“PV compares favorably to just the fuel costs of natural gas-fired generation.”

Earlier this week, Lawrence Berkeley National Labs released a report on the state of utility-scale solar installations in the US. Just about everything in the report is remarkable for anyone who’s followed the solar market closely. Over the past five years, prices have dropped by half, while the capacity factors are approaching that of wind. As a result, the most recent installations are offering power at prices that are competitive with natural gasnot the cost of the plant and fuel, but the fuel alone.

Utility-scale solar

In 2014, utility-scale solar projects added about 4GW of capacity to the US grid. Slightly more than 6GW of solar capacity was added in total, with the remainder split between commercial and residential installs. Due to the rapid drop in prices, the majority of this capacity is in the form of photovoltaic panels.

One of the issues with utility-scale solar has been that some of the earlier plants were built outside the Southwest. This has meant less overall generation and a lower capacity factor, meaning that the panels are only producing power at a fraction of their maximal rate. Both of these raise the cost of the electricity generated. But installations in the Southwest have boomed to over 90 percent of the total installed hardware. This has capacity factors up and costs down. More recently, large projects have been getting more popular in the Southeast, which may change this dynamic in the future.

For now, the total capacity factor is about 27.5 percent of what the panels are rated for. But the best projects see capacity factors of 35 percentsimilar to a typical windfarm in the US.

Meanwhile, the cost of the hardware and greater experience with maintenance have both dropped the cost of power produced from these plants. In the 2007-2009 period, the typical cost was about $6.3 per Watt of AC power; in 2014, that had dropped to $3.1/WAC. The lowest-priced projects (bottom fifth) are now coming in at $2.3/WAC. This price includes a 30 percent investment tax credit, which is due to drop to 10 percent in 2017.

If costs continue to come down in the intervening years, however, this change may not have as dramatic an impact as it might otherwise. But lots of projects are being put in the pipeline now to take advantage of it, which will likely drive a boom in solar installs over the next several years. Right now, the DOE expects the change to cut solar installs in half in 2017.

Buffalo, New York SolarCity Factory

Regardless of the cause, the low costs have allowed power purchase agreements (PPAs) in the Southwest to reach unheard of levels: “Some of the most-recent PPAs in the Southwest have levelized PPA prices as low as (or even lower than) $40/MWh (in real 2014 dollars). At these low levelswhich appear to be robust, given the strong response to recent utility solicitationsPV compares favorably to just the fuel costs (i.e., ignoring fixed capital costs) of natural gas-fired generation.”

For a technology that was recently one of the most expensive forms of electricity generation on the market, it’s a remarkable turnaround.

 

by John Timmer via arstechnica.com

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