Economic feasibility of developing large scale solar photovoltaic power plants in Spain

Abstract

In 2017, electricity generation from renewable sources contributed more than one quarter (30.7%) to total EU-28 gross electricity consumption. Wind power is for the first time the most important source, followed closely by hydro power. The growth in electricity from photovoltaic energy has been dramatic, rising from just 3.8 TWh in 2007, reaching a level of 119.5 TWh in 2017. Over this period, the contribution of photovoltaic energy to all electricity generated in the EU-28 from renewable energy sources increased from 0.7% to 12.3%. During this period the investment cost of a photovoltaic power plant has decreased considerably. Fundamentally, the cost of solar panels and inverters has decreased by more than 50%. The solar photovoltaic energy potential depends on two parameters: global solar irradiation and photovoltaic panel efficiency. The average solar irradiation in Spain is 1,600 kWh m-2. This paper analyzes the economic feasibility of developing large scale solar photovoltaic power plants in Spain. Equivalent hours between 800-1,800 h year-1 and output power between 100-400 MW have been considered. The profitability analysis has been carried out considering different prices of the electricity produced in the daily market (50-60 € MWh-1). Net Present Value (NPV) and Internal Rate of Return (IRR) were estimated for all scenarios analyzed. A solar PV power plant with 400 MW of power and 1,800 h year-1, reaches a NPV of 196 M€ and the IRR is 11.01%.