PV System Installation Price and Tariff Trend (Singapore 2015)

Strategic Energy Management For Resilience
Managing
mainstream
solar
Recent trends in solar

applications
Christophe Inglin
07 October 2015
christophe@energetix.sg
Managing mainstream solar
PV could generate 10% of global electricity within a decade

PV share of world elec consumption grew 100-fold in 14 years
100'000
World consumption 100%
Photovoltaics (PV) now on the energy radar screen

PV = 1% of global electricity in 2014, after 100-fold growth since 2000
PV projected to soon reach 10% of global electricity supply
PV already supplies >6% in Germany
10'000
TWh/year
1.5% CAGR
10%
1'000
40% CAGR
1%
Growth drivers from subsidies to common sense
25% CAGR
10% CAGR
100
PVs impact on the grid
10
What about storage?
PV production*
1
2000
2005
2010
2015
2020
2025
* PV production assumes global average specific yield of 1200kWh/kWp. Underlying MWp from BNEF
World consumption (2000-2012) from US EIA. World consumption (2013-2014) from Enerdata
Renewables dominate net new capacity in EU
PV generates more than natural gas in Germanys fuel mix

Fuel shares in Germanys electricity supply (2014)
Data: www.energy-charts.de
PV experience curve
price drops ~20% when cumulative installation doubles

PV module prices drop as installations grow (experience curve)
PV already commercially attractive in Sgp, w/o subsidies
PV a natural price hedge against volatile fossil fuel prices

What about storage?
Data: Paul Maycock (1976-2003), BNEF (2004-2014)
Tariff trend since Jan 2002 = +1 cent/year
Installed system prices already at grid-parity in Sgp

Combined effects of scale, cheaper modules, AND lower installation costs
12
36
10
30
24
18
12
30
Retail electricity tariff [S$c/kWh]
Fully installed system price [S$/Wp]
Rapid decline in simple

payback period (years)
6.2-year payback
= 13.9% project IRR
(unlevered, incl Opex)
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Source: Phoenix Solar commercial projects and GeBiz tenders. Prices at time of final offer (not at installation)
Bubble size in proportion to project size (kWp)
Payback period at 2014/Q1 retail tariff (SGD0.2573/kWh)
24
22
20
18
16
14
12
10
Data: SP Services
9
Retail tariffs tied to forward HSFO prices
29
130
27
110
25
23
90
21
70
19
50
10
12
Low tension elec tariff [S$cents/kWh]
31
150
Oil prices are rather volatile
Whereas PV electricity price is locked in for 20-25 years (natural price hedge)
17
30
15
01
/0
1/
07 0 2
/1
0/
01 0 2
/0
4/
01 0 3
/0
1/
01 0 4
/0
7/
01 0 4
/0
1/
01 0 5
/0
7/
01 0 5
/0
1/
01 0 6
/0
7/
01 0 6
/0
1/
01 0 7
/0
7/
01 0 7
/0
1/
01 0 8
/0
7/
01 0 8
/0
1/
01 0 9
/0
7/
01 0 9
/0
1/
01 1 0
/0
7/
01 1 0
/0
1/
01 1 1
/0
7/
01 1 1
/0
1/
01 1 2
/0
7/
01 1 2
/0
1/
01 1 3
/0
7/
01 1 3
/0
1/
01 1 4
/0
7/
01 1 4
/0
1/
01 1 5
/0
7/
15
3-month forward Fuel oil price [S$/bbl]
26
01
/0
1/
02
07
/1
0/
02
01
/0
4/
03
01
/1
0/
03
01
/0
4/
04
01
/1
0/
04
01
/0
4/
05
01
/1
0/
05
01
/0
4/
06
01
/1
0/
06
01
/0
4/
07
01
/1
0/
07
01
/0
4/
08
01
/1
0/
08
01
/0
4/
09
01
/1
0/
09
01
/0
4/
10
01
/1
0/
10
01
/0
4/
11
01
/1
0/
11
01
/0
4/
12
01
/1
0/
12
01
/0
4/
13
01
/1
0/
13
01
/0
4/
14
01
/1
0/
14
01
/0
4/
15
01
/1
0/
15
28
Data: Cushing, OK crude oil future contract, www.eia.gov/

Data: SP Services
11
Gas prices even more volatile than oil prices

Add distributed small-scale generators to a traditional electricity grid

PV shaves price peaks and lowers overall electricity prices
Intermittency and variability are manageable
What about storage?

