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Connection costs down for new large-scale solar – but why?

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ARENA Blog

Connection is an under-appreciated component of the complex task of creating big new solar plants for Australia’s electricity system. Factors like access to network infrastructure, the amount of new generation that piece of grid can take and the lengths of nearby lines are big parts of site selection. These costs can add up, or they can be minimised through clever thinking – it differs by site.

ARENA’s large-scale solar funding round revealed projected connection costs are noticeably lower than for existing large-scale solar projects. Our collection of data on projects that precede the funding round – generally, larger and older – show a range between approximately 12 to 27 cents of connection costs for every watt of capacity. The twenty competitive round applicants show an average of 9 cents per watt, with more projects in the lower or zero connection costs band. This illustrates a fluid environment for companies looking to plug their big solar into the network, and it opens a fascinating question – why are the costs lower for ARENA’s large-scale solar funding round?

LSS_Chart_Highres2-1024x616

Many winners of ARENA’s LSS round include solar plants co-located with existing power stations, such as wind farms, which would reduce connection costs. The ARENA-funded study into co-location of wind and solar plants found that:

Major savings can be obtained in the grid connection infrastructure and installation, operation and maintenance and development costs (including land costs, development approvals and studies). These savings are estimated at 3 to 13% for [capital costs] and 3 to 16% for [operational costs].

There’s little doubt these effects have been borne out in the cream-of-the-crop projects that featured in ARENA’s large-scale solar funding round.

Another potential explanation is relatively simple – our call for applications encouraged aggressive competition among the bidders (it wasn’t called a competitive round by accident) . This well-designed process lead to bidders choosing sites for their cost-effectiveness, and the connection data ARENA has gathered almost certainly reflects this.

This article was originally published on the Australian Renewable Energy Agency’s blog. See the original here.  

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  • Eb

    Could it just be that the 12 to 27c/W connection cost is actual connection costs for existing PV plant and the LSS round estimate of about 0 to 19c/W is a forecast for PV plant yet to be built that is overly optimistic due to the way the LSS was structured?
    It would also be useful if it was spelt out if the unit is c/W AC or c/W DC, so the trend to greater DC to AC ratios can be factored in to this discussion of 3? actual data points and 20 forecast data points.
    Finally, the pink mean dot for the LSS Round looks much lower than the article’s ‘average of 9 cents per watt’, so were some of the 20 data points removed from the sample to calculate the average?

    • Ketan Joshi

      Hi Eb – to answer your questions:

      – It’s certainly a possibility that forecasts prices for future solar connections might be optimistic – which is why we’ll be following the data from construction through to operation, and sharing knowledge about how these facilities progress.

      – Apologies for leaving this out – the chart should have specified the wattage is in DC for both the existing and future facilities. We’ll do an update.

      – All 20 plants were included in the average – looks like a typographical error on my part, this should be an average of seven cents per DC watt. We’ll get it fixed up

      Thanks for pointing those out – appreciate it!