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Levelized Cost of Energy (LCOE) calculations for large-scale PV plants are usually performed assuming ideal active-power-only operation. However, modern PV plants must increasingly contribute reactive power to support grid stability and to comply with national grid codes. This hidden requirement impacts both the active energy delivered and the long-term project revenue.
SgurrEnergy, founded in Glasgow in 2002, is a global renewable energy consultancy and engineering firm that has delivered over 160 GW of projects across 55+ countries, supported by a 200‑plus‑strong multidisciplinary team. Specializing in solar, wind, hybrid, storage, hydrogen, and marine energy, they offer end‑to‑end services at any stage of a project's life cycle.
Location: Pune, Maharashtra, India
Year: 2022
Ensuring accurate LCOE analyzes to determine costs of energy production
1. Evaluating the impact of reactive power obligations on LCOE
Standard LCOE methods ignore the reduction in active energy caused by inverter reactive power output.
2. Modeling multiple inverter operating conditions
Grid codes require PV inverters to operate at non-unity power factor, reducing active output and affecting revenues.
3. Determining the best technical–economic configuration
Finding the optimal balance between reactive power delivered by inverters and/or compensation devices such as capacitor banks, STATCOMs or SVCs.
4. Quantifying real energy losses for bidding
A difference of only $2–3/MWh can determine whether a bid wins or loses a utility-scale solar tender.
Which solutions did they choose?
ETAP power flow
Used to model the active and reactive power output of a 140 MW AC solar PV plant under multiple operating scenarios.
ETAP digital twin & scenario analysis
Each case was evaluated under identical module, inverter, civil and electrical costs, isolating only the impact of reactive power.
LCOE evaluation
Annual P50 yields were calculated across 25 years for all scenarios.
Why do they use ETAP?
Clear understanding of how PF requirements affect revenue
ETAP quantified the reduction in active generation and the associated financial loss.
Ability to compare inverter-only vs. capacitor-assisted compensation
The customer could see how small changes in PF dramatically impact LCOE and project competitiveness.
Scenario-based planning for grid-code compliance
ETAP enabled evaluation of configurations that satisfy reactive power obligations at minimum cost.
Accurate modeling of PV plant electrical behaviour
Each case was built with identical physical parameters, isolating the effect of reactive power for a fair LCOE comparison.
Support for winning bid strategies
The study demonstrated that appropriate compensation could recover $2.45/MWh otherwise lost.
What do they think about ETAP?
ETAP allowed us to accurately evaluate the performance and economic impact of reactive power support on a 140 MW PV plant. The results clearly show how inverter operating conditions affect energy yield and revenue, and how capacitor compensation reduces LCOE back toward ideal values.By Mr. Mohammed Usama Shaikh, Electrical Design Engineer at SgurrEnergy
High penetration of solar PV energy fed into an electrical grid brings its share of challenges making the grid volatile which requires stabilizing variable energy. This presentation addresses one such challenge, of voltage profile improvement with reactive power compensation at the point of interconnection. A solar PV plant is rated in terms of power (either AC or DC) and is typically not rated for their reactive counterparts (MVAr). IEEE 1547/UL 1741 compliant inverters will typically not have reactive power capability and operate with a unity power factor. Although modern inverters have a capacity to supply reactive power in the range of +0.9 lead/-0.9 lag, the PV plant is rated based on the AC power supplied by the inverter at unity PF. Operational data sourced from various plants in India suggest that a typical utility-scale PV plant provides reactive energy in the range of 7% to 10%. This leads to an inherent error in the per-unit cost calculation, as when the inverter providing the reactive power, the active power is hampered. This paper showcases a cost-to-benefit analysis of various scenarios, such as unity power.
GridCode
Power Systems Analysis
Load Management System
Grid Code Load Flow