Data: Henry Hub natural gas futures prices, www.eia.gov/dnav/ng/hist/rngwhhdW.htm
13
Conventional on-demand power from centralised plant clusters
Weather-driven power from dispersed small-scale PV plants
13GW already installed (~2x peak demand in 2013)
40MWp by mid-2015*, heading towards 2GW within a decade
14
In 2013, 94% of electricity generated by a handful of CCGT generators
PV projects (>740 sites)

Installed (>40MWp)
Backlog (>50MWp)
Generating capacity (04/15)

Installed (12943MW)
Pipeline (529MW)
*
Source: EMA (www.ema.gov.sg)
15
Central = 221 systems; E = 112, NE = 226, N = 45, W = 140

Total 744 systems at 30/06/15 = 39.6MWp (www.ema.gov.sg)
16
RE pushes down electricity market prices
RE has capped price spikes from 2009

Weekly day-ahead maximum & minimum German electricity prices
Nuclear
Lignite
Hard
coal
Demand Electricity
production
Supply
curve
Merit-order effect
Nuclear
Lignite
RE plants1
Hard
coal
Demand
CCGT
Gas turbine
Electricity
exchange price
CCGT
Gas turbine
Supply
curve
Electricity price formation including

RE electricity generation impact
Price
Price
Electricity price formation excluding

RE electricity generation impact
Electricity
production
Electricity from PV and wind have zero marginal cost

Source: ZSW
17
Aggregate demand follows a predictable pattern
Source: Johannes Mayer, Fraunhofer ISE. Data: EPEX-SPOT / EEX
18
PV output is very predictable on an annual level
even if individual loads are intermittent (switched on and off)
Data: EMA (23 to 29 Sep 2013)
Data: Phoenix Solar PV projects

19
20
Two sites with offset intermittency
Single site, sunny morning and stormy afternoon
Charts from SERIS (data from 25 irradiation sensors around Singapore on 12 Apr 2015 christophe@energetix.sg
21
Two-site average reduces net intermittency
22
5 site average further reduces extremes
Average of two sites
Average of 5 sites
23
24
25-site average shows residual variability
10-site average reduces intermittency still further
Average of 25 sites
Average of 10 sites
25
Geographic aggregation smoothens the curves
26
In aggregate, PV is not intermittent; it is variable
All 25 sites+ average
Avg fluctuates
far less than
individual
curves
27
Charts: Solar Energy Research Institute of Singapore (SERIS)
28
Forecast weather to manage intermittency
Good correlation between forecast and actual

electricity production in Germany (2014)

What about storage?
Battery storage still too expensive and not yet necessary
Electric Vehicles (EV) will bring economies of scale

Electricity markets need innovation
Charts: B. Burger, Fraunhofer ISE; Data: EEX Transparency Platform

29
Better to sell surplus to SP Services than to store it*
30
But better still to push surplus PV to my EV than to PG!
Batteries are still too expensive for simple storage purposes
Transaction
Value calculation
Value of
electricity
[SGDc/kWh]
Consume PV electricity in-house, to offset

retail tariff + GST*
20.35 x 1.07
21.77
Sell surplus PV electricity to SP Services

(PowerGrid), to earn retail tariff minus grid
charges (no GST*)
20.35 5.26
15.09
Store daytime surplus in battery, to offset

night time retail tariff + GST*. But battery
charge/ discharge cycle loses 10% of energy
20.35 x 1.07
x90%
19.59
Amortise battery cost (~SGD800/kWh) over

10 years, with daily cycle to 80% DOD
- 800
- 30.00
10x365x80%x90%
* Figures apply to non-contestable customers who are not GST-registered (eg residential & small commercial)
31
32
EV shows classic symptoms of disruptive technology
EVs will disrupt both transport and energy sectors
EV motor ~3x efficiency of internal combustion engine (ICE) car*
50kWh battery per car gives 250km autonomy (@0.20kWh/km)
5x cheaper to fuel
Singapore has >600000 cars and >17000 taxis in circulation*
EV ~0.20kWh/km** @ SGD0.20/kWh = SGD0.04/km
ICE ~0.1l/km @ SGD2.00/litre = SGD0.20/km
600000 EVs x 50kWh = 30GWh of storage

