Near term photovoltaic central-station markets are analyzed. Cost effectiveness of photovoltaic plants is determined in terms of reduction of oil consumption. The breakeven photovoltaic system cost vs oil-steam power generation is given. The value of photovoltaic power plants in Southern California and in Los Angelos is given in terms of fuel savings and capacity value. The potential value of third party financing, facilitated by Federal and state tax incentives is analyzed

Leonard, S. L.

English

NASA Technical Reports Server

PV LARGE SYSTEMS PROJECT 
AEROSPACE CORP. 
S.L. Leonard J 
Utility Oil Conservation 
A Near-Term PV Centmi-Station Market 
PRIMARY MARKET AREAS 
0 CALIFORNIA, FLORIDA, HAWAII. 
PlERTO RIG) 
0 OIL-MPENDLW 
0HlGti INSOUTlOll 
0 PRESENT ilml OIL ilSE 
mm, reUrurv om OF U.S. 
lJllLllY OIL CONSWTIOW) 
SECONDARY MARKET AREAS 
0 LOUISIANA. TEXAS. oKwaM4 
0 DEPEWMNT ffl WTURAL GAS. OIL 
0 GOOD INSOUTION 
0 PRESENT t19733 OIL USE: 
85.000 BBUDAY 
0 PRESENT (1rn M W R A L  GAS us5 
1.004 OOO BBUDAY (OIL 
EQU IVALLNn 
CONCLUS ION 
0 IF BASELINE TECHNOLOGY COMMRCIAL READINESS C a L S  ARE REACHED. IT  WILL BE COST-aRCTlM BY M 
UlE 1Ws IN M PRIMARY MARKET AREAS TO rO)(STRUCI PHOTWOCTAIC PUNTS SOULY TO REDUCE OIL 
CONSWiTION, EVEN If M REAL (infkti-djustsd) PRICE OF OIL WES NOT INCREAS', OVER 1980 VALUES 
? 
PRECEDING PAGE BLANK NOT FILMED 
113 
https://ntrs.nasa.gov/search.jsp?R=19830002242 2020-03-21T06:55:15+00:00Z
PLENARY SESSION: S.L. LEONARO ORKiil'J,?L YdGt IS 
OF POOR QUALITY 
Issues 
QUESTION: I S  THIS APPARENT OPPORTUNITY REAL, OR I S  THE ANALYTICAL 
APPROACH TOO SIMPLIFIED? 
RESPONSE: DElAlLlD ANALYSES OF VALUE OF PHOTOVOLTAIC GENERATION 
IN SPECIFIC 011-DEPENDENT SUNBRT UTILITIES 
QUESTION: ARE M S E  RESULTS CREDIBLE TO THE INDUSTRIES THAT WOULD 
aE INVOLVED? 
0 RESPONSE: EXTENSIVE IN-DEPTH DISCUSSIONS WITH REPRESENTATIVE 
ORGANIZATIONS IN TH UTILITY, PHOTOVOLTAIC MANUFACNRINC, 
AND CONSTRUCTION INDUSTRIES 
0 QUESTION: HOW CAN TECHNICAL AND ECONOMIC RISKS BE REDUCED TO THE POINT 
THAT THE PRIVATE SECTOR WILL TAKE ADVANTAGE OF lHlS OPPORTUNITY? 
RESPONSE: ANALYSES OF INNOVATIVE FINANCING ARRANGEMENTS THAT COULD 
LEAD TO HAND-Off TO THE PRIVATE SECTOR AT CURRENTLY 
ACHiNABLE SYSTEM COSTS, ONCE TECHNICAL FEASl6lLlTY HAS 
BEEN DEMONSTRATED 
SUPPORT OF RLXRAL PARTICIPATION IN INITIAL UTILITY- SCALE 
PROJECTS THAT DEMONSTRATE TECHNICAL FEASIBILITY CF LARGE 
PHOTOVOLTAIC SYSTEMS FOR UTILITY APPLICATIONS 
Value Analysis Methodology 
COST OF rRODUCTlON PROGRAY 
0 UTILITY SYSTEM OMRAt  LOU YOOEL 
0 THERMAL PLANT DETAILS 
0 OPERATING RANGE 
.FUEL TYPE 
.HEAT RATE CURVES 
STARTUPISHUIOOWN COSTS 
.SPINNING RESERVE 
oMUST RUN UYITS 
PHOTOVOLTAIC 
OSYSTEM OPERATING 
OHOUR OY HOUR ELL~)~uMIC DISPATCH 
LOSS O f  LOAD PROBABILITY PROGRAM 
0 UTILITY SYSTEM RELIABILITY MOOEL 
0 UNIT FORCED OUTAGE RATES AS 
oMA1NTENANCE SCHEDULE 
OHOUR BY HOUR COMPUTATION OF LOSS 
o FUEL SAVINGS 
