This blog was written by Simon Mahan, former Energy Policy Manager at the Southern Alliance for Clean Energy.Guest Blog | September 27, 2017
The National Renewable Energy Lab recently published their annual solar power cost benchmark study, U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017.
The results are shocking.
In some southern states, like North Carolina and Florida, NREL reports that utility-scale solar power prices may reach a levelized cost of approximately 5 cents per kilowatt hour. Incorporating the federal investment tax credit (ITC) could drop those prices down into the 3-4 cents per kilowatt hour range ($30-$40/MWh). Those prices will challenge even existing natural gas power plants.
NREL’s report highlights regional levelized cost of energy models. Perhaps unsurprisingly, the Southeast contains significant solar power resources, priced below 6 cents per kilowatt hour ($60/MWh) in real dollars when priced excluding the cost savings from the federal ITC. Including the federal ITC, which currently reduces capital costs by 30%, may actually drop those solar power prices to 3-4 cents per kilowatt hour ($30-$40/MWh), given the net present value of reducing a solar power project’s tax burden, early in its lifetime. The federal ITC is slated to decline in value after 2019, until 2022 when the ITC will be valued at 10%.
NREL’s report highlights an interesting phenomenon: even though installing single-tracking solar panel systems (systems that mechanically tilt panels towards the sun on a daily basis) are a bit more expensive in total installation costs, the additional power generated from those systems reduces overall levelized cost. Installed costs for a tracking system appear to be about 6-7% more expensive than fixed-tilt systems; however, tracking systems result in higher power production, reducing overall levelized cost by more than 10%. Here’s the bottom line: for many solar power development companies, and electric utilities, installing slightly more expensive solar power structures is likely well worth it. Given that tracking systems also can generate power for longer periods of time “on peak”, tracking systems seem to have a lot of benefits working for them.
Other big news from the NREL study shows that solar power prices have dropped about 30%, just in the last year. A number of years ago, the United States Department of Energy set solar power pricing goals via the SunShot program. And with the latest pricing data, it appears DOE has met its SunShot goals, nearly three years early.
On Friday, the U.S. International Trade Commission ruled that solar panels “are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article.” The President of the United States will have authority to impose “relief” which could include tariffs and/or a floor price as requested in the petition. Those actions would affect future solar power prices.