Utility-scale solar is now cost-competitive with natural gas across the United States, according to the third in a series of annual reports by Lawrence Berkeley National Laboratory.
“The cost of installing utility-scale solar has fallen considerably in recent years, from more than US$6 per watt in 2009 to about US$3 per watt in 2014,” Greentech reports. “That has resulted in a boom in the sector, which is 31 times bigger than it was a decade ago.”
- Concise headlines. Original content. Timely news and views from a select group of opinion leaders. Special extras.
- Everything you need, nothing you don’t.
- The Weekender: The climate news you need.
In the U.S. Southwest, where developers are rushing to complete projects before the federal Investment Tax Credit (ITC) expires, power purchase agreements (PPAs) as low as US$40 per megawatt/hour (4¢ per kilowatt/hour) make photovoltaic costs the equivalent of “just the fuel costs for natural gas plants.”
GTM Research reports that the new normal for utility-scale solar prices across the U.S. is US$50 to US$75 per megawatt/hour. Prices in that range have “opened up some markets to avoided-cost contracts, where solar is cheaper than a utility’s avoided costs to generate electricity elsewhere,” Tweed writes.
While solar installations could decline nearly 80% from 2016 to 2017 when the federal tax credit disappears, “the post-2016 outlook is not as bleak as we once thought,” said GTM Research solar analyst Colin Smith. “With the loss of the ITC, we expect to see a rise in PPA prices. But as the installation cost of utility PV continues to fall, we expect to see PPA prices start to return to 2015-2016 levels in 2019.”