CHAPTER 5: MODELLING METHODOLOGY
5.2 METHODOLOGY USED FOR COST MODELLING
For the cost and scenario analyses performed in this research, it was necessary to use a reference plant with reliable cost and performance data for a CSP plant.
A study was recently conducted by the National Renewable Energy Laboratory (NREL), in partnership with engineering consultants WorleyParsons Group Inc, to conduct a cost study for a 100MWe parabolic trough CSP plant. This plant, located in southwest Arizona in the United
States of America (USA), has a storage capacity of six hours and both wet and dry cooling were considered (Turchi, 2010). The data used for the NREL/WorleyParsons study was also used for this study, as this is the most up to date data currently available. The costs reflect recent commodity price fluctuations as a result of the recent economic downturn. Adjustments to the NREL/WorleyParsons data were made to account for the fact that the reference plant would be located near Johannesburg in South Africa. Adjustments to the costs were made using adjustment factors that were developed by the Electric Power Research Institute (EPRI). The methodology that was used in the study, “Power Generation Technology Data for Integrated Resource Plan of South Africa” (EPRI, 2010), for making adjustments to the costs was also used in this study and is discussed below.
Reasons for choosing the parabolic trough technology as a high temperature solar system include that it is the most mature technology of all CSP technologies (Turchi, 2010) and that it can supply thermal heat within the required temperature ranges. Another reason is that more than 500MW of parabolic trough plants are already in operation in Spain and in the United States. Moreover, several gigawatts of parabolic trough plants are currently in the planning
phase in a number of countries (Turchi, 2010). The Solar Advisor Model (SAM) is capable of doing comprehensive technical analysis of the performance of parabolic trough plants. It was not possible to create a reliable technical model for another technology (e.g. linear Fresnel) for this study.
5.2.1 Adjustments to costs
Adjustments to total plant costs
In the EPRI report on “Power Generation Technology Data for Integrated Resource Plan of South Africa” (EPRI, 2010) factors were used to covert construction costs for the USA to the cost of construction in South Africa. Table 5-2 presents factors for materials, labour productivity and labour rates. It should be noted that construction material costs are more or less the same as in the USA. South Africa has a lower labour productivity and therefore the number of hours required for construction is expected to be significantly more. The lower labour productivity in South Africa is offset by a lower labour rate than in the USA.
Table 5-2: Construction adjustment factors for converting USA to South African costs. Source: (EPRI, 2010)
Materials Labour Productivity Labour Rate
Value Used 1.00 2.10 0.65
In the EPRI report (2010), assumptions are made about the fraction of the equipment imported and the fraction supplied locally. For a parabolic trough plant, the following assumptions are made:
50% of the equipment is imported; 50% of the equipment is sourced locally; 45% of the material issourced locally; and 55% of the construction labour is sourced locally.
The US-based costs from the NREL study: “Parabolic Trough Reference Plant for Cost Modelling with the Solar Advisor Model”, were converted to South African costs using the process shown in Figure 5-3. This process include the following:
The first step involved breaking down the TPC into its local and imported portion of the costs;
Imported costs were assumed to be from the USA and prices were kept in USD terms; The local portion of the costs was broken into materials and labour, and the factors from
Adjusted imported cost for construction in SA (USD)
TPC and O&M Costs from NREL (2010) study for a parabolic trough plant (USD)
TPC and O&M cots for a South African designed parabolic trough in Jan 2011
Percentage of costs for imported materials, labour and
equipment (USD)
Percentage of local costs for material, equipment and
labour (USD)
Percentage of local cost for materials and
equipment (USD)
Percentage of local cost for labour (USD)
Adjusted local material and equipment costs for
construction in SA
Adjusted local material and equipment for construction in SA
TPC and O&M costs for both imported and local equipment, materials and labour (USD)
TPC and O&M costs in ZAR Adjusted to Jan 2011
TPC X % local TPC X % imported
Local X % materials Local X % labour
Local materials X materials factor Local labour X labour factor Imported X foreign f t
TPC and O&M X USD:ZAR exchange rate
Figure 5-3: Methodology used for estimating capital costs. Source: (EPRI, 2010)
The local and imported costs were then combined and calculated in USD terms. In the final step, the costs in US dollars were converted to South African Rands (ZAR) using an exchange rate that equals the average for the year 2010. The exchange rate used was 7.33 ZAR/USD.
Adjustments to operations and maintenance costs
The O&M costs were also adjusted to South African currency and conditions. The US based O&M costs from the NREL study: “Parabolic Trough Reference Plant for Cost Modelling with the Solar Advisor Model”, were used as a baseline. O&M costs are split into fixed and variable components. Fixed O&M costs were adjusted by using the same adjustment factors that were used to adjust TPC costs (Table 5-2). The O&M costs were converted to South African currency using an exchange rate of 7.33 ZAR/USD.