First Solar Project in New Mexico Paying a Whopping 5.79 Cents per kWh

Says this report at Greentechmedia.

They also note that this seems rather low, but there is an added tax incentive for the first ten years of the power purchase agreement, which is around 2.5 cents on average.

So what’s up with my headline there? Why do I think that is a high price?

The interesting thing is, this power purchase agreement runs over 25 years. Twenty years from now, those solar panels will have paid back their investment. And everything they produce from that point on will be essentially zero cost. In the long run, 5.79 cents is not bad at all.

By extension, if that power purchase agreement would run 35 years, it could pay an even cheaper price per kWh, and still be profitable for First Solar. If you have it run for 50 years, you could bring the price down even more.

Also, with Germany’s feed-in tariff down to 10.4 cents Euro for large projects in July of this year, 5.79 cents US with the far better solar resources in New Mexico for a project delivered next year doesn’t sound unreasonable at all, even without tax incentives.

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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