The Cost of Solar PV
I get sick and tired of constantly reading off-the-charts high prices for solar PV quoted as the only price. You see this in articles from all sorts of media, and it is swallowed hook line and sinker by everyone who reads them. So what is the real price of PV?
The answer is “prices.” There is no real price, because there are many prices. Price varies by the amount of local sunlight and by the system size and type.
And there are two kinds of prices – dollars per watt, which is price per instantaneous power. And cents per kWh, which is price per unit of delivered energy. Dollars per watt is hard; cents per kWh is harder.
So with this in mind, let’s do some prices!
Big systems are cheaper than small systems; tiny systems, like those on your house, are more expensive again. If we assume the biggest systems can be installed (sans delays and all sorts of undefinable costs) at $3/W; then large rooftop systems on WalMart might go in for $4/W; and residential systems for $5/W. These would be “perfect” systems, with no delays and other setbacks. For more typical ones, you can add a dollar or even $2/W. These are all fixed arrays; if you want tracking, add another 50 ¢/W to a dollar to the large system price (but you get 25% more output).
Then there’s location. In comparison to the desert southwest US, putting up systems in average US locations are about 20% more expensive because you get 25% fewer photons; the East Coast is about 35% worse. (These are slightly corrected for reduced temperature losses versus the Southwest.) So if a large fixed array is three units of cost, what are the others?
Table 1. Relative Costs for Different Sizes and Locations (ratios to $3/W in Southwest)
| Largest Systems | Large Rooftops | Residential | |
| $/W | $3/W | $4/W | $5/W |
| Great Sunlight | 3 | 4 | 5 |
| Average | 3.75 | 5 | 6.25 |
| Northeast | 4.05 | 5.4 | 6.75 |
Let’s put this into something we can understand, cents per kWh (¢/kWh). There is no easy way to do this, but all we are looking for is a sense of these prices. Even these prices are estimates, and real prices vary all over the place. So let’s assume $3/W is 16 ¢/kWh, and take ratios to get the others.
Approximate Prices by Location and Size in ¢/kWh (no incentives)
| Largest Systems | Large Rooftops | Residential | |
| Great Sunlight (US Southwest) | 16 ¢/kWh | 21 ¢/kWh | 27 ¢/kWh |
| Average (Kansas City) | 20 ¢/kWh | 27 ¢/kWh | 33 ¢/kWh |
| Northeast (NYC, DC) | 22 ¢/kWh | 29 ¢/kWh | 36 ¢/kWh |
Thus you can see where someone can correctly quote nearly 40 ¢/kWh about PV costs, for example in a less sunny place like Germany; and I can quote 16 ¢/kWh in the US Southwest for large systems. We have not yet come to the point where different locations, applications, and sizes are distinguished in PV.
With 30% investment tax credit, these would calculate about 30% cheaper, and many have made the argument that this is only compensation for solar’s environmental, economic, and security values, which are otherwise unmonetized. Just to validate this somewhat, Jens Meyerhoff, head of First Solar’s utility systems business, stated in sworn testimony before Congress September 23: “First Solar is capable of providing solar electricity at a cost between $0.12 and $0.16 per kilowatt-hour” (presumably after application of the investment tax credit). This is consistent with the numbers in the above tables.
Ken,
A good, straightforward description.
Sol
Great, now it’s time to convince these guys:
http://www.eia.doe.gov/oiaf/aeo/electricity_generation.html
Ken, thanks for some clarity on a foggy and confusing subject. There are claims that the First Solar installation at Boulder City, Nevada has an LCOE of about 8 cents/kWh, BEFORE subsidies, tax breaks, etc. This installation was comleted in 2008, using panels that were 30% more expensive than today. This looks much, much better than your numbers. How so?
That was an error on the part of the analyst.
For all the bells and whistles of such calculations, go to NREL “Solar Advisor Model” – just google SAM NREL and you’ll find the download page.
Excellent and simple description of PV prices. I will surely share this within interested but ill-informed folks within my circles.
The cost of solar really should build up from the cost of the raw material. Here is what I have been told. The manufacturers make the pv material for about 50 cents and sells it for about 1 dollar to the installers. There are two basic kinds of installations. 1) Flat down on the roof a) with glue or b) with through the roof fasteners or 2) rack it up.
How is this so far?
Then you have to have cables and gear to hook it into the grid. But these costs aren’t counted in the case of a nuclear plant, or a coal plant.
Homes could use dc power to drive for examples the guts of computers. So to make prices comparable one could stop when the panels go on the roof.
