The Lawrence Berkeley National Laboratory recently published a paper on Solar PV project life and Operating Expense trends (you can read the paper here) drawing on the findings from a 2019 survey of U.S. solar project developers, sponsors, financiers, and consultants. There were two major takeaways of the study: over the last decade the average Solar PV assumed useful life has increased to 30+ years, and operating expenses have decreased by 50%.
This will obviously have a significant positive impact on the economics of solar going forward. This new landmark will bring down the Levelized Cost of Energy (LCOE) for Solar and is exciting for those who have already, or are looking to adopt solar into their energy plan.
Here are some of the exciting discoveries made in the Berekely Lab Study:
It wasn’t long ago that panel manufacturers were celebrating 20+ year life expectancy for solar panels. However, Berkeley Labs’ study reveals that recent advancements in the technology has added another 10 years (on average) to the life expectancy of a solar panel:
“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.”
Berkeley Lab: Benchmarking Utility-Scale PV Operational Expenses and Project Lifetimes - Figure 1 and 2
This means your current system (if using modern PV technology) will continue to produce for much longer than initially forecasted. Owners have more years of revenue to recover upfront capital costs and any necessary component replacements, helping to drive down the levelized cost of energy. Longer life also means an opportunity to sell or reuse panels after they reach end of contract date, such as the expiry of an initial fixed-price power-purchase agreement (PPA).
Generally, a 30-year life assumes that the panel will produce at least 80% of the rated power at the end of its lifespan. So in reality, the panels can last much longer than that end date (but will operate at lower efficiency).
In addition to a longer life expectancy for panels, the study also cited that, in the past decade, the forecasted solar PV operating expenses have had significant reduction of roughly 50%. This means that not only do panels last longer, but they cost less to operate per year than previously forecasted.
This reduction is due partly to per-service cost reductions (for example, via automated panel washing) and partly due to a smaller number of services being procured (for example, owners realizing that field-level inspections of electrical wiring and equipment are not required every year).
“Levelized, lifetime Operating Expense estimates have declined from an average of ~$35/kWDC per year for projects built in 2007 to an average of ~$17/kWDC per year for project built in 2019. Operating Expenses can include scheduled and unscheduled maintenance, operations personnel, land lease costs, property taxes, and any other ongoing operations costs.
Berkeley Lab: Benchmarking Utility-Scale PV Operational Expenses and Project Lifetimes - Figure 3 and 4
Operations and maintenance costs, which is just one component of total Operating Expenses, have declined precipitously in recent years to as low as $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.”
Lower operating expenses mean more dollars in your pocket each and every year, and even better, these are signs of less maintenance and downtime during the life of your system.
Clearly, OpEx and project life can be important drivers for the Levelized Cost of Energy (LCOE) over time. As we previously explored in our “Falling Cost of Solar” article, the recent drop in solar PV cost is the result of many different factors including superior manufacturing methods and greater economies of scale. Life expectancy and OpEx plays a significant role as well. Berkeley Labs predicts that, over the life of the system, without the extended panel lifetime and improved operating costs, levelized costs would be 43% higher today at the utility-scale:
“The levelized cost of energy (LCOE) of utility-scale PV projects fell from an average of $305/MWh for projects built in 2007-09 to $51/MWh for those built in 2019. This reduction was largely due to lower up-front capital expenditures (CapEx), but about 9% ($22/MWh) was due to improvements in project life and OpEx. Had project life and OpEx not improved, LCOE in 2019 would have instead averaged $73/MWh—43% higher.”
If you’re considering building a system and would like to discover how these new advancements will affect your ROI and expected payback, don’t hesitate to reach out and get in contact with us. Before you plan your project, we can provide you a full analysis on whether or not solar will be an effective choice for your business.
The Berkeley Lab Study is an extremely valuable resource for electric system planners, modelers, and analysts and can also 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.
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Sources:
Wiser, Ryan H., Mark Bolinger, and Joachim Seel. Benchmarking Utility-Scale PV Operational Expenses and Project Lifetimes: Results from a Survey of US Solar Industry Professionals. Lawrence Berkeley National Lab.(LBNL), Berkeley, CA (United States), 2020.