LCOE – LCOE – LCOE – What is it?

1) Levelized Cost of Energy
2) Levelized Cost of Electricity
3) Levelized Cost of Everything

It is actually #1. By definition the LCOE is the total cost of installing and operating a project expressed in dollars per kilowatt-hour of electricity generated by the system over its life. I personally like the one I made up, #3 as the idiots definition that I can understand. It balls everything into one for me, regardless if it is the cost to produce the source of energy, the electricity or of the total enterprise. It is the cost from what I remember Dr. Jabbour saying 6 years ago and it stuck with me, the cost from cradle to grave. Their goal was to be the lowest in the solar market. It appears they are still working on it and are about to enter the competition in the market if I read the tea leaves correctly that Art scattered in his response to the article on LinkedIn More than 1,000 GW of solar in India? [#1]. If they truly are on the cusp of LCOE in the solar industry then that is a massive breakthrough in a massive market. How big is massive? Consider that 130GW of installed solar only accounts for 2 per cent of the 6,000GW, or $2 trillion annual electricity market, that’s massive. So how will they do it? By reversing what the silicon market did for the display industry. As an example look at cell phones, quantum physics based silicon was used to convert energy to light, starting from a few iPhones, to 2 billion smartphones in 7 years, trillions of dollars worth as an industry. By the way, Quantum Materials Corp. (QMC) will benefit in that market as well with the next generation Quantum Dot (QD) semiconductor for the display screens. Similarly in the reverse direction, instead of converting energy to light, converting light to energy will be worth trillions, only instead of silicon Solterra Renewable Technologies, Inc. will be using QMC Quantum Dots to make it a reality. That will be accomplished by:
1) QUANTUM DOT SOLAR CELL FACTORIES at a fraction of the current silicon PV factories.
2) Utility scale electricity generating plants capitalizing on economies/efficiencies of scale.

What’s the best market to enter, residential or utility? The latest US Solar Market Insight report (from Q3 2014) put the price at $0.70/watt for residential solar panels and that does not include “soft costs”. The bulk of the price of going solar is now the “soft costs” (installation, permitting, etc.) rather than the solar panel cost. Again referencing the latest US Solar Market Insight report, the average installed cost of a residential solar panel system was $4.72/watt. Way too high to be competitive with the utilities. The residential market initially is not where they will invest their time or their money, not yet anyways.

For one piece of the LCOE puzzle we need to know what it costs for the solar cell factories currently to produce and what one of their factories cost. Costs have come down to $.20 per watt for tier 1 solar photovoltaic polysilicon and wafers together so that means $.50/watt for the cell and panel. The manufacturing sequence is: purified Si -> Si wafers -> Si PV cells -> Si PV panels. That would be four steps to the manufacturing of solar photovoltaic panels. The third generation quantum dot solar cell panel will have only three manufacturing steps. Quantum dots -> QD printed cells -> QDPV panels. Environmentally friendly to boot, as silicon manufacturing is an energy hog (electric arc furnaces for extreme heat) and a pollutant. I don’t see where the ecological cost is factored into the LCOE equation either.

So how much does a silicon PV factory cost to put the advantages of QD solar into perspective? 175 Million for a 100 Megawatt solar plant per Twin Creeks Technology and that’s cheap! http://www.renewableenergyworld.com/rea/news/article/2012/03/startup-unwraps-new-tool-process-to-slash-silicon-solar-pv-costs $225 Million for a 200 Megawatt plant in NY, http://www.greentechmedia.com/articles/read/New-York-Provides-Silevo-With-225M-to-Build-Advanced-PV-Cell-Factory So the cost for a solar plant is between $1.1 and $1.75 million per megawatt. Lets not forget that didn’t include the cost of the purified SI plant to make the silicon boule.

In contrast to the silicon are the quantum dots (QD). The QD plant will run less than a couple million v.s. billions for the pure silicon cell plants. The Taiwan government to build a new factory for 450mm wafers, with the total cost of the project expected to be between $8-10 billion.[#2] The LCOE capital cost (CAPEX) takes a huge hit in favor of quantum dots as a source material and again in contrast, the QD solar cell plant will run a fraction of the cost of the tier 1 or 2 PV plants. I see Solterra coming in 1/3 to 1/5th of conventional PV plants. In line with Arts statement, “The comparable cost of starting such a factory is roughly one-fifth the cost of a silicon panel factory the same size and payback is quicker..” Why can QMC/Solterra be so low? They don’t need so much of the specialized equipment to make their flexible cells and panels. See the typical manufacturing equipment used for the silicon solar process and you’ll understand the complexity: https://www.crystec.com/crysolae.htm. Then imagine printing solar cells as fast as you can print newspaper. Comparing the two manufacturing processes, speed and far less specialized equipment is the game winner in favor of a lower LCOE for quantum dot solar.

What’s the pair of ACE’s IN THE HOLE Solterra has? QMC’s economical Tetrapod Quantum Dots and Scalability!!! Big time! How? For starters and this is a no brainer, they could double output by running two shifts or three shifts to triple output, increasing the process output speed from 100m/m to 600+m/m would allow them to scale up further, then by continually improving efficiencies up to the theoretical 65% for the Quantum Dot Solar Cells. That’s a significant increase from today’s numbers. So it is not unrealistic to see that a regular 100Mw plant today could be producing 1Gw of solar cell material in a few years at little to no extra cost. You see, they aren’t making conventional solar cell panels as we know them today. They are manufacturing a continuous wide flexible solar cell panel that if they go bi-facial with it, it in my opinion will blow away the competition and make their solar material a commodity faster. It will be specifically tailored for utility scale projects requiring ease of construction, low maintenance and LOW COST. The utilities are getting serious and nervous that as much as half their customer base could go off grid in the northeast alone.[#3] That’s a significant amount of revenue stream to loose! They know they have to embrace third generation solar or it will be the demise of them.

Another cost reduction in the LCOE for Solterra will be what is called the “Learning Rate”. As they work through each project they will learn and become more efficient in the future projects. Per the U.S. Energy Information Administration, AEO 2012 Electricity Market Module Assumptions Document, Table 8.3. Generally, overnight costs for technologies and associated components decline at a specific rate based on a doubling of new capacity. The cost decline is fastest for revolutionary technologies i.e. 3rd generation solar and slower for evolutionary i.e. 1st & 2nd generation solar and mature technologies. Thus the company money tree will bear more fruit as time and costs reduce with increased economies of scale.

When will solar be at parity with current generation sources? Below is the LCOE calculator. Plug in some numbers and you’ll be surprised how quick it can change. Remember those Capital Cost numbers are based on the current 1st and 2nd generation solar costs. No wonder the utilities are worried about renewables, particularly the next generation of solar from QMC/Solterra. http://www.nrel.gov/analysis/tech_lcoe.html

[#1] https://www.linkedin.com/groupItem?view=&gid=1848744&type=member&item=5983269072333213696&commentID=5992389122730242048&report.success=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_5992389122730242048
[#2] http://www.reuters.com/article/2012/06/12/us-tsmc-renesas-idUSBRE85B06J20120612
[#3] http://www.bloomberg.com/news/articles/2015-04-07/utility-sales-could-drop-by-half-as-homes-make-their-own-power

Company OTCQB ticker symbol: QTMM
Regards,
Bill

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One Response to “LCOE – LCOE – LCOE – What is it?”

  1. Gonçalo Sousa Says:

    Really good article, congratulations! For those of you that are not sure if solar is a good investment discover now how much money you can save per month with your own solar system. Calculate your savings at http://indiagoessolar.com/solar-calculator/

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