A new report released this week asserts that utility-scale solar is much more economical than small-scale solar. The clear implication is that we should let incumbent utilities build or buy solar from large-scale arrays instead of allowing customers to generate their own power. There are several reasons to seriously question the mistaken assertion that big… Continue reading
Viewing the economies of scale tag archive
There are a lot of stories on residential rooftop solar but few if any on what cities are doing to make themselves energy self-reliant by using their own buildings and lands to generate power. In Public Rooftop Revolution, ILSR estimates that mid-sized cities could install as much as 5,000 megawatts of solar—as much as one-quarter… Continue reading
In his Sunday Wall Street Journal commentary on May 17, Brian Potts suggests that cost is the bottom line in the electric customer shift to solar, and that rooftop solar costs too much. But his defense of the utility’s view of energy costs leaves a big hole in the big picture: the value of solar… Continue reading
Unfortunately for utilities, new technology and commercial opportunities in the coming years will only increase the threat to the 1.0 business model. Solar energy is growing exponentially as costs have fallen 28% per year from 2009-2013, and electricity from rooftops is approaching or passing parity with utility prices.63 This is the third of four parts of our… Continue reading
In a filing Tuesday (April 28), Minnesota’s largest electric utility announced unilateral action within the next 30 days to reduce development under the state’s community solar gardens program by 80%, from nearly 560 MW to 80. It’s the latest in a series of attempts to slow the program, including efforts to cap the program and… Continue reading
Aggressive state policy and cost reductions for clean energy have created two business model crises for electric utilities: stagnant sales and exponentially rising production from distributed renewable sources. This is the second of four parts of our Beyond Utility 2.0 to Energy Democracy report being published in serial. To see the first post, click here. Download the entire… Continue reading
The growth of solar has continued at a furious pace, with a new record of 6.2 gigawatts installed in the United States in 2014. But the bigger tale may be the persistent growth of small-scale solar, on residential and non-residential rooftops (and property). These projects, a megawatt or smaller, contributed 13% of new power plant… Continue reading
Earlier this week, Lawrence Berkeley Labs released a marvelous comparison of residential PV costs in Germany and the United States, finally putting some detail to an enormous gulf in costs (nearly $3.00 per Watt). The following chart (from page 35 of the presentation) shows the cost difference broken down into 9 categories, with ILSR’s addition… Continue reading
In this April 2 presentation to the Pedernales Electric Cooperative of Johnson City, TX, ILSR Senior Researcher John Farrell discussed how solving the clean local energy puzzle requires much more than a consideration of cost per kilowatt-hour. Instead, cooperatives, municipal utilities and others considering developing local clean power should consider issues of scale, value and… Continue reading
Installed costs for solar PV have dropped and economies of scale improved significantly in 2010, opening the door for much more cost-competitive distributed solar power.
The data comes from the 4th edition of the excellent report from the Lawrence Berkeley Labs’, Tracking the Sun (pdf) and shows the installed costs for behind-the-meter solar PV projects in 2010. The following merely copies Figure 11 from that report, showing the average installed cost of “behind-the-meter” solar projects in the U.S. in 2010, by project size.
This is useful and shows the significant economies of scale for solar PV in 2010, but the history is important. For context, the following chart shows the 2010 data along with the 2009 data from Lawrence Berkeley Labs, with the grey shaded area indicating the cost decreases. The 2010 installed cost data from the California Solar Initiative (red) is also shown, helping validate the LBNL data. The last data point from the CSI is an outlier likely due to having too few projects in that dataset.
Two things are clear from the new data. First, installed costs have dropped significantly, by $1 per Watt for residential-scale solar PV and by nearly $2 per Watt for megawatt-scale projects. We can also see more clearly how the economies of scale of solar have improved, as well.
The unit cost savings between the smallest and largest solar projects (1 MW and under) jumped from $2.80 to $4.60 per Watt, a change in relative savings from 30 percent to 47 percent. Economies of scale were also much greater for mid-size solar (30-100 kW), with the percentage savings over the smallest projects rising from 21 to 35 percent. The following chart illustrates the change in economies of scale, showing installed costs as a percentage of the cost of a 2 kW system.
Instead of having relatively little economies of scale for solar PV projects larger than 2 kW, the 2010 data confirms that the unit cost of solar does continue to fall significantly as solar projects grow up to 1 megwatt (MW) in size.
Unfortunately, LBNL did not have sufficient data to provide context for economies of scale for larger distributed solar projects (1 to 20 MW), with only about 20 datapoints. However, their finding was that these larger crystalline solar projects cost between $4 and $5 per Watt, showing small but significant scale economies.
The lesson is that solar economies of scale seem to be improving as the U.S. market matures, good news for distributed solar to compete with peak electricity prices on the grid.
[note: for more context, see the previous post on 2009 solar economies of scale]