Objective: As a result of a maturing PV industry and increasing competition, from equipment suppliers to developers and EPCs, there is interest in optimizing a solar project’s financial return for all stakeholders. A typical design process for a solar PV project using a linear flow between the solar resource assessment, plant design using typical parameters, energy yield analysis, and financial model, may unintentionally miss higher value combinations by not performing an optimization. The goal is to iterate among these technical design and equipment choices but be driven by the financial metrics that ultimately determine project viability.
Methods: By coupling multiple plant designs, energy yield models, and financial model analyses, techno-economic optimization can be leveraged to maximize financial benefit of the project. Fixing certain project parameters to reduce model complexity, such as the site area, grid capacity, and tender specifications, while design parameters, such as module types, installed DC capacity, orientations, etc., are varied, allows for optimization of the preferred financial metric.
Results: The financial basis for techno-economic optimization involves minimizing levelized cost of electricity (LCOE) or maximizing cumulative cash flow metrics, such as internal rate of return (IRR) or net present value (NPV). Correctly selecting the financial metric to optimize is vital. LCOE is often simpler to model than cumulative cash flow metrics, but it falls short of capturing the value of subsidies in subsidy-driven markets.
Conclusion: This case study reviews two projects where techno-economic optimization has been applied to maximize the financial benefit to the owner. The first project is an optimization based on LCOE in a subsidy-free market, varying module types, installed DC capacity, and ground coverage ratio for a single-axis tracking system, resulting in an LCOE reduction from the baseline design, which was based on “standard” design parameters. The second project optimizes for IRR in a subsidy-driven market by varying fixed-tilt orientation, module types, and installed DC capacity. East-West facing structures at 10° tilt angles, rather than the industry standard South-facing fixed-tilt installations, paired with high-efficiency modules, produced the highest NPV in spite of having higher capex. Techno-economic optimization benefits the developer at all stages, but especially early in development - including designing more appropriately to local conditions and constraints, easing the permitting process through reduced design changes, more accurate energy yield analysis for PPA negotiations, and maximizing project value throughout development.