o CAPACITY VALUE 
FUNCTlONSOf OPERATING LEVEL 
LOAD CARRYING 
OF LOAD PROBA8111TY lLOLPl 
ODETERMINATION OF EFFECT Of 
CAPAI l l  ITY  
HOTOVOLTAIC GENERATION ON LOLP 
I 
114 
PLENARY SESSION: S.L. LEONAW 
. . . ." 
c 1 . .  . .. - k .>.. L La 
OF POCR QUALITY 
Value of PV Power P!ants in the Southern 
California Edissn System 
ASSUMP;IONS 
411 COSTS IN 1980 DOLLARS 
GENERAL INFLATION RATE 
e 1981 - 1987: - 8 4 % / Y R  
e 1988 - : 5 W Y R  
REAL FUEL PRICE ESCALMION 
e 1981 - 1984:-2.7%lYR 
e 1985 - : W Y R  
PHOTOVaTAIC SYSlEM LIFE: 30 
PHOTOVOCTAIC PENCTRATIW 
e ENERGY: 5% 
CAPACITY: 11% 
EXFCTED CAPITAL COST I RANGE FOk PHOTWOlTAlC PUNTS- 
2.0 
3r 
LZ 
3 
U 
W 
e- 
3 
YEAR OF PHOTOVaTAIC PUNT INSTALlAllON 
Full SAVINGS 
1-1 CAPACITY CREDIT tal MIW)l k W )  
Vairle of PV Power Plants in the Los Angeles 
Departmeclt of Water and Power System 
A SSUMP ' IWIS 
A l l  COSTS F'J 1531 OOLURS 
GENERAL M A T I O N  RATE 
0 1981 - 85: 9 . l Z U I Y U R  
0 1986 - ).: 8.30%1YEAR 
0 1991 - : 5 . W 1 Y E A R  
REAL FdEL PRICE ESCALATION 
0 1981 - 95: 0.88%1 VEAR 
0 1986 - 90: l.TOZIYL4R 
m l9Y l  - : 2.05+11iAR 
PHOTOVOlTAIC SYSTEM LIFE: 
PHOlWOlTAiC X N 3 R A T I O N  
Iv\ 
30 YEARS 
0 1981: 
0 1994: 
2.1% OF ELECTRIC ENERGY 
FROM ltERMA1 UNITS 
1.5% 01' ELECTRIC ENERGY 
FROM IHERMAL UNITS 
EXPEClED CAPITAL COST RANGE 
FOR PHOTOVOLTAIC PUNTS 
1981 ,1994 
CAPACITY CREDlT (at MOOIkW) 
11.6 
0R:GIK.n.L PAGE IS 
PLENARY SCSSION: S.L. LEONARD OF POOR QUALITY 
Third-party Ownership Option 
COMCECT: 
IMVESTOR BROW FIWNCES CONSTRUCTIOM OF ~ O T O V O l T A l C  m R  RAW, SELLS ElECTRlCnr TO 
UTILITY. TAUES AOVANTABE OF TAX IYCEMTIVES MOT A V A l U I L E  TO UTll lTY 
AOVAWT. i 
IMClUslOW OF TAX BEMEFITS MANES IMVESfYEMT ATTRACTIVE W H € W  CO6T OF R A M 1  IS STILL TOO Hi6H 
FOR w'' ITV WRCHSE 
Investment Evaluation: Third-Part\ Financing Arrangement 
ECONOMIC ASSUMPTIONS 
SYSTEM COS' ($1 Wp' 13.00 
REAL ESCALATION OF ELECTRICITY PRICE S%l yr 
21 
75 
50 
lS%/ yr 
rWln CAPITAL 4% d system cost) 
DEB1 CAPITAL (S d system cost) 
EQUITY RESERVE (% d systam cost! 
RRMJIRED AFTER-TAX RETURN ON EQUITY 
FEDERAL INVESTMNT TAX CREDIT 
FEDERAL ENERGY CREDIT 
CALIFORNIA ENERGY CREDIT (net d Federal Tal 
CALIFORNIA ioet of Federal Tax) 
DEPRECIATION: FEDERAL 
NET LOAN CGST (less interest shelter) 
NET ELECTRIC POWER REVENUE (net d O W  
RESERVE RELEASE 
RESERVE INTEREST 
12.4 
18. I 
16.8 
1.3 
(46.8) 
15.5 
21.8 
19.4 
31.9 
loo. 0 
12.8 13.0 
19.2 19.6 
it. z 17.6 
18.9 
101.0 99.5 
118 
PLENARY SESSION: S.L. LEONARD 
Before-Tax Cash Flow 
0 . 6 1  
I 
I 
I 
I 
I 
NET ELECTRIC I /  
~r I-... ,.t..L.. .+. . ..I ..... b-4 
CASH 
now 
YEARS 
119 
PLENAP Y SESSION: S.L. LEGNARD 
Investment Ev8lU8tiOn: Selected Sensitivities 
ZpONOMIC ASSUMPTIONS 
SYSTW COST W W P )  
SYSTEM SERVICE LIFE (years) 
REAL ESCALATION OF EECTRICITY PRICE 
EQUITY CAPITAL @wont d system cost) 
DCBT CAP,ITAL (gercent of sy;'em cost) 
