The price of solar power is a big concern presently. FIT price for solar in 2018 is forecasted to be under \20/kWh. Many of concerned are watching closely. In recent years, official announcement of FIT has become a big event in February, but seemingly, they are too affected by the official
price near future.
What is important for solar business’s development is mid-to-long term value of solar power.
To correctly evaluate the value of power generated, daily price in JEPIX is extraordinarily important. Of course, fluctuateing by season & time, it is transacted between \12～\20/kWh in daytime on weekdays in July 2017. In May, caused by relaxed supply & demand, it is between \8～\11/kWh.
JEPIX price is determined by availability of fuel power plants. Specifically, the most inefficient fuel power plant which actually generates on each time substantially determines the price.
There are mainly three factors that determine the price.
First, fossil fuel cost, actually LNG. The fuel of marginal power plant differs by zone & time, but at the time during which solar power generates, or from morning to evening, presently it will be LNG plant. Therefore, cost of LNG is the important factor that determines JEPIX price.
Second, thermal efficiency of marginal plant. Recently power utilities promote renewal of fuel power plants, so in general, thermal efficiency is inclined to go up. Therefore, from conventional power plants(41%～45%) to Combined Cycle(47%), furthermore, Advanced Combined Cycle(54%～57%) seem to be marginal plants.
Third, the operation of nuclear and coal plants. For example, when nuclear plants re-operate, thermal efficiency increases so much. Recently, after Takahama No.4 of Kansai Electric Power Co re-operates on May 17 in 2017, JEPIX price decreased by \0.8～\1.0.
These factors above are so fluctuating that we cannot predict them all accurately. Calculated on certain conditions, present cost of LNG power plant is \9/kWh※.
※450$/t(LNG rice)×\110/$÷15,170kWh/t÷40%(thermal efficiency)÷95%(plant efficiency)=\9/kWh
Will solar power price converge at this level?
No way. We will consider the reason next time.