NREL Publishes Annual PV Costs Report; Sets Benchmark for PV-Plus-Energy-Storage Costs

January 30, 2019 by Scott McMahan

The National Renewable Energy Laboratory (NREL) published the annual report tracking the costs of standalone photovoltaics as well as the cost of photovoltaics with energy storage. NREL's 2018 cost benchmarks for installed PV systems showed a continuing decline in cost for residential- and commercial-scale systems, and it revealed a slight increase in cost for utility-scale systems. A similar report established NREL's first such cost benchmarks for PV-plus-storage systems.

Continuing an annual NREL cost benchmarking work that began in 2010, the 2018 report, "U.S. Solar Photovoltaic System Cost Benchmark: Q1 2018PDF,"  showed that installed costs of PV systems fell across two of three sectors in the first quarter of 2018 from a year before. The other report, "2018 U.S. Utility-Scale Photovoltaics-Plus-Energy Storage System Cost BenchmarkPDF,"  sets NREL's first benchmark of PV-plus-storage costs.

Costs Fall for Residential and Commercial Standalone PV

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Specifically, the Q1 PV cost benchmarks declined 4.9 percent to $2.70 per watt for direct current (Wdc) of residential systems and 2.6% to $1.83 per Wdc for commercial systems. The benchmarks rose 1.9% to $1.06 per Wdc for fixed-tilt utility-scale systems, and also rose 0.9% to $1.13 per Wdc for one-axis-tracking utility-scale systems.

"Higher-voltage inverter designs, lower inverter prices, and higher module efficiencies contributed to cost reductions," said Ran Fu, who authored the report with fellow NREL researchers David Feldman, Mike Woodhouse, and Robert Margolis. On the other hand, higher module prices, higher labor wages, and higher steel prices raised costs. In the utility sector, where PV modules represent a larger portion of overall project costs, increased module prices helped to drive the slight increase in installed solar costs.

According to the report the drivers of the 4.9% decrease in residential PV costs include:

  • Higher module efficiency
  • Lower structural BOS commodity price
  • Lower electrical BOS commodity price
  • Higher labor productivity
  • Lower supply chain costs
  • Decrease in higher cost module inventory
  • Higher small installer market share
  • Lower permitting cost

However, not all of the costs of residential PV went down. The cost that went up for residential PV include:

  • Higher mixed inverter price due to higher advanced inverter adoption
  • Higher module price
  • Higher labor wages

For commercial PV, the drivers of the 2.6% lower costs included:

  • Lower inverter price
  • Higher module efficiency
  • Smaller developer team
  • Lower permitting and interconnection costs

On the other hand, some factors added to commercial PV costs such as:

  • Higher module price
  • Higher labor wages

New Benchmark Established for Battery Storage Costs

Fu and Margolis, along with fellow NREL researcher Timothy Remo, authored a companion report that gives NREL's first cost benchmarking of energy storage and PV-plus-storage systems. The report, "2018 U.S. Utility-Scale Photovoltaics-Plus-Energy Storage System Cost Benchmark" models the costs of several standalone lithium-ion storage and PV-plus-storage system configurations.

For a standalone storage system, assuming a constant battery price of $209 per kilowatt-hour (kWh), the installed system costs vary from $380 per kWh for a four-hour battery system to $895/kWh for a 30-minute battery system.

While historically, the majority of PV-plus-storage systems have installed PV and storage systems in separate locations, the report found that co-locating the PV and storage subsystems reduces costs.

These costs can include those related to labor, hardware, site preparation, land acquisition, permitting, and interconnection.

The report indicates that the 0.9% increase in one-axis tracking utility-scale PV system costs were driven by the following increased costs:

  • Higher module price
  • Higher labor wages
  • Higher steel prices

The factors that contributed to lower costs for one-axis tracking utility-scale PV included:

  • Lower inverter price
  • Higher module efficiency
  • Optimized design coefficients for wind loads
  • 1,500 Vdc to replace 1,000 Vdc
  • Lower developer overhead

Both reports and their models can be used to estimate the potential for future cost-reduction for PV and PV-plus-storage systems, helping to guide research and track costs. These reports were funded by the U.S. Department of Energy Solar Energy Technologies Office.