The Brattle Group has released a study that says utility-scale projects are more cost-effective than distributed solar.
The report, which was prepared for First Solar, compares the generation cost of 300 MW of utility-scale solar with 300 MW of solar spread over 5 kW residential systems in the Xcel Energy Colorado service area.
The group used five scenarios based on different projections of what the investment tax credit will be in 2019. The key finding of the analysis was that the projected 2019 utility-scale PV power costs will range from $66/MWh to $117/MWh across all scenarios, while projected power costs for a customer-owned PV system, such as a rooftop array, will range from $123/MWh to $193/MWh.
The lower cost is important not only for solar development, but also for meeting environmental requirements, the report noted. ‘With the likely onset of new state greenhouse-gas savings targets from pending [Environmental Protection Agency] rules, the options for reducing carbon emissions and the costs of achieving them will take on an even greater importance,’ the authors wrote. ‘Simply stated, most of the environmental and social benefits provided by PV systems can be achieved at a much lower total cost at utility scale than at residential scale.’
That's good news not only for solar developers, but also for the environment, says Peter S. Fox-Penner, one of the study's authors and a principal at The Brattle Group. ‘We have the imperative to decarbonize our power grid to meet the challenge of climate change and also reduce other forms of emissions and reduce water use, and renewable energy does both of those,’ he says. ‘The cheaper renewable energy is, the less expensive it will be to save the climate and improve our health.’
In fact, when The Brattle Group presented the findings of the study in October at a breakfast meeting, most of the attendees were representatives of environmental organizations.
‘They had very thoughtful questions and observations,’ Fox-Penner says. ‘Some of them actually had looked into this question and had already understood that large-scale solar was significantly cheaper than small-scale solar.’
One topic that came up during the presentation was transmission costs. The report noted that one advantage of residential-scale solar is that generation is closer to the load and reduces transmission losses. The authors assumed the reduction in transmission losses is approximately 3% and concluded that utility-scale PV's transmission losses cost about $564,000 per year. However, though rooftop PV saves transmission costs, the report noted that fuel costs will be lower with utility-scale PVs – on the order of $6.2 million per year.
Fox-Penner says the environmentalists were surprised that the avoided transmission costs were much less than the savings in large-scale solar. ‘That was a topic of substantial conversation,’ he says.
Another topic was land use. Julie Falkner, senior director of renewable energy for Washington, D.C.-based Defenders of Wildlife, noted at the presentation that building solar projects on existing buildings would disturb wildlife less than would building a new solar array on a tract of land. Of course, adding solar to an existing structure is not always feasible, but wildlife should be taken into consideration when building solar projects on public lands.
‘We recognize that in order to achieve carbon reduction, there is a need for some utility-scale renewable energy,’ Falkner says. ‘While we want to see carbon reduction, we want to ensure our wildlife heritage can coexist with that and will persist into the future.’
The organization works with federal and state agencies to shape policies for renewable energy development. Defenders of Wildlife advocates ‘smart from the start’ development, which includes conducting environmental reviews to lessen the impact on wildlife and locating projects in areas with little habitat value.
‘We continue to work on efforts to try and figure out what are those low-conflict areas,’ Falkner says. ‘For wildlife, there are things like habitat, breeding ground, migration corridors and avian issues.’
Fox-Penner says The Brattle Group is working on other studies that are somewhat related to the solar costs question. ‘There is much research and analysis going on that dives deeper into this – into the whole question of how you balance out large-scale and small-scale solar and how you decarbonize the grid,’ he says.
The report, ‘Comparative Generation Costs of Utility-Scale and Residential-Scale PV in Xcel Energy Colorado's Service Area,’ is available here.
Nora Caley is a freelance writer based in Denver.