Background

The sun is a renewable source of energy which can be used to generate solar power. Such power plants:

• may be based on photo-voltaic cells which are cheap (and becoming cheaper) but relatively inefficient. Their operating costs are very low. They are also limited to generating electricity during daylight hours.
• or may be a Concentrated Solar Power (CSP) system based on mirrors heating a medium such as hot salt which are more expensive but also convert more of the sunshine into power. Such plant are also able to store the hot medium to generate power via a steam turbine for a few hours after sunset.
• these plant may be based on fixed or moveable mirrors. The moveable mirrors are more expensive but are more efficient. Their operating costs are low but significantly higher than for PV cells. .
• PV Cells are technically simple but projects based on other technologies are more complex.
• have no fuel cost and low operations and maintenance costs.
• experience seasonal fluctuations in insolation and this affects the cash flows
• the cash flows on a solar power plant are based on the daily average insolation calculated over a monthly period. The monthly figures will vary over the course of a year with the peak in the northern hemisphere usually in June. The peak in the southern hemisphere is usually in December. The peak to trough becomes larger the further away from the equator. This can be important for a cash flow model.
• produce low capacity factors
• are subject to straightforward taxation calculations but may receive subsidies.

Modelling Considerations

Monthly variations in solar insolation have a direct effect on the cash flows and can be significant. They must be included in the model.
Long term degradation in the cells/mirrors should also be taken into account.

How Promoter handles solar power projects

The user places the average monthly insolation figures into the software. (These figures for a specific site can often be found on data bases located on the internet).

The following chart illustrates typical monthly insolation figures for a site in the northern hemisphere with relatively little cloud cover.

Typical Project Cash Flows

The following diagram illustrates the cash flows on a PV Cells project. The project has a high capital cost but very low operating costs. The chart also illustrates the gradual decline in efficiency and the need for additional investment in inverters. Notice how the revenues vary seasonally.

In the case of a project with a CSP system, the capital and operating costs will be higher. The revenues may also be higher if the project is selling power at peak demand times.