draws on a survey of US solar industry professionals and other sources to clarify trends in the PV industry.
Key findings include:
- Solar project developers, sponsors, long-term owners, and consultants have increased project-life assumptions over time, from an average of ~21.5 years in 2007 to ~32.5 years in 2019. Current assumptions range from 25 years to more than 35 years depending on the organization; 17 out of 19 organizations from which data were obtained use 30 years or more.
- Levelized, lifetime OpEx estimates have declined from an average of ~$35/kWDC-yr for projects built in 2007 to an average of ~$17/kWDC-yr for project built in 2019. Here OpEx is defined to include scheduled and unscheduled maintenance, operations personnel, land lease costs, property taxes, and any other ongoing operations costs.
- Across 13 sources, the range in average lifetime OpEx for projects built in 2019 is broad, from $13 to $25/kWDC-yr. Operations and maintenance costs—one component of total OpEx—have declined precipitously in recent years, to $5-8/kWDC-yr in many cases. Property taxes and land lease costs are highly variable across sites, but on average are—together—of similar magnitude.
Reductions in OpEx over time have, in part, been motivated by the low power sales prices now common in the sector, requiring focused attention on lowering OpEx.
The authors disseminated a brief survey of US solar project developers, sponsors, financiers, and consultants in December, 2019 to which 7 organizations responded. Additionally, they conducted a review of the annual financial reports from some of the large, publicly traded solar project developers and owners, yielding a number of additional sets of project-life assumptions. In order to locate patterns, they assembled 19 different time-series estimates of useful project life and, in addition to the 7 survey responses, synthesized data from 7 literature sources, which led to 14 different time-series for OpEx estimates.
To understand an asset with a useful life of 30 years, as example, ongoing operating profits during the life of the asset comprises ongoing revenue > ongoing costs. At the end of year 30, either decommissioning or full project repowering would be expected. A longer assumed project life could enhance the expected long-term profitability of a project, assuming any resulting increase in O&M is kept within reasonable bounds.
The authors defined OpEx to include scheduled and unscheduled maintenance, operations personnel, land lease costs, property taxes, and any other ongoing operations costs. As their interest was total OpEx, they sought levelized estimates considering the full expected lifetime of utility-scale PV plants and asked respondents to report data in $/kWDC-yr, and requested elaboration on any variations that might exist depending on whether a project is fixed-tilt vs. tracking, whether a project is located in a region with heavy soiling (requiring frequent washing) or vegetation growth (requiring vegetation management), or other project characteristics.
The research was funded by the Solar Energy Technologies Office of the US Department of Energy.
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