Residential Costs Stayed Flat from 2020 to 2022 & then Declined in 2023: NREL

The National Renewable Energy Laboratory (NREL) has released its annual report on ‘U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks.’ The report tracks the solar cost trends to support the U.S. Department of Energy Solar Energy Technologies Office. It aims to accelerate the advancement and deployment of solar technology and gives an account of the cost breakdown with minimum sustainable price analysis: Q1 2023. The report also shared the cost breakdown of installed solar photovoltaic (PV) and battery storage systems in the U.S.

NREL gives the breakdown of the operations and maintenance (O&M) cost into various categories. The report states that the MSP (minimum sustainable price) results for PV systems (in units of 2022 real USD/kWdc/yr) are $28.78 (residential), $39.83 (community solar), and $16.12 (utility-scale). The MMP (modeled market price) results are $30.36 (residential), $40.51 (community solar), and $16.58 (utility-scale). The report finds the community solar O&M cost to be higher than the O&M cost for a single-customer commercial PV system. This is due to similar configuration of the community solar subscriber management cost, which accounts for about 40% of the total community solar O&M cost

Q1 2023 Data and Model.

“We developed our models for years to improve our cost benchmarks, but the models themselves were mostly inaccessible from the public’s perspective,” author the report, Vignesh Ramasamy said. “The new model we developed with the Solar Energy Technologies Office provides the public greater access to the inputs and assumptions that influence the benchmark results.” The report states that the solar photovoltaic system and energy storage cost benchmarks, with minimum sustainable price analysis: Q1 2023. The report shares details of installed costs for PV and storage systems as of the first quarter (Q1) of 2023. The report gives benchmarks are bottom-up cost estimates of all aspects of PV and energy storage system installations.

Recent trend suggests that the benchmark prices have declined for residential systems, and increased for Utility-Scale Systems. These trends that characterized the 2022 benchmarks based on high and volatile component prices and competition for limited supplies—appeared to lessen in 2023. Two graphs show the installed costs of utility and residential PV systems in 2020, 2021, 2022, and 2023. Based on it the report found that the utility costs have stayed relatively flat across all four years. The residential costs stayed flat from 2020 to 2022 and then declined in 2023.

The report states that the inflation-adjusted cost benchmark rose in 2023 for utility-scale PV systems but fell for residential PV systems. The report credits this to recent trends in network upgrade costs, Inflation Reduction Act manufacturing tax incentives, and other cost drivers. The report compared to last year’s report, has found that the prices for installed residential PV systems were 15% lower this year. Although the balance of system costs was higher, the increased costs were more than offset by lower module, inverter, logistics, and customer acquisition costs, resulting in overall cost reductions for the representative residential system.

However, modeled market prices for utility-scale systems were 8% higher in Q1 2023 than in Q1 2022. This is due to higher inverter, labor, and electrical balance of system (EBOS) costs which accounts for more than offset lower module, structural balance of system (SBOS), and other soft costs in the 2023 report. “The costs of network upgrades needed to meet interconnection requirements have risen rapidly as the number of projects in the interconnection queue has increased,” said the report’s lead author, Vignesh Ramasamy. “Including network upgrade costs is one way we improved our model this year, and those costs account for much of the increase in EBOS costs compared with last year.”

Community Solar Costs benchmarked are used for the first time in which community solar is a model used for distributing solar energy. The report suggests that such a model allows customers to share in the benefits of a large off-site PV or PV-plus-storage system, often receiving a monthly bill credit for their portion of electricity generation.

Costs for community & commercial solar

The report finds that the cost for installing community solar resembles the costs of installing a commercial PV system for a single customer. However, the report makes two distinctions, that is, community solar systems incur more initial costs to acquire numerous residential and commercial subscribers. They incur ongoing costs of subscriber management, including bill management as well as marketing and customer acquisition to manage customer turnover.