But anyway in a residential set up the inverter costs upwards of $900.
So where/how does the cost build up to $6.75? The sales fee is fully earned because of sales resistance with the rampant confusion about the effectiveness. But the compnent of skilled labor, planning and engineering is really a small part of the installer’s input.
Cost btw seems to have dropped $2 dollars since the recession started. New entrants are coming into the market place all the time and more significantly non-professionals are forming cooperatives and learning how to do it themselves.
We are trying this month for a grant to a small business lender to promote renewable energy right here in Arlington so I’d like to include the above in the grant app with an attaboy.
thoughtful analysis. Good ideas.
Ken
You appear to be one of the frontline supporters of Desertec type PV/CSP projects? Given the precipitous drop in PV prices over the last few years do you still hold this position? With over 80% of the solar so far installed going onto rooftops and into built environments why is there any need (at this point) to worry over utility scale PV? Personally, I think this mindset is a little too futuristic. It’s akin to the Nuplex idea that enamored nuclear engineers in the fifties. Better I would say to reach first base before we start worrying about home plate.
The conservationist community is putting up a solid fight against some of these larger projects in California and Colorado. Nowadays not only do they have the environmental case which they have successfully used to kill all sorts of power plants in the past – they also have an economic case that supports distributed PV over utility PV.
Some people put forth the argument that we need everything. I find this “why don’t we all just get along message” distasteful. You install PV on the South – not on the North side of your roof. We should be able to recognize better ways of doing things. I personally think the distributed PV option is rapidly emerging as the best option. Any thoughts?
I have been thinking a lot about this lately and coming closer to your viewpoint. I am still looking for more info on transmission costs, which are where the issue of cost differential arises. Otherwise, big PV in the desert would be cheaper. FYI, there is also a difference between HVDC costs and HV AC costs, with DC lower. At least that’s how it looks. Quick answer: I think this is a hot topic and worthwhile of a lot of discussion.
Good to hear this issue has attracted your attention. I agree that we need to get more info on transmission and network upgrade costs out in the open. There is a tendency to talk about extra transmission costs in nebulous terms – this amounts to hand waving – I’ve done a lot of this myself.
I have found CAISO responsive to requests for information. I don’t know what sort of resources you have but I’ve often thought one of the better bets would be to investigate the findings of Germany thus far. In particular the network upgrade costs surrounding their larger 10, 30, 50 MW projects versus all the small rooftop projects. The specific costs wouldn’t transfer but if one type of development was significantly more expensive than the other this would be good to know.
Hello Ken
Don’t have a whole lot of info here but I’ve tried. I wrote to all the major network operators in Southern Germany asking for some basic cost estimates – I got nothing. I wrote to CAISO – got one reply that didn’t address any specifics.
You are a highly respected professional. You might be able to write directly to Hans-Josef Fell and get the information from the top.
My only luck so far has been a few short emails with a veteran transmission planner from SCE (Ms. Jaleh Firooz). She said that micro-scale PV has negligible integration costs up to 10 to 15% of peak circuit load. I’ve confirmed this estimate via other papers.
She also said that each PV project is unique (whether 1 MW or 100 MW) so there’s no generalizing about big PV vs. small PV.
Ms. Firooz wrote a paper that details the proposed costs of the RETI and CREZ type transmission development plans. These plans for California have price tags of 15 to 30 billion. To put that in perspective, this would shift the transmission charge up from about 1 cent/kWh to 3 or 4 cents/kWh. This transmission charge will be disproportionately distributed amongst the rate payers such that some see an extra .5 cents/kWh while others see closer to 5 cents/kWh.
Point is… transmission is very expensive. As a supporter of rooftop/local solar I think these mega project will ultimately encourage what I want to see but there’s no solace in this. We should build smarter from the get go.
I did some very simple calculation for a 3MW facility going up near me at a cost of 18 million dollars. I figured the mortgage payment for 25 years and came up with 42 cents per kWhr, w/o maintenance and hoping it all works for 25 years. I don’t think it is going too far to say maintenance and repairs is another 8 cents = 50 cents per kWhr, or 5 times as much as I pay now. Actually it is more, because I still have to pay for all capital costs of the electric company, minus fuel, add another 5 cents per kWhr.
So that is how some of these people come up with such numbers.
http://www.nofreewind.com/2010/08/pocono-raceway-solar-project.html
I have a home and two business locations, so you are hoping to multiply my electric bill by 5? And not only that, junk up my environment and deplete rare precious metals to build this stuff, as opposed to using cheap and quite plentiful other sources??
