Mississippi residents are sometimes advised that renewable vitality sources, reminiscent of photo voltaic panels, at the moment are the lowest-cost methods to generate electrical energy, however these claims are based mostly on artistic accounting gimmicks that solely account for a small fraction of the prices incurred to combine photo voltaic into the grid. whereas excluding many others.
When these hidden prices are accounted for, it turns into clear that photo voltaic is dearer than Mississippi’s present coal, pure gasoline, and nuclear energy crops and that including extra photo voltaic will increase the value of electrical energy for households and enterprise that relies on it. One of the vital widespread methods to estimate the price of producing electrical energy from various kinds of energy crops is a metric referred to as Levelized Price of Vitality, or LCOE.
LCOE is an estimate of the long-term common price of manufacturing electrical energy from an influence plant. These quantities are estimated by taking the prices of the plant, reminiscent of the cash wanted to construct and function it, gasoline prices, and the price of borrowing cash, and dividing it by the quantity of electrical energy generated by the plant (normally megawatt hours) throughout its helpful life.
In different phrases, LCOE estimates are the identical as calculating the price of your automobile on a per-mile-driven foundation after accounting for bills reminiscent of preliminary capital funding, mortgage and insurance coverage funds, gasoline prices , and upkeep.
We estimate the LCOE of recent photo voltaic services in Mississippi through the use of in a single day capital price estimates from the US Vitality Data Administration (EIA) Electrical energy Market Module and different state-specific elements. We are able to evaluate the price of photo voltaic to real-world price information for coal and pure gasoline turbines at Victor J. Daniel Jr. Producing Plant, and the Grand Gulf nuclear energy plant utilizing the Federal Vitality Regulatory Fee (FERC) Kind. 1 database.
The graph beneath exhibits that electrical energy generated by new photo voltaic panels would price $50.67 per megawatt hour when accounting for the truth that monopoly utilities are allowed to lift electrical energy costs to cowl the price of building of any new photo voltaic facility that receives approval from the Mississippi Public Service Fee. , plus a ten % charge of return, is proven as “utility revenue,” beneath.
These price estimates, I ought to level out, are for the unsubsidized price of photo voltaic – what you may name the true, or underlying price of manufacturing it. That is vital as a result of the Biden administration’s $370 billion so-called “Inflation Discount Act” provides many subsidies for photo voltaic, which on the floor appear to scale back the price of photo voltaic. Actually, what IRA subsidies do is scale back the price paid by some by passing the prices on to the taxpayer. The subsidy, in different phrases, does not change the underlying price of photo voltaic, which stays unattractive irrespective of what number of incentives the federal authorities provides to go photo voltaic.
The most affordable electrical energy within the state is generated by mixed cycle (CC) pure gasoline models on the Victor J. Daniel Producing Plant at $30.31 per MWh, based mostly on the 2021 delivered price of pure gasoline, which is $3.90 per million British thermal models ( MMBtu), and electrical energy technology. Pure gasoline costs might have been on the rise just lately, however even with these rising costs, pure gasoline provides Mississippians a greater worth than photo voltaic. So, too, is nuclear.
The following most cost-effective energy plant is the Grand Gulf nuclear facility, which produces electrical energy at $32.10 per MWh, based mostly on 2021 output. Lastly, the coal models on the Victor J. Daniel Producing Plant produce electrical energy at $43.83 per MWh, based mostly on 2021 coal costs of $2.55 per MMBtu and electrical energy technology.
However wait, there are others.
Not solely are photo voltaic panels dearer than present pure gasoline, coal, and nuclear crops on Mississippi’s electrical grid, however additionally they present little worth as a result of they do not produce electrical energy when the solar does not shine. -ag, which is widespread in time. .
Statistics from the EIA present that Mississippi’s photo voltaic services are producing solely about 22 % of their potential output by 2021, which implies utility corporations might want to set up 450 megawatts (MW) of photo voltaic to generate 100 MW of electrical energy, on common, over the course of a 12 months, requiring a big overbuild capability to acquire the identical annual vitality output.
Constructing an electrical grid able to incorporating all these extra photo voltaic panels would require buying 1000’s of acres of land, constructing extra transmission traces to attach these panels to the grid, and switch energy to the place it’s wanted. These prices, together with property taxes associated to land, traces, and different utilities, are handed on to clients by way of their electrical energy charges.
In line with Midcontinent Impartial Methods Operator (MISO), these transmission traces usually price between $2.5 million and $3.1 million per mile. Regardless of their hefty price ticket, photo voltaic proponents do not sometimes embody these transmission prices of their LCOE calculations as a result of it is inconvenient.
Lastly, it is very important be aware that irrespective of what number of photo voltaic panels are put in in Mississippi, the state’s electrical energy wants will nonetheless require using pure gasoline energy crops or costly new battery storage services to can present electrical energy when there isn’t a solar. shining, which occurs each evening. Because of this, Mississippi households and companies are pressured to pay for 2 energy methods: one which works when the solar goes down, and one which works when it does not.
The info is obvious: when all these prices are added up, we see that photo voltaic is dearer than utilizing present pure gasoline, coal, or nuclear crops in Mississippi. Due to this fact, the Mississippi Public Service Commissioners should defend ratepayers from the pointless price will increase that may inevitably end result from constructing extra photo voltaic services within the Magnolia state.