Utility-Solar System Costs Fell 82% in the Last Decade in the United States_ Report

Residential, commercial-rooftop, and utility-scale solar systems have witnessed a 64%, 69%, and 82% decline in costs since 2010, respectively, in the United States, the National Renewable Energy Laboratory (NREL) has said in a report.

Costs of solar systems

The price of a 100 MW fixed-tilt utility-scale solar system stood at $0.94/watt in 2020, an 80.21% decline compared to $4.75/watt in 2010. The price of a 100 MW one-axis tracker utility-scale system was $1.1/watt in 2020, an 82.15% decrease from $5.06/watt in 2010, with a 40% decline in its operation and maintenance (O&M) cost.

The report said that residential solar systems’ prices decreased from $7.53/watt in 2010 to $2.71/watt in 2020, while their O&M costs declined 49%. The price of a 200 kW commercial rooftop solar system declined from $5.57/watt to $1.72/watt in 2020, with a 46% decline in its O&M cost.

The decline in costs of the residential, commercial, and utility-scale solar system was mainly due to increased module efficiency and lower inverter and hardware costs. However, soft costs – like labor and interconnection with power grids, profit, and overhead – for residential solar installation increased in the past decade from 50% of overall system cost in 2010 to 64% in 2020. For commercial rooftop installation, soft costs went up from 37% of total cost in 2010 to 55% in 2020. However, soft costs of utility-scale solar projects declined marginally from 37% in 2010 to 35% in 2020.

NREL Report Chart

David Feldman, a Senior Financial Analyst at NREL, said, “A significant portion of the cost declines over the past decade can be attributed to an 85% cost decline in module price. A decade ago, the module alone cost around $2.50/watt, and now an entire utility-scale photovoltaic (PV) system costs around $1/watt. With similar reductions in hardware costs for storage systems, PV and storage have become vastly more affordable energy resources across the nation.”

Costs of solar plus storage systems

According to the report, costs of a 7 kW residential solar plus storage systems were lower by around 25% for more-resilient systems, with 5 kW/20 kWh storage, from $50,801 in 2016 to $37,709 in 2020. Prices for less-resilient systems, with 3 kW/6 kWh storage, were down to $28,371 in 2020, an 11% decline from $31,834 in 2016. The reduction was mainly due to a 26% and 38% decline in costs of PV modules and storage system kits, respectively.

In the first quarter of 2020, the cost of a commercial 1 MW ground-mounted PV coupled with a direct current 600 kW/2.4 MW storage system stood at $2.12 million. The cost of a 1 MW system equipped with an alternative current 600 kW/2.4 MW storage system was $2.066 million.

The cost of a 100 MW utility-scale system coupled with a direct current 60 MW/240 MWh battery declined by 9.42% from $191 million in 2018 to $173 million in 2020. The cost of a 100 MW solar system equipped with an alternative current 60 MW/240 MWh battery stood at $171 million in 2020, an 8.55% decrease compared to $187 million in 2018. The cost of utility-scale solar plus storage systems declined mainly due to significant reductions in lithium-ion batteries and bidirectional inverter costs.

According to the Lawrence Berkeley National Laboratory report, the national median installed prices fell roughly 1% from 2018 to 2019 for residential rooftop solar systems, remained more or less flat for small non-residential systems, and fell 4% for large non-residential systems in the United States.

Wood Mackenzie said in a report that the cost of solar power had declined 90% over the past two decades and was expected to go down another 15% to 25% in the upcoming decade.