Why is solar so expensive? The sun is free. It is expensive because it is very costly to mine the precious minerals and also very costly for the complex manufacturing processes, all of which run on traditional energy supplies. The cost of that energy is “hidden”, you only know the sun is Free. Simple, unless you think about what goes into those added expenses.
The $/watt cost of that system would be = $6 per watt, so you far off by a factor of 2 for large systems. The link to the news article promoting the farm and the costs are there.
So le
It is crucial that in the best of circumstances and in excellent sunlight, solar is much cheaper than you are talking about – like $0.15/kWh, not $0.5/kWh. In the last two Symposia at the GW Solar Institute, First Solar has publicly stated they can install large, ground-mounted systems for $3/W (not $6).
Solar has come down about 50% in the last 3 years, so if your system is older than that, it could be $6/W. It could also be a tracking system, which gets 25% more sunlight but costs about 25% more, too.
Also, it is important to remind you that solar avoids the environmental problems of natural gas (fracking and accidents), coal (too numerous to mention, recently described as about 18 c/kWh in externalities), and nuclear (obvious). Not to mention oil, if we can have an electric transport sector. Your bill may go up, but your other bills and taxes will come down. Are you sure you are already not paying through the nose for all these other things’ mistakes?
I don’t want to be propounding un-economic rates for electric customers. We will have $3/W systems in your neighborhood soon, as prices continue to drop. We will also have great, lower cost systems in sunnier locations and possibly the ability to send those electrons to you via high-voltage lines, if that is more economical.
Why is solar costly? Not because of materials you mention, which are tiny parts of their costs; not even so much because of manufacturing. It is because sunlight is a diffuse resource, and even spending the price of a really good carpet ($200/m2) to collect it makes the output costly. There is almost nothing hi-tech you can make that costs so little it makes solar cheap. That is why the progress to-date has been so astonishing (and under-appreciated).
The theme of adding more costly electricity is one I recognize as crucial to the future of solar. We need the cheapest possible prices, and besides technical progress, we also need to simplify permitting and other siting issues. Right now, they are costing a lot and helping to make some solar unaffordable.
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Recently I visited a solar site underconstruction in Marshall Virginia. The building uses stick on solar panels and the wide span of the standing seam metal roof fits it perfectly so that the whole building fits within a definition of a solar structure suitable for funding by a government grant. The cost is said to be $4 per watt. I plan to do a study of this costing over the next little while.
Contractor-installed cost of solar PV is now around $3.00/watt without incentives (Nov 2012). For a 5kw system, that’s $15,000. With grid-tie credits bringing a home electrical bill to net zero, over 25 years I show a net cost of $0.06/kwh. What am I missing? Why do mainstream studies still show double or triple PV electricity cost?
Will you consider the cost of the Solar PV than the bill tin your consumption of electricity from time to time? I think it is not a good choice of action in considering that matter because Solar PV really helps specially in your budget. It has many great advantage that a certain source of energy doesn’t have..
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Paul
I commented 5 months ago. Since then I’ve intimately studied PV and installed a system. It’s clear to me that PV is the daylight energy source of the future, and possibly night time as well (with Hydrogen-generating PV cells). Before mid-century, the total cost of PV will likely be cheaper than any other generation method (in the $0.01 to $0.04 / kwh range, not including grid costs). The only cheaper solution on the horizon is fusion.
Please give us in extenso your process to completion of your project. Size of system hardware any metering considerations and grid tyin pointers and recs. Also finance can be key now. Did you consider a lease?
James, it’s 11.5kW DC with microinversion (all system components are warranted for 25 years). Peaking around 8.5kW AC in late February. Grid-tied sell back, so monthly bill went from over $500/mo (avg) to utility minimum fee of $30/mo. Total cost $30,000, minus 30% Fed credit and 10% State credit = $18,000 net cost. Payback period about 3 years (would be 5 years w/o govt credits). Total net savings over 25 years: well over $100,000. Net 25 year electricity cost $0.04/kWh (N. California) but that could change as increasing use of renewables change grid dynamics and utilities start charging a grid-use fee or tariff, perhaps starting around 2020-2025. Renewable grid dynamics is one of our biggest hurdles over the next 40 years, and major structural changes are needed ($$$).
Leasing is not a good option. Best to borrow the money from a bank (etc.) and work directly with local solar installers. The “Solar City” (etc.) leasing model is a great money-making scheme (for them) but a relatively poor deal for homeowners. In my opinion, the federal government should be offering low interest homeowner loans directly for renewable energy and efficiency upgrades.
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