As renewables expand their share of generating capacity in the United States, some sources have enjoyed a more rapid decline in capital costs than others. This dynamic of declining costs dictates which source will take the leading role.
According to data released recently by the U.S. Energy Information Agency (EIA), the declining costs of solar are helping it out compete its nearest rivals.
Data released this month by the EIA for the year 2017 shows solar costs on a four-year drop. The data measures the annual capacity-weighted average construction costs for utility photovoltaic solar systems. Since 2013, they have fallen by 37%.
To put this trend into perspective, the EIA compared the costs of solar to that of its two closest rivals, wind and natural gas. The agency notes these three generation technologies collectively accounted for more than 97% of total capacity added to the grid in the United States in 2017.
However, the costs for their installation have not been on the same path. Solar’s decline has far exceeded that of wind and gas, which fell by only 13 percent and 4.7 percent, respectively, for the same time period.
The EIA attributes the drop in solar costs to the falling costs in crystalline silicon axis-based tracking panels, which saw their lowest average construction cost of $2,135 per kilowatt (kW) in 2017. According to the data, crystalline silicon axis-based tracking panels accounted for more than half of the solar photovoltaic capacity added in 2017 at 2.6 GW of added generating capacity.
The rapid decline in solar prices appears to have had an effect on installations. In 2017, according to the EIA, U.S. developers spent nearly $12 billion in construction costs on solar photovoltaic plants. By comparison, U.S. developers invested less in constructing natural gas and wind generators.
On the other hand, they installed more wind and gas capacity than solar. Despite the faster rate of decline, the cost to install photovoltaics still exceeds that for wind and natural gas on a dollar-per-kilowatt basis. In 2017, U.S. developers installed 10.5 GW of natural gas, 5.8 GW of wind power and 5.0 GW of solar.