Long doubted in many quarters as a competitor with conventional sources – and even with wind power – U.S. government scientists say new research shows that solar is making up ground, both at utility scale and on rooftops.
For example: “The price of electricity sold to utilities under long term contracts from large-scale solar power projects has fallen by more than 70 percent since 2008, to just $50 per megawatt-hour on average within a sample of contracts signed in 2013 or 2014 and concentrated among projects located in the southwestern United States.”
So says Mark Bolinger in a statement accompanying the release of three new solar-related reports by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab).
Those are prices, Bolinger and his colleagues noted in their report, that are “competitive with wind power projects in that same region” – and solar, by producing during high-demand afternoon periods, has a “time of delivery pricing advantage over wind” that enhances its value in California.
The price of building big solar did begin to level off in the past year, the researchers said, but it was still down from $5.80 per watt installed in the 2007-2009 period to $3.70 in 2013.
For residential and commercial systems, the news was similar – installed prices in 2013 fell by 70 cents per watt, or 12-15 percent, the researchers said in a second report. This slide came even as a free-fall in module prices largely eased. Increasingly, researchers said, cost reductions are coming in “softs costs” – marketing, customer acquisition, labor, permitting, etc. – which have been a target of the Obama administration with its SunShot program.
“The fact that system prices have continued to fall, despite the flattening of module prices, suggests that the various initiatives targeting soft costs are beginning to bear fruit,” report co-author Naïm Darghouth said in a statement.
The falling price of rooftop solar bodes well for the future of distributed power, but right now most PV growth in the United States is coming at utility-scale plants.
The Berkeley Lab researchers defined utility-scale as ground-mounted systems larger than 5 MW in capacity. They said that as of the end of 2013, there were 126 PV projects totaling 3,023 MW (AC) that were fully online. The Southwest dominates the category, with 86 percent of the capacity, led by California (48 percent), Arizona (19 percent) and Nevada (10 percent). In 2008, utility-scale plants comprised just 5 percent of annual U.S. PV installations, but in 2013 the number was 60 percent, the researchers said.
Various trends have been improving the economics of big solar, according to the new research. Increases in module efficiency, for instance, have allowed developers to use fewer modules “to reach a fixed amount of capacity (thereby saving on balance-of-system and land costs as well) or, alternatively, use the same number of them to boost the amount of capacity installed on a fixed amount of land.” As a result, “for PV more than for other technologies like wind power, efficiency improvements over time show up primarily as cost savings rather than as higher capacity factors.”
Lower module costs have also encouraged a key technical shift. Solar power plants produce electricity as direct current, which has to be converted to alternating current for use on the grid. “As module costs have fallen, projects have increasingly oversized the DC array relative to the AC inverter rating (boosting the ‘inverter loading ratio’ or ‘ILR’) as a way to enhance project economics (particularly with time-of-delivery pricing),” the researchers said in a presentation that accompanied the new report.
This can lead to some energy losses at peak production, since the inverters can’t handle the full output. But peak production can be extended on both sides of the output curve, and “extra output/revenue in shoulder periods outweighs losses from power limiting,” the researchers said.
