Construction Costs for Utility-Scale Solar Fell 8% in 2020, New Report Says

WASHINGTON — The average construction cost for utility-scale photovoltaic solar installations continued to drop in 2020, according to a new analysis by the U.S. Energy Information Administration.

While that’s good news for the energy sector, the report noted that the construction costs for onshore wind and natural gas rose during the same 12-month period.

Average solar construction costs across all solar panel types fell 8% to $1,655 per kilowatt in 2020, the agency said.

The decrease was primarily driven by a 17% drop in the construction cost for cadmium telluride tracking panels, which fell to $1,631 per kW, their lowest capacity weighted average cost since 2014.

The average construction cost for crystalline silicon fixed-tilt panels fell by 13%, although they were still the most expensive of the major solar technologies, at $1,957 per kW.

The majority of solar panels installed in the United States are crystalline silicon tracking panels. 

Unlike fixed-tilt systems, solar tracking systems move to follow the sun as it moves across the sky, allowing for greater electricity production. 

A majority of tracking panels in the United States are single-axis tracking systems. 

In 2020, crystalline silicon tracking systems accounted for 61% of the utility-scale solar capacity added to the U.S. power grid. Construction costs for these systems increased by 6% in 2020, settling at $1,587 per kW.

Industry analysts expect the construction costs to go down even further once the tax credits for U.S.-manufactured solar panels and other components take effect in 2024.

As for onshore wind and natural gas, the EIA’s latest Annual Electric Generator Report found the average construction cost for onshore wind turbines rose 8% in 2020 from $1,391 per kW in 2019 to $1,498 per kW.

The two largest wind-farm size groups accounted for 95% of the wind capacity added to the U.S. power grid in 2020, the agency said.

The average construction cost for the largest wind farms — those with more than 200 MW of capacity — increased by 11% to $1,393 per kW. 

Wind farms ranging from 100 MW to 200 MW were the only group to decrease in average construction costs in 2020, from $1,615 per kW in 2019 to $1,531 per kW in 2020, down 5.2%.

Wind farms with 1 MW to 100 MW of capacity had an average construction cost increase of 53% to $2,530 per kW in 2020.

At the same time, the average construction cost for natural gas-fired generating plants rose 4% from 2019 to 2020. 

The majority of natural gas electric-generating capacity installed in 2020 came from combined-cycle facilities, the agency said. 

The average combined-cycle generator construction cost increased by 22% in 2020 to $1,155 per kW, up from $948 per kW in 2019.

Together, the  three technologies — solar, wind, and natural gas — accounted for over 95% of the capacity added to the U.S. electric grid in 2020. 

Investment in new electric generating capacity in 2020 increased by 40% compared with 2019 to $46.3 billion.

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