New reports from the U.S. Department of Energy (DOE) show that the costs of solar keep declining as the renewable energy becomes an increasingly bigger part of the country’s power landscape.
A study from the DOE’s National Renewable Energy Laboratory (NREL) says the modeled costs to install solar PV systems continued to decline in the first quarter of this year in the U.S. residential, commercial and utility-scale sectors. The new statistics come shorty after reports from another national lab, the Lawrence Berkeley National Laboratory, verified that the U.S. saw record-low solar prices in 2015.
According to NREL, lower module and inverter prices, increased competition, lower installer and developer overheads, improved labor productivity, and optimized system configurations have driven the cost reductions.
“The continuing total cost decline of solar PV systems demonstrates the sustained economic competitiveness of solar PV for the industry across all three sectors,” said NREL Senior Analyst and Project Lead Ran Fu.
NREL says the modeled costs for the first quarter of this year were down from the fourth quarter of 2015 by 6%, 4%, and 20% in the residential, commercial, and utility-scale sectors, respectively. The costs fell to $2.93/W DC for residential systems, $2.13/W DC for commercial systems, $1.42/W DC for utility-scale systems for fixed-tilt utility-scale systems, and $1.49/W DC for one-axis-tracking utility-scale systems.
“Such accurate cost benchmarks are critical for tracking the progress of PV systems toward cost-reduction goals. Because our cost model categorizes hardware and non-hardware costs with a high degree of resolution, the results can also be used to identify specific cost-reduction investment opportunities and assess regional levelized costs of energy,” Fu said.
NREL says the new results also highlight the importance of non-hardware, or “soft,” costs. As the pace of cost reductions for modules and inverters has slowed in recent years, the proportion from soft costs – such as labor, overhead and permitting costs – has grown, according to NREL. In the first quarter, soft costs accounted for 58% of residential system costs, 49% of commercial system costs, and 34% of utility-scale system costs.
The national lab explains that it uses a “bottom-up” modeling method to construct total capital costs by quantifying the typical cost of each individual system and project-development component, largely through dialogues and interviews with solar industry collaborators. The results represent total installed system costs from the perspective of the PV project developer or installer, including net profit in the cost of the hardware. The benchmarks are national averages weighted by state installed PV capacities.
In addition, the DOE has released a separate report that highlights the accelerated deployment of clean energy technologies, including solar. (The other technologies covered in the report are wind turbines, electric vehicles and LEDs.)
According to the annually updated report, dubbed “Revolution…Now,” utility-scale solar PV represented 15% of all newly installed electricity generation capacity in 2015, and utility-scale PV generated enough electricity to power over 2 million homes. The report also says distributed solar PV has reached 1 million rooftop installations on homes and businesses after experiencing a 54% reduction in overall costs since 2008.
In total, the report says solar and wind power account for two-thirds of all new, U.S. installed electricity capacity.
Moreover, the report notes the increased deployment of clean energy technologies is already revealing real-time benefits: For example, solar power saved 17 million metric tons of CO2 in 2014 – leading to reduced water consumption and decreased air pollution that equate to nearly $700 million in environmental savings.
The DOE says its continued investments in the research and advancement of the clean energy technologies highlighted in the report have contributed to price reductions from 40% to as high as 94% since 2008.
“This report is further proof that our commitment to clean energy and American innovation can lead to steep cost reductions and sharp increases in the deployment of advanced technologies,” said Energy Secretary Ernest Moniz.
He added, “We need to continue pushing the innovation agenda that leads to these kinds of dramatic cost reductions for all low-carbon technologies and increases America’s competitiveness and independence in the global clean energy economy.”
Chart courtesy of NREL