For the first time in 2023, solar energy accounted for more than half (52%) of new U.S. grid capacity, with 35% coming from utility-scale solar energy and 17% from distributed energy.

The findings were published in the Utility-Scale Solar 2024 report by Lawrence Berkeley National Laboratory.

The Berkeley report considers projects of 5 MW and above as utility-scale solar.

The US commissioned 221 new utility-scale solar projects in 2023, totaling 18.5 GW, a 78% increase from the 153 projects commissioned in 2022, which totaled 10.4 GW.

Solar largest contributor

Solar has accounted for more capacity since 2021 than any other power generation source. Contributing more than 40% of capacity additions each year, more than 30% in seven of the last eight years, and more than 20% in each of the previous 11 years.

Battery storage continues to expand, with 6.9 GW of storage added to U.S. grids in 2023, up from 4.6 GW in 2022 to 3.9 GW in 2021.

Across the U.S., the share of solar power generation was 5.6%, reaching 28% in California and 15% in Nevada, Massachusetts, Vermont, and Hawaii.

New utility-scale solar projects were built in the eastern Midwest, the mid-Atlantic and southern U.S. Fixed-tilt projects were built on challenging sites, and tracking projects were built in high-latitude states. However, due to falling upfront cost premiums for trackers, 96% of the projects had single-axis tracking systems.

Fixed-tilt PV was primarily relegated to lower-insolation sites, while tracking PV was increasingly pushed into those same areas.

Batteries were added to the existing 15 solar projects and 37 new solar projects with storage. Solar-rich California added the most storage capacity (1,657 MW), followed by the non-ISO West (1,046 MW).

States deploying solar

Texas led the nation with a 4.3 GW capacity. California’s utility-scale solar growth accelerated in 2023 to 2.6 GW, Florida (1.8 GW), Ohio (0.9 GW), and Wisconsin (0.8 GW).

The Inflation Reduction Act offers a tax credit benefit for new solar projects in “energy communities.” These are areas with employment or tax revenue from coal, oil, and natural gas, greater unemployment than the national mean, a closed coal mine or coal power plant, and contaminated properties (brownfields).

The study found that 49% of new solar capacity was built in energy communities. On average, projects developed in energy communities were $0.22/W_DC cheaper than similarly designed projects outside of energy communities.

Solar Costs

Crystalline silicon modules led the market in large-scale solar projects, comprising 72% of newly added capacity in 2023, while thin-film modules reached an annual deployment of 5 G.W. or 6.3%.

The cost of installing large-scale solar projects fell by 75% in 2023, from $1.56/W_AC in 2022 to $1.43/W_AC in 2023. However, tracking projects were more expensive than fixed-tilt projects. By 2023, 96% of all new capacity used trackers, and tracking projects ($1.4/W_AC or $1.1/W_DC) were slightly more expensive than fixed-tilt projects ($1.2/W_AC or $0.9/W_DC).

Solar projects with more than 50 MW capacity costed 13% less than projects of 5-50 MW in size. Project cost varied between projects larger than 50 MW at ~$1.4/W and $1.6/W for smaller projects.

Operation and maintenance (O&M) costs decreased by 73% but have been on the same trend for the last three years. Median O&M costs for the cumulative sample have declined from about $39/kW-year or $22/MWh in 2012 to about $11/kW-year or $7/MWh in 2023.

LCOE and PPA Prices

The average levelized cost of energy (LCOE) for utility-scale PV fell by 80%, while the average LCOE increased slightly among projects coming online recently, from $45/MWh in 2022 to $46/MWh in 2023. Lower capital costs, operating expenses, and increased project design life drove this trend.

Large projects in the non-ISO West, ERCOT, and CAISO had the lowest cost ($37, $41, and $42/MWh), while smaller projects in ISO-NE and NYISO had the highest.

The generation-weighted national average of power purchase agreement prices was $35/MWh in 2023, considerably higher than 2019’s $23/MWh low. The study also found that solar PPA prices have largely closed the gap with wind, and some contracts are competitive with levelized gas price projections.

High interest rates leading to higher financing costs, long lead times for high- and medium-voltage equipment, equipment supply constraints, lead times, long interconnection and permitting timelines, and high demand from corporations and utilities in advance of 2025 and 2030 emissions targets are some of the factors for rising PPA prices over the years.

Solar curtailment

The rate of curtailment was much higher in the ERCOT (7.3%) than in the CAISO (3.0%) region, even though solar’s penetration rate was far lower in the ERCOT (7%) than in the CAISO (27%) region.

Most of ERCOT’s curtailment occurred in western Texas, driven by transmission/pipeline congestion and excess local electricity.

PPAs have started to exceed the wholesale market value in CAISO, MISO, PJM, and NYISO, indicating potential future economic challenges based on solar’s wholesale market value. In contrast, solar energy offered more significant value than what was paid for in PPAs in ERCOT and SPP in 2023.

On average, projects built in 2022 delivered $15/MWh more wholesale market value in 2023 than their LCOE.

Solar plus battery hybrid Projects

Deployment of PV-battery hybrid projects set a record with 5.3 GW greenfield and retrofit capacity in 2023. There were 37 newly built hybrid power projects with 4.4 GW of solar, while storage retrofits to existing standalone solar projects declined slightly, with 15 projects totaling 0.9 GW.

Greenfield PV+ battery project costs fell 15% in 2023. Average combined costs fell by 11% from $2.68/W_AC-PV in 2022 to $2.24/W_AC-PV in 2023.

PPA prices for solar plus battery hybrid power projects nearly doubled. The rate of hybrid power PPA price growth exceeds that of standalone solar, which saw increases of ~50-65% since 2020/2021. When normalized for the PV project size, a larger capacity battery adds more to a PPA price than a smaller battery.

A report by Lazard published in June 2024 found that the low ends of the LCOE for renewable energy technologies in the U.S. have increased for the first time, driven by persistent cost pressures such as high interest rates.

At the end of 2023, 1,085 GW of solar energy was in the queue, with 312 GW joining the list in 2023. Of the 1,085 GW, 571 GW included a battery in a solar hybrid configuration. Solar (both in standalone and hybrid) was the largest resource within these queues, followed closely by storage, with wind and gas a distant third and fourth.

According to a report by the National Renewable Energy Laboratory, solar is expected to reach 1,090 GW by 2050, representing 10x capacity growth.