The U.S. solar industry has hit the goal of the federal SunShot program by delivering utility-scale electricity at less than $1.00 per watt—three years ahead of the Department of Energy’s 2020 target date.
The price represents a 75% cost reduction in six years for fixed-tilt, utility-scale photovoltaic systems, Greentech Media reports. MJ Shiao, research director at GTM Research, notes that the $1 price tag covers engineering, procurement, and construction (EPC), and “in many cases, there is still an asset developer’s margin on top of this.”
But even so…when then-energy secretary Steven Chu and SunPower founder Dick Swanson came up with SunShot in 2011, “$1.00 per watt seemed more aspirational than real—but one needs a North Star,” writes Greentech Media Editor-at-Large Eric Wesoff. “The intrepid analysts at GTM Research were tracking utility solar at close to $4.00 per watt in early 2011.”
SunShot’s mission was to make unsubsidized solar cost-competitive by 2020 by focusing on four factors: solar cell and array technology, power electronics to optimize performance, improved manufacturing processes, and system installation, design, and permitting. “In fact,” Wesoff writes, “steep reductions in system pricing have stemmed not just from modules, but also from price reductions in inverters, trackers, and even labour costs. It’s only stubborn soft costs such as customer acquisition that have actually risen.”
Shiao said a rapid drop in solar module costs, from 60 to 30¢ per watt in the last year, represents “a huge reduction for the utility sector, supported by other reductions in the cost stack.” The question, Wesoff adds, is whether the rapid price shift was driven mostly by SunShot, and whether it could have happened without government support.
GTM Research solar analyst Ben Gallagher cited “pure market forces” around the world as an important factor, but noted that funding and market forces from SunShot “made the market more efficient,” helping to accelerate the industry and make customers and suppliers less risk-averse.