Utility-Scale Solar Poised for Continuing Growth Says LBNL

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Utility-scale solar projects have been coming online left and right recently. While many know this is a rapidly growing segment, it is less understood just how much it has grown and what prices are looking like these days. This is understandable, considering that just back in 2007 there were virtually zero utility-scale PV installations larger than 5 MW. In contrast, utility-scale installations today make up the largest segment of the solar industry.

The Lawrence Berkeley National Laboratory (LBNL) has recently released a study outlining just how big the utility-scale segment has become. In addition, the report looks at project costs, performance, and pricing trends in the U.S. The report details all forms of utility-scale solar, including concentrating PV and concentrating solar power, but focuses mainly on PV as it currently dominates the market. This is actually the second report in this series, with LBNL planning to release it on an annual basis going forward.

At the end of 2013, 126 utility-scale PV projects totaling 3,023 MWac were fully online in the U.S. The first was installed in 2007, and 92% came online between 2011 and 2013, which highlights just how young this industry still is. These are the installations the study used for its data samples.

Notable findings include the following:

  • Technology advancements have led to the majority of installations using crystalline silicon panels along with tracking systems to improve system efficiency.
  • Prices have fallen from the 2007 level of approximately $5.8/W down to an average of $3.7/W.
  • O&M costs have been in line with pro forma cost projections, and have been in the range of $20-$40/kW per year or $10-$20/MWh.
  • Capacity factors for recent projects have gone up to nearly 30% up from 25% in 2011.
  • Driven by lower installed project prices, PPA prices have decreased to a levelized price of $50/MWh.

Utility-scale solar has continued its strong growth thanks to technological advances, which increase efficiency while continually decreasing costs. LBNL expects strong growth for at least the next several years, as there is currently 39.5 GW of capacity making its way through interconnection queues. This is approximately eight times what’s in the current project pipeline, although not all of it will be built.

The report goes on to estimate that utility-scale construction will likely drop off after 2017, when the currently available 30% investment tax credit drops down to just 10%. At that point we may see commercial and residential overtake utility-scale installations on an annual basis.

A recent report by Navigant Research, however, predicts that utility-scale energy storage may be on the verge of greatly expanding. This could in turn help continue the adoption of utility-scale PV. Navigant predicts the energy storage industry will grow from $675 million to $15.6 billion by 2024.

“The grid-scale energy storage market continues to develop in a piecemeal fashion, but there are signals that it is poised for significant expansion in the coming years,” says Anissa Dehamna, senior research analyst with Navigant Research. “In particular, after several years of faltering growth, lithium ion batteries are emerging as the breakout technology in this sector.”

There are still many challenges energy storage must face before it will see this kind of growth. According to the report, the industry needs more systems integrators and financing models to succeed. Even so, it has the potential to give utility-scale solar a boost once its tax incentives decline.