Cost estimates for production of the electrical energy needed in the early twenty-first century are provided. Costs and performance of the Satellite Power System are compared with alternative methods of producing electrical energy

Samsa, M. E.

English

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SPS AND ALTERNATIVE TECHNOLOGIES COST AND PERFORMANCE EVALUATIONS
Michael E. Samsa
Argonne National Laboratory - Argonne, Illinois 60439
An important consideration in the analysis of the Satellite Power Sys-
tem (SPS) concept for electrical energy production early in the twenty-first
century is its expected generation cost in comparison with that for alternative
technologies. This study uses, as a standard metric, the constant dollar level-
ized annual revenue requirement for production of a unit kilowatt-hour of
electrical energy from each system as the basis for comparison. Levelized
annual revenue requirement, expressed in mills/kWh, is essentially a discount
factor weighted average unit cost of energy production which includes all
components of capital recovery, fuel, and nonfuel operating cost projected
over the facility's economic lifetime. A typical utility's weighted average
cost of capital, exclusive of general inflation, was selected as the appropriate
discount rate.
Analysis of future costs is complicated by the existence of large
uncertainties about capital and fuel prices twenty to fifty years in the future.
This uncertainty originates from three major concerns: I) uncertain perfo_ance
capabilities and capital costs for improved current, near-term, and advanced
technologies, 2) uncertain future economic trends and their effect on energy
demand, and 3) uncertain future regulations that may constrain certain fuel
production or use. Each of these factors is accounted for in the analysis.
Table 1 displays the low, nominal and high capital costs projected for
each technology for the year 2000. As shown, these costs derive from the direct
and indirect capital cost estimates made as part of the technology characteriza-
tion task by adding costs for contingencies, owner's expenses, and interest
during construction. These additions result in a nominal 1978 costs. Projec-
tion of these costs to the year 2000 consider ranges of uncertainty in future
environmental regulations, safety requirements and technological advances. Low
year 2000 costs for coal and nuclear systems assume optimistic projections of
future environmental and safety requirements, respectively, Low costs for the
central station photovoltaic and SPS technologies assume a reduction in solar
cell costs from the nominal $37.80/m 2 (1978) to $21.60/m 2 (1978). High year
2000 costs are driven primarily by uncertainties in achieving the current]y
estimated nominal costs as a result of technical and regulatory uncertainties.
Figures 1 and 2 show the ranges of installed generating capacity and
fuel prices that result from uncertainties in future economic trends and energy
demand. Values shown are derived from the results of the alternative futures
scenarios task. Examination of Figure 1 indicates that only the high capacity
growth scenario (scenario UH) is capable of accepting a full implementation of
sixty SPS units by 2030 if the SPS is limited to no more than twenty-five percent
of installed capacity for utility operational purposes. In the lower capacity
growth scenarios, UI and CI/CI(d), the SPS implementation rate would need to be
reduced to one-half or one-third the nominal rate, respectively, in order to
satisfy the twenty-five percent criteria in 2030. Although reduction of the
SPS implementation rate would also reduce the up-front investment costs neces-
sary to support it, only about half of the investment costs would vary propor-
tionately; the other half would remain unchanged. Thus, as the SPS implementa-
tion rate is reduced, up-front investment adds significantly to the average
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unit cost, As indicated in Table l, reduced implementation could add as much
as fifteen percent to the average unit cost, significantly offsetting potential
major cost reductions, i.e., the sixty unit nominal year 2000 cost is com-
parable to the twenty unit low year 2000 cost for the SPS technology.
Figure 3 shows the ranges of levelized annual generation costs for SPS
and the alternative technologies considered. The shaded area of each bar in
Figure 3 represents the spread in nominal costs as a result of the spread of
fuel price scenarios considered, except in the case of the terrestrial central
station photovoltaic (TPV) where the range is defined by geographic location
(Phoenix and Cleveland) and in the case of decentralized photovoltaics, where
the indicated range is both location and design dependent. The low bound of
each bar in Figure 3 represents the generation cost under the most favorable
fuel price, location and/or design coupled with the low year 2000 capital cost.
Conversely, the high bound represents the least favorable fuel price, location
and/or design coupled with the high year 2000 capital cost.
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Examination of Figure 3 leads to the following conclusions:
I. The SPS will have little chance of competing favorably,
on a levelized cost basis, with improved conventional
technologies over a wide range of fuel prices.
2. The SPS has a better chance of competing with near-term
technologies, i.e. coal gasification/combined cost, high
near-term technology cost assumptions.
3. The SPS may compete favorably with advanced technologies
such as fusion, central station and decentralized photo-
voltaic. However, large uncertainties exist about the
future costs of these systems.
Figure 4 shows the sensitivity of. generation cost to variations in
capacity factor for each of the central station technologies. The SPS, fusion
and terrestrial photovoltaic systems are more sensitive to variations in
capacity factor as a result of their higher capital intensity and essentially
no variable fuel costs.
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SPS and alternative technologies cost and performance evaluations

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