Work in progress
In the dazzling sunshine of June, the solar panels are being added one after the other to the fully-mounted steel support structure. The solar power plant, which is being constructed on the site of Dunamenti Erőmű and on the area of a former fish farm in Százhalombatta, is comprised of 280 W panels, similar to the ones used for small-scale household power plants.
There is a striking difference however, since the latter only needs 8 to 10 panels, while over 76,000 solar panels are being installed in Dunai Solar Park.
The investor is MET Dunai Solar Park Kft., 100% owned by MET Power AG, which also owns a majority stake in Dunamenti Erőmű Zrt. Construction works are executed by a foreign prime contractor with a considerable experience in the international market.
Power generation can begin at the solar park at the beginning of autumn the latest. The plant will produce about 25 GW electricity per year, and supply power to around nine thousand households. It will be one of Hungary’s largest solar power plants, but it is also worth putting the capacity of the investment in a different context. While the smaller unit of the Dunai Solar Park will have a peak power of 3.9 MW, a single cooling water pump of Dunamenti Erőmű, which has an overall performance of 794 MW, has a power demand of about 2 MW, MET Power Renewables Business Development Director Gábor Molnár explained, shedding light on the proportions of the project at the construction site.
Building a solar power plant on this plot had not been exactly obvious for MET before. Attracting and selling the unused areas surrounding Dunamenti Erőmű to companies producing high added value was also among the options we looked at. The project was green-lighted in 2016, and after the feasibility study was completed, the permitting process began in August. The last permit arrived in May 2017.
The launch of the investment coincided with the phasing out of the KÁT scheme and the revamp of the national renewable energy subsidy system, which triggered a surge of applications for the construction of solar power plants at the end of 2016. The increased workload of the energy authority and other competent authorities resulted in an extended permitting phase for MET as well.
“We were certain that we would like to get involved in renewable energy, just as we were aware that Dunamenti Erőmű had a capacity that could be utilised in other power generation projects as well. On top of that, we had an unused area of a significant size,” Gábor Molnár explained the background of the decision to build a solar power plant.
As for our choice of the site, there are no major differences with regard to irradiation between the potential solar power plant locations in Hungary. However, a grid connection point available nearby significantly reduces investment costs, and the area’s suitability for installation is also a key factor – for MET, the areas around Dunamenti Erőmű were ideal from both aspects. Although it is true, in general, in this industry as well that the larger the power plant the investor builds, the more profitable it will be, this statement does not hold water in every respect. And this is because connecting smaller power plants, with a capacity under 0.5 MW, to a network is significantly cheaper and simpler, since they can also be tied into a 20-kV power line.
The power generated by the solar park will be transformed from 20 kV to 120 kV in the central switchyard of Dunamenti Erőmű, while the next stop is the substation of the Mavir network; a one-time steam turbine connection point will serve to tie the generated power into the grid. Along with the construction of the solar power plant, the central transformer has been upgraded as well, in a manner that will allow it to serve future generating capacities.
According to MET, a further 5 MW capacity can be installed at several locations within the area of Dunamenti Erőmű, although the economics of these projects have not been confirmed yet.
It will look like this
Actual construction works started after the permitting process and the groundwork. This is when the plot was taken over by the prime contractor, set to construct the power plant on the area, engineered to guarantee proper drainage, in the following order of operations:
In fact, several elements of the process are executed concurrently, whose coordination comes down to good logistics. These work phases are followed by connecting the plant to the grid, the commissioning and a trial run.
The value of the investment amounts to EUR 25m (about HUF 8bn), HUF 5bn of which is covered by a 15-year project financing credit facility. It takes about ten years to recoup investments like this one. Investment cost structure in case of a renewable power plant is fundamentally different from that of a gas-fired power plant. Although landed costs of a solar power plant are higher per unit, operation costs are significantly lower, not least because there are no fuel costs.
Panels account for nearly 40% of the overall investment costs, while the development of the central transformer station also costs billions. Over the past five to seven years, the price of panels, which are the fundamental units and most important parts of photovoltaic power plants, dropped by over 50%. The price of inverters has also fallen in the past years, although to a lesser extent compared to the panels’.
The investment costs of solar power plants are currently decreasing, albeit less quickly than before. The trend is sometimes disrupted by steps like the import tariffs imposed on solar cells by the US at the beginning of the year, which triggered extensive stockpiling overseas, causing an increase in solar panel prices. The drop in the price of photovoltaic technology is not primarily due to the progress in technology but rather to the expansion of mass production and the roll-out and size-efficient concentration of production capacities in Asia, the Renewables Business Development Director of MET Power explained.
The polycrystalline solar cells installed in the Dunai Solar Park operate with a nearly 18 percent efficiency, which means that they utilise 18 percent of the solar radiation they capture. During our visit, the air temperature was around 30 degrees Celsius, which is slightly higher than the 25-degree defined as a standard test condition (STC) for solar power generation (the performance of the panels deteriorates by a few tenths of a percent per degree above that). On a scale of 1 to 10, the quality of the technology installed in the solar power plant would receive 9, Molnár said. Quality is a matter of optimisation, which depends on the results of the cost-benefit analysis. It would have been possible to purchase more expensive panels of a higher quality, but the current parameters offer the largest return.
Most of the parts of the power plant arrived from Southeast Asia, where the majority of the global production capacity is located; the panels came from China to Százhalombatta. The expected lifespan of the power plant is at least 25 years, during the first 20 years of which the contract pursuant to the mandatory off-take scheme (KÁT) will guarantee revenues. The life expectancy of the panels, which are the main parts of the plant, is expected to exceed these numbers, while the average lifespan of the inverters is ten years. According to the warranty agreement, the panels that need replacing will always be replaced with the most advanced and most efficient products of the manufacturer.
The structure was designed such that it requires the least possible external intervention. As far as physical protection goes, the solar power plant is separated from the surrounding, sparsely populated areas by a fence. Protection against lightning strikes are provided by lightning conductors densely mounted on the superstructure, while the surface of the panels offers protection against hail. Since we are talking about a rather passive system, where operation does not require special activities or costs, in line with common practice in the power plant sector, MET will outsource the management of the plant.
Besides some classic facility management responsibilities (like lawn mowing, security and surveillance, cleaning of panels), management will include the uninterrupted monitoring, the maintenance and the occasional replacement of technical equipment, although they will be mostly repairs under warranty. The plant will be remotely supervised and operated partly from Százhalombatta and partly from abroad.
MET is also studying the option to install an energy storage system adjacent to the solar power plant. The cost of the technology has been plunging dramatically, the price curve of lithium-ion batteries has started to look like that of the solar panels did ten years ago. The main purpose of storing electricity is to reduce load on the network by equalising consumption and renewable-based power generation, which has a changing daily curve. However, as long as power generators do not have to address this issue, and they are not motivated to deal with it, investing in this technology will not be worthwhile for them. Therefore, the first renewable power generators to find this matter relevant may be the wind power plants, which little by little are dropping out of the KÁT scheme.
After their permit that guarantees subsidised off-take tariffs expires, they will have to get along in the market, where they will also face the cost of balancing power as well. This applies to all market players, but this is much more of a problem and cost for plants using renewables that heavily depend on the weather than it is for a well-controllable gas-based power plant.
MET Group aims to construct solar parks in Hungary with a combined installed capacity of 50-100 MW, therefore Dunai Solar Park will also serve as a pilot project for further investments. Besides Hungary, the company is looking for possibilities to invest in solar power plants outside the country, in Central and Eastern Europe.