US solar plant costs fall another 30 per cent in just one year

PV Magazine

Only ten days before the U.S. solar industry finds out whether or not it will have to deal with trade remedies imposed by the Trump Administration, the U.S. Department of Energy’s National Renewable Energy Laboratories (NREL) put out a new report showing new low costs for solar in the first quarter of 2017.

U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017 shows PV system prices falling roughly 30 per cent in only one year for utility-scale solar, to an average price of $1.03 per watt-DC for fixed-tilt systems and $1.11 per watt for systems with tracking.

This is a dramatic slide in prices even for an industry that has been greatly successful in reducing prices, and appears to come mostly from the collapse in PV module prices over the same period.

This in turn is largely due to a mismatch between supply and demand in China, which has caused significant pain for module makers, and it is not coincidence that there is currently a case before the U.S. government on potential trade protection for U.S. solar cell and module makers.

NREL has estimated that this translates to levelized costs of electricity from $50-66 per megawatt-hour (MWh) for fixed tilt systems and $44-$61/MWh for tracking systems, excluding the effect of the U.S. federal Investment Tax Credit (ITC).

These prices show that utility-scale solar has already beaten the 2020 targets set by the U.S. Department of Energy’s (DOE) SunShot Initiative, which has led the new head of the DOE’s Office of Energy Efficiency and Renewable Energy (EERE) to shift the focus of SunShot away from cost reduction and towards integration of high levels of renewable energy (please see our interview with EERE head Daniel Simmons here).

As the bulk of cost reductions were driven by the module price collapse, prices in other sectors have not fallen as quickly. NREL found that prices for commercial and industrial (C&I) systems fell a still-impressive 15% over the last year to an average of $1.85 per watt-DC, while prices for residential systems fell only 6% to $2.80 per watt.

This means LCOE of $92-120/MWh for C&I systems, and $129-167/MWh for residential systems. This is still well below SunShot goals for unsubsidized solar and given the current rate of price declines residential solar may not meet its SunShot target in 2020.

However, when the effect of the ITC is calculated, such costs fall significantly, putting the average cost of residential PV below $100/MWh.

NREL notes that this points to the difficulty in reducing non-hardware “soft” costs, which have increased to two-thirds of the cost of residential systems and 59% of C&I systems.

Source: PV Magazine. Reproduced with permission.

Tune into the latest episode of Energy Insiders with Giles Parkinson & David Leitch