“When Apple announced to the world last month that it would be spending an eye-popping almost $850 million to buy solar power from a solar farm to be built in central California, clean energy fans naturally cheered. But there was another common reaction by industry watchers, too: confusion,” Katie Fehrenbacher reports for Fortune.
“But on the surface of Apple’s solar deal, the few financials they released just didn’t look all that competitive compared to the latest low cost solar panel farm deals that are being done,” Fehrenbacher reports. “But the key factor that has been overlooked in these calculations is that, while Apple and PG&E are splitting the solar power from the farm almost down the middle, PG&E’s deal is actually only for 15 years. Apple’s is for 25.”
“After 15 years, Apple plans to buy up the solar power from the entire 280-megawatt site,” Fehrenbacher reports. “So any financial calculations need to incorporate the fact that, in the last 10 years of the deal, Apple will be getting double the electricity.”
Read more in the full article here.
MacDailyNews Take: So, yes, Apple is as shrewd as ever.
Related articles:
Apple’s $850 million solar plant investment rockets it to first place among U.S. corporations – February 12, 2015
Apple to build new solar farm, and some greens hate it – February 11, 2015
Tim Cook: Apple to build $850 million solar farm; Apple Watch will surprise everyone – February 10, 2015
I guess “Industry Watching” is what analysts do in their spare time.
Battery backup! you need to store the power for later use. Please see Tesla battery backup program via Solar City.
What is it going yo cost to buy up the rest in 15 years?
This solar farm is interesting. I think it’s more an environmental PR play than it is anything to do with money or otherwise. The upfront investment is massive, the power output marginal. Imagine dumping almost $1 billion into computers today for your company. Those computers become obsolete quickly. This is one major problem here, and solar is just in the beginning of Moore’s Law like advancement.
Solar panels are still inefficient, barely cracking 20% efficiency, and they degrade each year by about 1% or more. In sunny areas, the degradation is higher. Haven’t even got to all those batteries yet…
Apple wants to tout environmentalism, the problem here is the adverse impact on land, as they had to clear out a massive land area for the solar farm. If the panels were twice as efficient, they’d need half the space. In about 5-10 years, panels will push 50% efficiency (a group of researchers just cracked 45%+ last year). Then it starts to make more sense to do stuff like this.
As it is, it’s grandiose and a PR move.
The wholesale cost of power can run anywhere from about $100 to $300 per megawatt hour. That’s a low end of about $28,000 per hour for this plant. If it operates 12 hours a day that’s $336,000 per day. That’s a little over $122 million per year in gross wholesale electricity production, assuming the lowest expected pricing. Avoided cost for Apple is the retail cost of power wherever Apple uses this power.
And BTW, I doubt they are feeding all of this power to a battery bank. There may be some batteries involved, but basically what’s required is a very large DC to AC inverter that is synched to the grid (matched voltage and phase angle) so that the power is used as it’s generated.
Your cost analysis is overly simplistic. First, you assume that it actually CAN sustain such power output 24 hours per day. Solar power generation is completely dependent on the sun. The less sun, the less power generation. At night it’s pretty much a dead duck. Solar panels degrade like batteries. They also need to be maintained, cleaned, fixed, etc. All running fixed costs.
Apple is overcompensating here where it sells power back into the grid, then uses the grid when it’s net energy negative.
Apple also uses biogas fuel cells for power generation.
The real issue I have is the impact on land and the local environment. In 25 years, we’ll look back at these huge solar farms and marvel at the destructive nature of them. The negative impact on land. Their ugliness. The fact that land is precious and expensive, and other companies doing this could have an impact on increasing land prices. Etc. etc.
“Apple’s solar farms at one point were controversial both outside of Apple and likely inside, too. The solar farms use a large amount of land, which had to be razed and prepared for the panels. Back in 2011, when Apple was clearing the land, some local residents complained about burning foliage and smoke blowing toward their houses.”
After 30 years in the power generation industry doing things like designing power plant controls I think I know what I’m taking about. Yes, I used simplified, ballpark numbers. That’s because they vary based on region and economy. I did specify gross generating revenue, 12 hours days (not 24 hour days), and I’m quite familiar with all forms of power generation, their strengths and weaknesses.
Apple could have other reasons besides cost and reliability for building its own plants. Have you ever heard of power quality? It’s important for server farms and chip making. Look it up.
“[Apple’s] 10 mw station in NC will generate about 5,000 pounds a year of toxic and hazardous solid waste”.
And:
“This is a massively poor deployment of capital to make dirty higher cost power.
The CO2 footprint is no better than fossil fuels, and about 20% higher than a CCHP system would produce.
The thermal pollution from unused waste heat was clearly noted by this detailed article.
The VOC emissions are much larger than a much lower cost combined cycle natural gas turbine plant.
Massive land footprint…guessing the land was farming before.
Massive amounts of government welfare used.
More taxpayer dollars taken from everyone to give huge tax write offs to an already filthy rich company.
What does all this ‘green technology’ do for apple’s energy security?
Does it replace emergency backup generators or stay up when the next ‘Mann-made’ CO2 driven super dooper hurricane takes the grid down?
I note there was no mention of ROI, probably means it is a money loser, but for the massive tax benefits.
Inquiring minds want to know.”