Cost of Rooftop Electricity as of 2019: P5.80/kWh

Originally published in microRenewables magazine, Volume 4, Issue 11 2019

by the Center for Renewable Energy and Sustainable Technology (CREST) and Friedrich Ebert Stiftung

We calculate the levelized cost of electricity (LCOE) from a solar rooftop on a regular basis, to keep track of the rapid changes in solar economics.

The LCOE is the standard way by which the cost per kilowatt-hour (kWh) of different generating technologies are calculated, in a way that makes the technologies comparable in cost.

The method involves totaling the present values of all expenses – capital, operating, maintenance, etc – expected to be incurred during the lifetime of the plant. The expected total lifetime production of the plant in kWh is also calculated. The LCOE is the total lifetime expenses divided by the total lifetime production. It is, in effect, the cost per kWh of the plant’s electricity output, averaged over the lifetime of the plant.

Our cost calculations are based on the following assumptions:

· solar panels (350-400W per panel): P30,000/kW

· grid-tie inverter (P15,000/kW)

· balance of system (includes racking, protection devices, wires, etc): 10% of the panel plus inverter cost

· lifetime operating and maintenance cost: 100% of capital cost

· solar panel service life: 25 years

· inverter replacement over 25 years: 2

· overall system efficiency: 78%

The 25-year service life is what most global solar panel manufacturers now claim: an improvement over previous claims. This possibly reflects the increasing confidence of manufacturers in the reliability of their products. Solar panel manufacturers define service life as the period in which the panel’s output remains at least 80% of its rated capacity.

The result: a rooftop solar LCOE of P5.80/kWh (see Table 1 for details).

In 2018, CREST wrote that the rooftop solar LCOE had gone “below six persons per kWh”. This year, it continued its steady decline. Compare this with the typical retail price of electricity of P10.00, often higher in many electric cooperatives, and we can appreciate how far the cost of solar electricity had gone down.

Based on previous calculations and industry estimates, the LCOE of electricity from solar farms is at least one peso lower per kWh, putting it below P5.00 per kWh. This makes solar fully competitive with other competitive sources of electricity including coal, hydro, and geothermal.