Price per watt, or $/W is a common way to compare the capital costs of various forms of electricity generation. It refers to the number of dollars one would have to spend to buy a machine capable of producing one watt of electricity. It is calculated by dividing the total project capital cost by the amount of peak power or watts-peak (Wp) it can produce.
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Installation costs
Coal power plants are generally one of the least expensive sources of electricity by this measure, at a construction cost around $2.10 a watt. Large hydroelectric systems can be even less expensive by this measure; the Three Gorges Dam is reported to have cost ¥180 billion (US$26 billion), about $1 a watt, but actual costs are widely believed to be much higher. Solar panels are currently selling for as low as US$0.70 per watt (7-April-2012) in industrial quantities; the balance of system costs (inverters, racks, wiring, marketing) made the median price in 2011 of large (>100 kW) systems $2.60/watt in Germany and $4.87/watt in the US. The price difference between German and US photovoltaic systems was analyzed in 2013 by Lawrence Berkeley National Laboratory. Large wind turbines cost about $2 a watt. Natural gas-fired peaking power plants are around $1 per watt ($1,000/kW) of electrical capacity.
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Capacity factor
Capacity factor is actual power produced yearly, relative to what would be produced if the system produced full power all year long. The cost of electricity produced depends also upon how much energy each installed watt produces over the course of a year. Coal, gas and nuclear plants require downtime for maintenance; nuclear plants have to shut down for refueling; dams do not always have enough water; wind does not blow steadily; and the sun does not shine 24 hours per day. When comparing price per watt, capacity factor should be considered in the overall cost comparison. For instance; if the cost of solar is $1 per watt, when including an average capacity factor of approximately 20%, this cost rises to $5 per watt when compared to a hypothetical source that produces energy consistently.
Wind
As of the end of 2015, the US had 74.5 gigawatts (GW) of installed wind capacity. If maximum power had been produced 24 hours daily, all year long, 525,600 (60 x 24 x 365) gigawatt-hours (GWh) of energy would have been made. Actually, 140,000 GWh were produced, so capacity factor of US wind power was 27% (140/525).
Solar
In the US, photovoltaic (PV) panels will see an average of 4-5 hours per day of full sun, so the effective capacity of solar power generation is 4.5/24, or about 20%. In 2011, statistics of the Solar power in the United States showed that US installed solar power, PV and thermal, totaled 4.9 GW, which produced 7454 GWh of energy. If the sun were always overhead, the installed capacity of 4.9 GW would have produced 4.9 x 24 x 365=42924 GW hours, so the actual production was 18%.
Capital costs
The capital costs are not the only determinant of the cost of the electricity produced. A coal plant needs to burn coal to produce power (a limited resource). Maintenance, replacement, fuel costs and capacity factor all affect the cents per kilowatt hour of the power plant's delivered electricity. Also, liability, the harms done by that mode of power generation, are not included. "Externality and insurance costs of energy sources" became in the 2010s recognized as equivalent to fuel costs as a decision factor, driving such decisions as Japan's decision to phase out nuclear power in 2012, and the shift off coal as the dominant form of electricity generation in the US. (See the section "Externality and insurance costs of energy sources" in the article cost of electricity by source which deals with these issues in depth).
Because of differing accounting treatment of liabilities and fuel pricing, the cost of electricity by source can vary widely even for the same type of source.
Electricity pricing
Electricity pricing is also highly regulated in most places in the world, and the ability to recover costs can likewise affect the decision on what type of plant to build. A preference for cheaper, dirtier fuels would be expected, for instance, if the cost of more expensive fuels could not be recovered by the power plant operator.
Source of the article : Wikipedia
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