Average U.S. construction costs for solar generation continued to fall in 2019

[thackney]

Average U.S. construction costs for solar generation continued to fall in 2019
https://www.eia.gov/todayinenergy/detail.php?id=48736
JULY 16, 2021



The annual capacity-weighted average construction costs for solar photovoltaic systems in the United States continued to decrease in 2019, dropping by a little less than 3%, according to our latest data on newly constructed utility-scale electric generators. The average costs for wind turbines remained relatively stable in 2019, increasing $9 per kilowatt (kW), or a little less than 1% from the 2018 average. Costs for natural gas-fired generators had the largest change from 2018 to 2019, increasing $241/kW, or almost 29%.

Together, these technologies accounted for over 98% of the total capacity added to the U.S. electric grid in 2019. U.S. investment in all forms of new electric-generating capacity in 2019 decreased by 4.9% compared with 2018.

Solar
Solar construction costs averaged $1,796/kW in 2019, a 2.8% decrease from 2018. The decrease was driven by falling costs for crystalline silicon axis-based tracking panels, which fell to $1,497/kW in 2019. Crystalline silicon axis-based tracking panels made up almost half of the solar capacity added in the United States in 2019, at 2.5 gigawatts (GW). Among solar technologies, crystalline silicon fixed-tilt panels had the highest average cost in 2019, at $2,242/kW.



Wind
Total U.S. wind capacity additions were 39% greater in 2019 than in 2018, although the average construction cost for onshore wind turbines remained about the same. The average construction cost for onshore wind turbines was $1,391/kW in 2019, compared with $1,382/kW in 2018.

The average construction cost for wind farms with more than 200 megawatts of capacity, which accounted for the largest share of wind capacity additions in 2019, decreased by 1.3% to $1,252/kW.



Natural gas
Among wind, solar, and natural gas technologies, natural gas received the least U.S. investment in 2019, accounting for 26% of total electric-generating capacity investment across all energy sources. Most natural gas electric-generating capacity installed in 2019 was in combined-cycle facilities. Average combined-cycle construction costs increased from $858/kW in 2018 to $948/kW in 2019, a 10% increase.

[IsailedawayfromFR]

So solar construction costs remain about 70% higher than natural gas.

Then why is anyone constructing solar plants in any case when gas is so much cheaper to generate power?

[Kamaji]

So solar construction costs remain about 70% higher than natural gas.

Then why is anyone constructing solar plants in any case when gas is so much cheaper to generate power?

Tax subsidies?

[Bigun]

Sorry! No sale!

[IsailedawayfromFR]

Tax subsidies?

I doubt they cover that much of the cost differential.

Could it be the government's forced mandates for utilities to take generated solar power?

The answer in all but a very few cases is no market forces swaying the generation of power by solar.

It is completely contrived government mandated and subsidy. Which means it costs more.

And always will be, regardless of the feel-good articles written that say otherwise.

[thackney]

I doubt they cover that much of the cost differential.

Could it be the government's forced mandates for utilities to take generated solar power?

The answer in all but a very few cases is no market forces swaying the generation of power by solar.

It is completely contrived government mandated and subsidy. Which means it costs more.

And always will be, regardless of the feel-good articles written that say otherwise.

I believe a better cost comparison is on the energy produced, or even better the dollars produced, not the capacity of the system that cannot run all the time.  The capacity factor is important.  Operation and Maintenance as well as fuel cost should be included in the comparison.

Levelized Costs of New Generation Resources in the Annual Energy Outlook 2021
https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf


See Table 1a. Estimated capacity-weighted1 levelized cost of electricity (LCOE) and levelized cost
of storage (LCOS) for new resources entering service in 2026 (2020 dollars per megawatthour)
page 7

Total system LCOE
Combined cycle (Nat Gas) $34.51
Solar, standalone $31.30, with subsidies $29.04

[IsailedawayfromFR]

I believe a better cost comparison is on the energy produced, or even better the dollars produced, not the capacity of the system that cannot run all the time.  The capacity factor is important.  Operation and Maintenance as well as fuel cost should be included in the comparison.

