Utility-Scale Solar Hits Cost Goal, Focus Turns to Reliability

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By Rebecca Kern

The solar industry has met the Energy Department’s goal to reduce the average price of utility-scale solar to 6 cents per kilowatt-hour—three years ahead of the agency’s 2020 target.

The solar industry also has made heavy gains in reducing the costs for residential and commercial solar, according to a Sept. 12 report from the Energy Department’s National Renewable Energy Laboratory on its SunShot Initiative. The industry is 86 percent of the way toward the target reduction of the average cost of residential PV and 89 percent toward the cost of commercial solar PV, the report said.

The Energy Department continues to aim for further price reduction while also focusing efforts on solar’s reliability and resiliency, offering $82 million in funding for research and development into new technologies.

The SunShot Initiative was launched in 2011 with the aim of making solar cost-competitive with fossil fuels. It was an ambition intended to be reminiscent of President John F. Kennedy’s 1961"Moon Shot” program to put a man on the moon.

Utility-scale solar dropped from 28 cents per kilowatt-hour in 2010 to 6 cents in 2017, which was the 2020 goal. Residential and commercial solar costs dropped from 52 cents and 40 cents per kilowatt-hour in 2010to 16 and 11 cents, respectively, in 2017. The goal is to drop to 10 cents and 8 cents, respectively, by 2020.

The next challenge is to cut prices in half again, from the 2020 goal, for utility, residential, and commercial PV systems by 2030.

“It is of tremendous significance because it really shows that, with government and with industry holding hands, they’re able to make solar highly competitive with traditional fossil-fuel-based electricity generation. And not only competitive, but competitive earlier than anyone forecasted,” Ben Gallagher, a solar analyst at GTM Research, told Bloomberg BNA Sept. 12.

Improved Technology, Material

Technology innovation in solar modules and increased efficiency due to better material quality and design have been the primary drivers of the dramatic cost reductions in solar photovoltaic systems.

SunShot has awarded $1 billion in funding to corporations such as General Electric Corp., academic institutions such as the Massachusetts Institute of Technology, and national laboratories. The money has been used to devise ways to lower the costs of hardware and costs associated with the integration of solar panels to the electric grid.

“The point of these goals is to further the overall focus on affordable and reliable energy,” Daniel Simmons, the acting assistant secretary of the Energy Department’s Office of Energy Efficiency and Renewable Energy, told Bloomberg BNA in a phone interview Sept. 11. “We want to be focused on devoting our resources to early stage research and development.”

Continuing to lower the costs of PV solar systems is like facing a limbo bar and “it gets progressively more difficult to slide under that limbo bar without falling backwards,” Charlie Gay, director of the Energy Department’s solar energy technologies office and leader of the Sunshot Initiative, told Bloomberg BNA.But he’s optimistic. “I have been working in solar for 43 years, and I continue to see a lot of opportunities that will enable us to keep moving and lowering that limbo bar.”

$82 Million to Improve Reliability, Resiliency

As part of the early stage research and development push, the department is offering $82 million in new funding opportunities from the Solar Energy Technologies Office, where the SunShot Initiative is housed, according to a Sept. 12 announcement at Solar Power International in Las Vegas, the largest solar industry event in North America.The funding includes up to $62 million focused on Concentrating Solar Power technologies, which can store solar energy to be used to produce electricity when the sun isn’t shining, and up to $20 million to advance power electronics technologies, which can protect against physical and cyber threats to the grid. The awardees will have to contribute 20 percent of their own funding to the overall project budget.Dan Whitten, vice president of communications for the Solar Energy Industries Association, the trade group that represents the solar industry, told Bloomberg BNA that SunShot has advanced “all manner of innovations along with industry that have improved the solar value proposition dramatically.”

Technology Costs Driving Reductions

James Evans, renewable energy analyst at Bloomberg Intelligencesaid that reaching the utility-scale solar cost goal was “not entirely unexpected given the dramatic cost declines in equipment over recent years with average benchmark silicon solar panel costs declining by 35 percent just in 2016 with industrial inverter prices falling around 26 percent in the same period.”However, he told Bloomberg BNA in a Sept. 11 interview, hitting the 2030 SunShot goals would be harder if the U.S. applies trade tariffs on imported solar technologies, which would increase import costs of solar panels. A petition before the U.S. International Trade Commission by Suniva and SolarWorld would apply a trade tariff on certain imported solar technologies.

Addressing ‘Soft’ Costs

While the hardware costs are being lowered significantly, a remaining challenge for continuing to reduce costs of solar systems are the “soft” costs, like labor, permitting, interconnection, customer acquisition, financing and grid integration. These soft costs are more associated with rooftop solar systems that occur in the residential and commerical solar sectors. SunShot Director Gay said that SunShot will continue to work with industry to help lower these costs. Efforts include helping to standardize and harmonize local building codes and funding for solar worker training. “We definitely want to reduce red tape to promote economic growth,” EERE’s Simmons said.

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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