EQUITY RESERVE Mrcent d vstem cost) 
RATE (w INTEREST ON DEBT 
REQUIRfD AFTER-TAX RElURN ON EQUITY 
RMRAL AND STAIE SOUR TAX CREDITS 
BENEF IT1  COST BREAKDOWN (after- tax nd present 
value as percentage of spulty) 
FfDERAL INVESTMENT TAX CREDIT 
FEDERAL ENERGY CREDIT 
CALIFORNIA ENERGY CREDIT (net of federal tax) 
CALIFORNIA (net of federal tar) 
Df PRECIATI ON: RDERAL 
NET LOAN COST (less interest shelter) 
NET ELECTRIC POWER REVENUE (nd of ObM) 
R f  SERVE RlLEASE 
RfSfRVE INTEREST 
10.50 
30 
WYr 
25 
75 
41.4 
12% 
15% 
YES 
12.8 
19.2 
17.2 
38.9 
44  
(48.1) 
15.6 
22.1 
18.9 
101.0 - 
- 
6.00 
WYr 
60 
40 
El 
9.65 
12% 
in 
YES 
13.4 
20.1 
18.1 
40.8 
4.6 
(31.21 
22.7 
9.2 
2.2 
99.9 - 
- 
1.60 
30 
WYr 
25 
15 
50 
El 
1% 
YES 
12.4 
18.7 
16.8 
37.9 
4.2 
(58.7) 
21.0 
23.5 
25.0 
100.8 - 
- 
4.50 
WYr 
m 
'30 
30 
21.2 
12% 
1% 
DEI 
1F.2 
0 
0 
55.5 
6.2 
(64.0) 
51.9 
24.9 
7.6 
100.3 - 
120 
PLENARY SESSION: S.L. LEONARD 
Current Large-System Projects 
SACRAMENTO MUNICIPAL UTILITY DISTRICT PROJECT 
0 PUNNED CAPACITY: 1 MW (AC) 
0 SITE: RANCHO SECO NUCLEAR P M R  PUNT, 30 MILES SOUTH W 
P 
SACRAMENTO, CALIFORN l A  
$2 MILLION FROM STATE OF CALIFORNIA, $3.2 MILLION FROM SMUD 
0 FUNDING ALLOCATION: $12 MlLLlON -- S.8 MILLION FROM WE, 
0 PROJECTED IOC DATE: JUNE 1984 
0 FIRST STAGE OF PUNNED 100 MWP PHOTOVOLTAIC POWER P U N T  
ARCO SOUR I SOUTHERN CALIFORNIA EDISON COMPANY PROJECT 
0 PUNNED CAPACITY: 1 MW (DC) 
0 SITE: 
0 ARCO SOLAR TO BE BUILDER, OWNER, AND OPERATOR 
P 
LUG0 SUBSTATION NEAR VICTORVILLE, CALIFORNIA 
SOUTHERN CALIFORNIA EDISON TO PURCHASE AND DISTRIBUTE OUTPUT POWER 
0 PROJECTED IOC DATE: 
0 PRIVATE VENlURE MAM POSSIBLE BY STATE AND FEDERAL TAX @'JCENTlVES 
DECEMBER 1982 
121 
PLENARY SESSION: S.L. LEONARD 
Conclusions 
DETAILED ANALYSES OF THE VALUE OF PHOTOVOLTAIC GENERATION TO SPECIFIC 
UTILITIES CONFIRM M RESULTS W SIMPLIFIED ANALYSIS 
0 PHOTOVMTAIC PUNTS COSTING $1.50- Z.OO)1Wp WOULD BE COST-EFFECTIVE 
0 THE BREAKEVEN COST IN A SIMILAR MUNICIPAL UTILITY WOULD BE WEN 
IN AN OIL- DEPENDENT SOUTHWESTERN INVESTOR-OWNED UTILITY 
LARGER: $3.00 - 4.001Wb 
THE PROGRESSIVE ELEMENTS OF THE UTILITY INDUSTRY ARE KEENLY INlERESTED 
IN PHOTOVOLTAIC TECHNOLGGY BUT REQUIRE ASSISTANCE TO PROCEED WITH 
LARGE COMMERCIAL ti.e., non- RBD) PROJECTS 
0 RISKS ARISING FROM UNCERTAINTIES IN SYSTEM COST AVD PERFORMANCE 
ARE TOO LARGE TO BE JUSTIFIED UNDER AUOWED RATES OF RETURN 
0 UTILITIES ARE, HOWEVER, WILLING TO ENTER INTO AGREEMENTS WITH 
THIRD. PARW FINANCED PROJECTS 
UNDER A PROPERLY- STRUCTURED THIRD- PARTY ARRANCEMENT, CONSTRUCTING 
A PHOTOVOLTAIC PLANT AT CURRENTLY ACHIEVABLE COSTS CAN BE AN 
ATTRACTIVE INVESTMENT 
0 CURRENT SOLAR TAX CREDITS CONTRIBUTE HEAVILY TO EFFECTIVE R A E  
OF RETURN ON INVESWNT 
INCREASES RETURNS 
0 LEVERAGED FINANCING AT REASONABLE RATES SIGNIFICANTLY 


PV large systems project

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