Levelized Costs of New Generation Resources in the Annual Energy Outlook 2021
https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf


See Table 1a. Estimated capacity-weighted1 levelized cost of electricity (LCOE) and levelized cost
of storage (LCOS) for new resources entering service in 2026 (2020 dollars per megawatthour)
page 7

Total system LCOE
Combined cycle (Nat Gas) $34.51
Solar, standalone $31.30, with subsidies $29.04

I read the link but need some help in understanding the concepts.

It appears that an installed capacity for natural gas and another one being solar having exactly the same installed capacity is not the same?  And this is due to a capacity factor which from what I gather is the % of time it is operating?

Guess an example can clarify.  A ___ mw combined cycle natural gas plant operates at a capacity factor of (from link) of 87% and the solar a capacity factor of 30%.

The capital cost to install the solar is more than 3X that of combined cycle NG.  This seemingly is an impossible hurdle for solar to overcome to generate more cheaply than that of combined cycle ng.

How does table 1a work to have the effective economics to produce electricity via solar superior to that of combined cycle natural gas?

[thackney]

I read the link but need some help in understanding the concepts.

It appears that an installed capacity for natural gas and another one being solar having exactly the same installed capacity is not the same?  And this is due to a capacity factor which from what I gather is the % of time it is operating?

Correct.

Guess an example can clarify.  A ___ mw combined cycle natural gas plant operates at a capacity factor of (from link) of 87% and the solar a capacity factor of 30%.

The capital cost to install the solar is more than 3X that of combined cycle NG. This seemingly is an impossible hurdle for solar to overcome to generate more cheaply than that of combined cycle ng.

How does table 1a work to have the effective economics to produce electricity via solar superior to that of combined cycle natural gas?

Because initial capital cost is not the only cost.  You have operations and maintenance cost including fuel that also have to be paid out.  Those costs are in the same table.  Those costs are included in the numbers I used above.

[IsailedawayfromFR]

Correct.

Because initial capital cost is not the only cost.  You have operations and maintenance cost including fuel that also have to be paid out.  Those costs are in the same table.  Those costs are included in the numbers I used above.

Interesting.  Am I correct in assuming that the high variable cost for combined cycle is due to having to purchase the NG fuel?  If so, that will only go higher.

If these numbers are correct, and I remain skeptical I admit among other reasons it is predicting 2026 costs, I can see why solar power entering the grid is preferable at all times the grid can accept it.  The abnormally high cost on diverting to storage does not seem a feasible alternative to divert there when the grid cannot accept.

Am also wondering whether the large expense for land to accommodate solar arrays is included within capital costs, as well as longevity issues of solar stations as they seem rather fragile against hostile weather elements and need periodic replacement.

[thackney]

Interesting.  Am I correct in assuming that the high variable cost for combined cycle is due to having to purchase the NG fuel?  If so, that will only go higher.

Correct.  Variable costs is costs associated with running as opposed to just the equipment sitting unused.

If these numbers are correct, and I remain skeptical I admit among other reasons it is predicting 2026 costs, I can see why solar power entering the grid is preferable at all times the grid can accept it.  The abnormally high cost on diverting to storage does not seem a feasible alternative to divert there when the grid cannot accept.

It is not when the grid cannot accept, but rather producing when the price is cheap and releasing when the price is high.  Large variable in cost from night to day.


Note: numbers do not reflect real pricing, just the concept.

Am also wondering whether the large expense for land to accommodate solar arrays is included within capital costs, as well as longevity issues of solar stations as they seem rather fragile against hostile weather elements and need periodic replacement.

Land cost would be included in capital cost, everything required to build the power station. 

Average replacement and repairs for storm damage would be averaged in the fixed O&M cost.  It does not matter if the unit is running or not, those costs will happen just because it exists.

I used to gather these numbers in engineering planning when I worked in the utility business.  Back in the dot matrix printing days.

[IsailedawayfromFR]

Correct.  Variable costs is costs associated with running as opposed to just the equipment sitting unused.

It is not when the grid cannot accept, but rather producing when the price is cheap and releasing when the price is high.  Large variable in cost from night to day.


Note: numbers do not reflect real pricing, just the concept.

Land cost would be included in capital cost, everything required to build the power station. 

Average replacement and repairs for storm damage would be averaged in the fixed O&M cost.  It does not matter if the unit is running or not, those costs will happen just because it exists.

I used to gather these numbers in engineering planning when I worked in the utility business.  Back in the dot matrix printing days.