Enough to power Sgp for 6 hours at 2013 demand (44923GWh**)
Much cheaper to maintain (electric motors last a long time and

need no oil changes!)
Traffic patterns
Private cars are parked for 94% of their lives***
EV has more torque than ICEV (more bang for the buck)
Peak demand at rush hour
By 2020, EVs to cost less than average petrol car in US,
Rest of time available for grid interaction
assuming 16% annual price decline (2014 Tesla Model-S @ USD70-90k vs

avg car @USD33k in Nov 2013^)
* EV grid-to-wheel efficiency ~59-62% vs petrol-to-wheel ~17-21% (www.fueleconomy.gov)
** 27kWh/100miles (BMW i3) to 34kWh/100miles (Tesla Model-S), from www.fueleconomy.gov
^ Kelley Blue Book
Inductive charging and discharging at traffic lights

* Straits Times, 04 Aug 2014
** Singapore Energy Statistics 2014, EMA
*** Assume 15000km/yr for 10 yrs at average driving speed of 30km/h = 5000 hrs of driving
33
Conclusions expect disruptive opportunities!

PV is growing fast and making a perceptible contribution already
Do not rely on old data regarding PV costs and market share!
Unsubsidised PV is already competitive against fossil fuels

PV shaves demand peaks and moderates generators market power
PV output in aggregate is not intermittent, but merely variable
Grid-integrated weather forecasting can manage this variability
Storage still too expensive, and unnecessary at current PV penetration
Storage will be competitive in time to balance higher PV penetration (EV)
Electricity markets are ripe for massive contractual innovation
Demand response
Time of use metering per minute billing
Two-way contracts, to buy and sell electricity, and pay for storage
We need corresponding regulatory innovation!

35
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PV System Installation Price and Tariff Trend (Singapore 2015)

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Strategic Energy Management For Resilience

Recent trends in solar

Managing mainstream solar

PV could generate 10% of global electricity within a decade

Photovoltaics (PV) now on the energy radar screen

PV projected to soon reach 10% of global electricity supply

PV already supplies >6% in Germany

Growth drivers from subsidies to common sense

PVs impact on the grid

What about storage?

Renewables dominate net new capacity in EU

PV generates more than natural gas in Germanys fuel mix

Managing mainstream solar

price drops ~20% when cumulative installation doubles

Photovoltaics (PV) now on the energy radar screen

PV module prices drop as installations grow (experience curve)

PV already commercially attractive in Sgp, w/o subsidies

PV a natural price hedge against volatile fossil fuel prices

PVs impact on the grid

Data: Paul Maycock (1976-2003), BNEF (2004-2014)

Tariff trend since Jan 2002 = +1 cent/year

Installed system prices already at grid-parity in Sgp

Fully installed system price [S$/Wp]

Rapid decline in simple

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Retail tariffs tied to forward HSFO prices

Low tension elec tariff [S$cents/kWh]

Oil prices are rather volatile

3-month forward Fuel oil price [S$/bbl]

Data: Cushing, OK crude oil future contract, www.eia.gov/

Gas prices even more volatile than oil prices

Managing mainstream solar

Add distributed small-scale generators to a traditional electricity grid

Intermittency and variability are manageable

What about storage?

Conventional on-demand power from centralised plant clusters

Weather-driven power from dispersed small-scale PV plants

13GW already installed (~2x peak demand in 2013)

40MWp by mid-2015*, heading towards 2GW within a decade

In 2013, 94% of electricity generated by a handful of CCGT generators

PV projects (>740 sites)

Generating capacity (04/15)

Central = 221 systems; E = 112, NE = 226, N = 45, W = 140

RE pushes down electricity market prices

RE has capped price spikes from 2009

Electricity price formation including

Electricity price formation excluding

Electricity from PV and wind have zero marginal cost

Aggregate demand follows a predictable pattern

Source: Johannes Mayer, Fraunhofer ISE. Data: EPEX-SPOT / EEX

PV output is very predictable on an annual level

even if individual loads are intermittent (switched on and off)

Data: EMA (23 to 29 Sep 2013)

Data: Phoenix Solar PV projects

Two sites with offset intermittency

Single site, sunny morning and stormy afternoon

Two-site average reduces net intermittency

5 site average further reduces extremes

Average of two sites

25-site average shows residual variability

10-site average reduces intermittency still further

Geographic aggregation smoothens the curves

In aggregate, PV is not intermittent; it is variable

All 25 sites+ average