Cost of carbon avoided

Arizona's main power supplier, Arizona Public Service, unveiled plans to build the world's largest solar plant outside Phoenix.

The plant will provide electricity to 70,000 homes using solar heat, as opposed to panels, and help the utility to meet required goals for renewable sources of supply.

APS will pay $4 billion over 30 years for the supply, or $133 million annually for 280 megawatts.
Alexis Madrigal makes some extrapolations about the price and finds this a striking deal for solar power, priced below the generally assumed minimal cost of using the sun for electricity.

Madrigal puts the price at about 15 cents per kilowatt, or about 50 percent higher than the average U.S. rate, although Arizona rates are lower.

A different way to look at this is the cost of carbon dioxide emissions avoided. This calculator from the National Renewable Energy Laboratory suggests about 400,000 tons of carbon will be avoided. Figuring that the annual payment of $133 million is a 50 percent increase over alternative carbon-intensive power, that works out to a little over $100 per ton of carbon avoided.

Carbon taxes and cap-and-trade plans being kicked around in Washington put the cost of carbon anywhere from $12 to as much as $40, so in those terms this type of plant still isn't competitive. However, its close to a carbon capture project in the U.S. Midwest aims to sequester 1 million tons for about $86 each and its well below a UK parliamentary estimate that the social cost of carbon is about 70 pounds per tonne, or something around $125/ton.