Requires Subscription: PV Tech Premium

New NREL LCOE data highlights US potential for super-cheap solar and co-located energy storage

Facebook
Twitter
LinkedIn
Reddit
Email
A rendition of what 8minute Solar Energy’s huge Eland solar-storage will look like once complete. Image: 8minute Solar Energy.

Earlier this week the US National Renewable Energy Laboratory (NREL) published its 2021 Annual Technology Baseline (ATB) document, detailing the continued reduction in the levelised cost of electricity (LCOE) of the country’s core generators.

It highlighted that by 2030, the LCOE of utility-scale solar in the US could be as low as US$16.89/MWh, cheap enough to be the lowest-cost source of low carbon power in the country. By the end of this decade, all but the most expensive utility-scale solar PV projects in the US will be cheaper than mid-range onshore wind, a feat which could herald in a new era of solar proliferation in North America.

NREL’s ATB provides project classes for each generation technology, ranging from ‘class 1’ (the cheapest) to ‘class 10’ (the most expensive). A mid-range ‘class 5’ is also given, indicating a median LCOE cost of each technology. The below graph charts the ‘class 5’ LCOE projections of the mainstream renewable energy generation technologies from 2021 to 2025, including options for both residential solar PV and utility-scale co-located solar and storage.

A ‘Class 5’ comparison from NREL’s ATB 2021 highlights how median average LCOEs will see solar beat onshore wind on cost by 2030. Image: PV Tech.

As the graph illustrates, the cost of solar PV is expected to fall dramatically across the board over the next decade, driven by ongoing maturation and enhancement of solar technology, economies of scale driven by larger project sizes and reduced soft costs. By the end of this decade, utility-scale solar PV looks set to beat onshore wind on price, a feat which continues out until 2050.

Cost reductions are most stark for residential solar PV, which sees its LCOE plummet nearly 60% from around US$106/MWh this year to US$43.59/MWh by 2030. By this point residential solar PV in the US would provide cheaper grid electricity than offshore wind, a considerable feat for the US considering how cheap offshore wind is expected to become in markets outside of the US.

Meanwhile, cost reductions in solar and energy storage technologies will combine to make co-located solar-storage drastically more cost competitive by 2030. It will also see its cost of generation fall at a quicker rate than other technologies over the next two decades, falling 20% between 2030 and 2050 to around US$21.88/MWh.

But taking into consideration the different classes of utility-scale solar PV illustrates the variance in LCOEs out to 2050. The graph below adds so-called ‘class 1’ and ‘class 10’ utility-scale solar PV to the above chart, portraying the range in costs and just how competitive utility-scale solar PV could be in the US by 2030 and 2050.

When adding ‘class 1’ and ‘class 10’ projections for utility-scale solar PV, the dataset indicates just how cheap solar and solar-storage could become. Image: PV Tech.

The cheapest utility-scale solar PV projects in the US will be cheaper than mid-range onshore wind projects by 2025, bringing forward that inflection point by some five years. But not only will mid-range solar projects be cheaper than onshore wind throughout the 2030s and 2040s, but the most cost-effective projects stand to be considerably cheaper than their onshore wind counterparts. Throughout the two decades from 2030 until 2050, power generated by ‘class 1’ utility-scale solar PV projects stands to be ~22% cheaper than ‘class 5’ onshore wind.

However the most expensive utility-scale solar PV projects – those in ‘class 10’ – could be beset by an increasingly cost-competitive co-located solar and storage asset class.

This year, co-located solar and storage projects are expected by NREL to have an LCOE of US$57.86/MWh, around 18% more expensive than the LCOE of even the most expensive utility-scale solar projects in the US, which are expected to have an LCOE of around US$47.14. But by 2030 the gap between the two technology classes closes considerably. By 2030 that 18% gap in LCOE closes to just 6.4%, and by 2050 the gap between the two LCOEs is just US$0.47c/MWh, equivalent to around just 2%.

Evidently, utility-scale solar PV of all but the most expensive asset classes will be cheap enough to beat every other renewable generation technology by the mid- to late-2020s, but in certain circumstances co-located solar and storage will be supremely cost effective in the US by the 2040s, indicating the potential for such projects to come forward.

The dataset used for the above analysis can be found below, while the full interactive ATB dataset can be found here.

YearOnshore windUtility PV (1)Utility PV (5)Utility PV (10)Offshore windResidential PVSolar-storage
202129.4729.3935.9847.1476.83106.8457.86
202525.8223.5528.8337.7764.578.5145.25
203021.5816.8920.6827.155.1543.5928.96
203520.4715.9619.5425.5950.6341.0827.1
204019.3715.0618.4324.1547.2838.6125.3
204518.314.1917.3722.7544.6336.1723.56
205017.2313.3516.3421.4142.4533.7621.88
LCOEs (US$/MWh) provided by NREL’s ATB 2021.
7 September 2022
The demand for rooftop solar PV is soaring, driven by falling costs of the technology against energy crises that are gripping countries globally. But while an increasing number of households turn to solar to generate their own electricity, there is now a need for more specialist equipment, technologies and services to ensure the solar transition can reach as many customers as possible. Delivering these is now a major challenge for rooftop solar installers. This webinar will analyse the characteristics of the rooftop solar market, discussing how the products, logistics, installation and servicing of solar systems has evolved in line with consumer demands.
15 September 2022
Bifacial PV modules will be the dominant solar PV technology globally within one or two years; in the utility-scale sector, their market share is already above 70%. This webinar will provide a clear view on the successful implementation of bifacial technology, maximizing system performance and minimising LCoE.
4 October 2022
Solar & Storage Finance USA, the only event that connects developers to capital and capital to solar and storage projects, will be back in November 2022.

Read Next

August 19, 2022
Chinese module manufacturer Astronergy is designing a solar PV, battery storage and building integrated photovoltaics (BIPV) micro-grid system for the Haining Zhengtai Industrial Park.
August 18, 2022
The Electricity Transmission Competition Coalition (ETCC) has called for the Federal Energy Regulatory Commission (FERC) to require transmission competition for projects that are 100kV or larger, branding a lack of competition as “inflationary policy” and slamming the Commission's decision to re-write its refusal rules.  
August 17, 2022
Lightsource bp has started construction on its 400MW Wellington North and 90MW Wunghnu solar farms in New South Wales and Victoria, respectively.
August 17, 2022
Solar Philippines Nueva Ecija Corporation (SPNEC) is planning to add a 3.5GW solar farm to its 500MW system already under construction on the Northern Filipino region of Luzon, which the company claims would make it the largest PV project in the world.
August 17, 2022
US President Joe Biden has signed the Inflation Reduction Act (IRA) into law, representing the largest climate package in US history and a major policy victory for the embattled president.
August 16, 2022
US residential solar installer Sunnova plans to offer a US$425 million private placement of convertible senior notes due in 2028, to pay off debts and fund operating costs.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
September 7, 2022
15:30 AEST (UTC +10)
Solar Media Events
September 14, 2022
London
Solar Media Events
October 4, 2022
New York, USA
Solar Media Events
October 11, 2022
Virtual event