EIA: Solar And Wind Farm Construction Costs Fell In Recent Years

Based on U.S. Energy Information Administration (EIA) survey data for new, utility-scale electric generators (those with a capacity greater than 1 MW), capacity-weighted average construction costs for most generator types, including solar and wind power, have fallen in recent years. In a new analysis, EIA says annual changes in construction costs include the effects of differences in the geographic distribution of installed capacity between years, differences in technology types, and other changes in capital and financing costs.

EIA explains it began collecting data on construction costs for new U.S. utility-scale generators installed in 2013. The data for each year reflects projects completed in that year. Because power plants are often constructed over several years, the agency notes reported costs are not necessarily indicative of the cost of a project initiated in that year. Government grants, tax benefits and other incentives are excluded from these costs.

EIA also points out construction costs alone do not determine the economic attractiveness of a generation technology. Other factors such as fuel costs (for generators that consume fuel), utilization rates, financial incentives, and state policies also affect project economics and, in turn, the kinds of power plants that are built.

In 2015, wind, natural gas, and solar were the most commonly added capacity types in the U.S., adding 8.1 GW, 6.5 GW, and 3.2 GW, respectively. In the case of wind and solar, EIA says almost all of these additions (98% and 91%, respectively) were at new plants, as opposed to new generators at existing plants.

For natural gas, about 60% of the capacity added in 2015 was new generators at new plants, and the remaining 40% were new generators at existing plants. For other fuels such as hydro and petroleum liquids, which had relatively little capacity added in 2015, almost all of those additions were located at existing plants. Construction costs for battery storage units are available for the first time in 2015.

According to EIA, the average construction cost of utility-scale solar photovoltaic generators declined 21% between 2013 and 2015, from $3,705/kW to $2,921/kW. EIA notes more than half of the utility-scale solar PV systems installed in the U.S. track the sun through the day, and in general, those systems cost slightly more than those installed at fixed angles. Construction costs also differed slightly by technology type, with crystalline silicon systems (73% of the 2015 installed solar PV capacity) costing slightly less than systems with thin-film panels made using cadmium telluride.

EIA says the average cost of installing wind turbines was $1,661/kW in 2015, a 12% decrease from 2013. Costs tend to be lower for larger wind plants, as plants above 100 MW averaged lower costs than those below 100 MW, likely reflecting economies of scale, the agency adds.

More information is available in EIA’s construction costs data, which is based on data collected through EIA’s Annual Electric Generator Report. The agency says construction costs for U.S. generators installed in 2016 are expected to be available in January 2018.


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