I bring up land as I suspect solar farms are notorious for some under the radar deals such as this one.  Note the capital for the land is $53 million, likely a nice profit for Gates

Gates’ Ohio farm could be solar energy site

Mark Williams The Columbus Dispatch USA TODAY NETWORK A 6,300-acre farm owned by Bill Gates in Madison County, Ohio, could become the site of one of the nation’s largest solar farms.

Renewable energy company Savion has an option to buy the property for what is being called Oak Run Solar Project, according to Madison County property records. The option expires Oct. 31, 2024.

The project is in its early days. How big it would be, how much it would cost, when it would be built and whether Savion will even proceed are decisions that have to be made. Savion has yet to seek approval from state regulators.

Savion, based in Kansas City, Missouri, wouldn’t comment specifically on Oak Run, but did talk broadly about its work in Madison County.

'At this time, we are in the very initial stages of researching additional utility-scale projects in Madison County,' Savion said in an email. 'Because those efforts are at an early stage of evaluation, we do not have further details at this time.'

The prospect of such a project and its potential size intrigues county economic development officials who see utility-sized solar as a way to bring millions of dollars into the county and draw companies that are demanding their operations be powered by renewable energy.

'It has the potential to become the largest solar farm in the United States,' said Rob Slane, the Madison County administrator. 'We feel that puts us on the map.’’

Slane said there is speculation that such a project could take up to 10,000 acres of land and could be as big as 1,500 megawatts.

The website of the Solar Energy Industries Association shows several hundreds projects under development across the country, but none that big. The website does list several projects that would be several hundred megawatts located in western states.

The Solar Star farm in California is the biggest farm in the U.S., according to Construction Review Online. The project consists of 579 megawatts of power, 1.7 million panels over more than 3,000 acres.

County records show Midwest Farms LLC of Monterey, Louisiana, is the owner of the farmland in Union, Deer Creek, Monroe and Somerford townships. Midwest Farms bought more than 5,000 acres for $27.1 million in 2009, the Dispatch reported then. Additional land was acquired in 2018 for more than $2 million.

The option does not identify how much land Savion would buy or the price. The county auditor’s office has appraised the value of the 6,300 acres at $53 million.
https://cincinnatienquirer-oh.newsmemory.com/?publink=0a36723ee_1345dde

[thackney]

I bring up land as I suspect solar farms are notorious for some under the radar deals such as this one.  Note the capital for the land is $53 million, likely a nice profit for Gates

I cannot imagine a motivation for a business to under report cost, which means over-reporting profit and paying higher taxes.

And for the public utility model rather than Texas competitive pricing, they report every expense because their guaranteed profit depends on reporting expenses and capital investments.

[IsailedawayfromFR]

I cannot imagine a motivation for a business to under report cost, which means over-reporting profit and paying higher taxes.

so you don't adhere to any shakiness in deals like Gates buying up farmland on the cheap in front of a pending new solar plant subsidized by taxpayers?

[thackney]

so you don't adhere to any shakiness in deals like Gates buying up farmland on the cheap in front of a pending new solar plant subsidized by taxpayers?

I am certain Gates will get "full price" and the project will record that cost.

Someone buying up land prior to the announcement of a project is just speculation not impacting the project cost, but betting on the outcome.  The only "loss" is the previous owner not holding out longer.

[IsailedawayfromFR]

I am certain Gates will get "full price" and the project will record that cost.

Someone buying up land prior to the announcement of a project is just speculation not impacting the project cost, but betting on the outcome.  The only "loss" is the previous owner not holding out longer.

That is like this is an arms length arrangement on all angles.

There is no way the former farm owner had the personal and business connections that Gates has that somehow convinced him to purchase farm land that right away now Woila! is in play for building the largest solar system in the US.

It is like saying Hunter Biden had the keen sense to understand the art market well enough to realize his talents to paint some art would be valuable.

[thackney]

That is like this is an arms length arrangement on all angles.

There is no way the former farm owner had the personal and business connections that Gates has that somehow convinced him to purchase farm land that right away now Woila! is in play for building the largest solar system in the US.

It is like saying Hunter Biden had the keen sense to understand the art market well enough to realize his talents to paint some art would be valuable.

It is also saying (back on topic) that the price for Solar includes the land cost.