Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduct

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Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduct Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduction Opportunities Alan Goodrich, Ted James, and Michael Woodhouse NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Technical Report NREL/TP-6A20-53347 February 2012 Contract No. DE-AC36-08GO28308 Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduction Opportunities Alan Goodrich, Ted James, and Michael Woodhouse Prepared under Task No. SS12.2250 NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. National Renewable Energy Laboratory Technical Report 1617 Cole Boulevard NREL/TP-6A20-53347 Golden, Colorado 80401 February 2012 303-275-3000 • www.nrel.gov Contract No. DE-AC36-08GO28308 NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. Available electronically at http://www.osti.gov/bridge Available for a processing fee to U.S. Department of Energy and its contractors, in paper, from: U.S. Department of Energy Office of Scientific and Technical Information P.O. Box 62 Oak Ridge, TN 37831-0062 phone: 865.576.8401 fax: 865.576.5728 email: mailto:[email protected] Available for sale to the public, in paper, from: U.S. Department of Commerce National Technical Information Service 5285 Port Royal Road Springfield, VA 22161 phone: 800.553.6847 fax: 703.605.6900 email: [email protected] online ordering: http://www.ntis.gov/help/ordermethods.aspx Cover Photos: (left to right) PIX 16416, PIX 17423, PIX 16560, PIX 17613, PIX 17436, PIX 17721 Printed on paper containing at least 50% wastepaper, including 10% post consumer waste. ANALYSIS DISCLAIMER AGREEMENT These cost model results (“Data”) are provided by the National Renewable Energy Laboratory (“NREL”), which is operated by the Alliance for Sustainable Energy LLC (“Alliance”) for the U.S. Department of Energy (the “DOE”). It is recognized that disclosure of these Data is provided under the following conditions and warnings: (1) these Data have been prepared for reference purposes only; (2) these Data consist of forecasts, estimates or assumptions made on a best-efforts basis, based upon present expectations; and (3) these Data were prepared with existing information and are subject to change without notice. The names DOE/NREL/ALLIANCE shall not be used in any representation, advertising, publicity or other manner whatsoever to endorse or promote any entity that adopts or uses these Data. DOE/NREL/ALLIANCE shall not provide any support, consulting, training or assistance of any kind with regard to the use of these Data or any updates, revisions or new versions of these Data. YOU AGREE TO INDEMNIFY DOE/NREL/ALLIANCE, AND ITS AFFILIATES, OFFICERS, AGENTS, AND EMPLOYEES AGAINST ANY CLAIM OR DEMAND, INCLUDING REASONABLE ATTORNEYS' FEES, RELATED TO YOUR USE, RELIANCE, OR ADOPTION OF THESE DATA FOR ANY PURPOSE WHATSOEVER. THESE DATA ARE PROVIDED BY DOE/NREL/ALLIANCE "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED. IN NO EVENT SHALL DOE/NREL/ALLIANCE BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER, INCLUDING BUT NOT LIMITED TO CLAIMS ASSOCIATED WITH THE LOSS OF DATA OR PROFITS, WHICH MAY RESULT FROM AN ACTION IN CONTRACT, NEGLIGENCE OR OTHER TORTIOUS CLAIM THAT ARISES OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THESE DATA. iii Executive Summary The price of photovoltaic (PV) systems in the United States (i.e., the cost to the system owner) has dropped precipitously in recent years, led by substantial reductions in global PV module prices. However, system cost reductions are not necessarily realized or realized in a timely manner by many customers. Many reasons exist for the apparent disconnects between installation costs, component prices, and system prices; most notable is the impact of Fair Market Value considerations on system prices. To guide policy and research and development strategy decisions, it is necessary to develop a granular perspective on the factors that underlie PV system prices and to eliminate subjective pricing parameters. This report’s analysis of the overnight capital costs (cash purchase) paid for PV systems attempts to establish an objective methodology that most closely approximates the book value of PV system assets. The analysis shows the following benchmark 2010 U.S. PV system prices (cash purchase, before 1 subsidy and considering reported target installer operating overhead and profit margins): • $5.71/WP DC – 5 kWP DC residential rooftop • $4.59/WP DC – 217 kWP DC commercial rooftop • $3.80/WP DC – 187.5 MWP DC fixed-axis utility-scale ground mount • $4.40/WP DC – 187.5 MWP DC one-axis utility-scale ground mount. Significant variation (standard deviations of 5%–8%) exists in these estimates due to regional and site-specific cost factors. Most notable is the impact that the wide range of U.S. labor rates and installer productivity (experience) factors can have on installation costs. This uncertainty analysis excluded the impact of system size, which can also play a significant role in determining installed system prices. Although the cost structure of PV systems designed for use in each market segment are very different, module price and performance remains a significant opportunity for future cost reductions across all PV sectors. In addition to the expected evolutionary cost reductions at the module level (price and efficiency enhancement), advanced installation methods, such as unitized construction techniques, are expected to provide considerable installation labor and materials-related cost benefits by 2020. As the U.S. market matures, competition among installers, as well as improved supply chain and regulatory costs, will likely contribute to significant cost reductions by 2020. This dynamic has been observed in the German PV market. The analysis shows the following 2020 evolutionary PV system price estimates, which are compared with the price targets for 2020 set under the U.S. Department of Energy’s SunShot Initiative: • $2.29/WP DC – 5 kWP DC residential rooftop (SunShot target: $1.50/WP DC) • $1.99/WP DC – 217 kWP DC commercial rooftop (SunShot target: $1.25/WP DC) 1 WP DC = peak watt of direct-current capacity. iv • $1.71/ WP DC – 187.5 MWP DC fixed-axis utility-scale ground mount (SunShot target: $1.00/WP DC) • $1.91/ WP DC – 187.5 MWP DC one-axis utility-scale ground mount (modified-SunShot target: $1.20/WP DC). As these results show, the evolutionary estimates of U.S. PV system prices fall short of the 2020 SunShot targets. This highlights the challenges that remain before solar energy can compete with incumbent electricity technologies without subsidy. v Table of Contents Executive Summary ................................................................................................................................... iv Table of Contents ....................................................................................................................................... vi List of Figures ........................................................................................................................................... vii List of Tables ............................................................................................................................................ viii 1. Introduction ............................................................................................................................................. 1 2. PV System Price Metrics: Fair Market Value vs. Bottom-up Analysis ............................................... 2 3. Bottom-up Installed System Price Analysis: 2010 Benchmark .......................................................... 4 4. Bottom-up 2020 Evolutionary PV System Price Projections vs. SunShot Targets ........................ 23 5. Conclusion: PV Price Reductions—the Road Ahead ........................................................................ 34 References ................................................................................................................................................. 35 Appendix A: Uncertainty Analysis of PV System Prices ...................................................................... 37 Appendix B: PV System Land Costs ......................................................................................................
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