Utility-Scale Solar: Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States –2019 Edition

The utility-scale solar sector has led the overall U.S. solar market in terms of installed capacity since 2012.  In 2018, the utility-scale sector accounted for nearly 60% of all new solar capacity, and is expected to maintain its market-leading position for at least another six years.  More than three-quarters of all states, representing all regions of the country, are now home to one or more utility-scale solar projects. 

This report—the seventh in an ongoing annual series—provides in-depth data-driven analysis of the utility-scale solar project fleet in the United States. Drawing on empirical project-level data from a wide range of sources, this report analyzes technology trends, installed project prices, operating costs, capacity factors, power purchase agreement (“PPA”) prices, the levelized cost of solar energy (LCOE), and the market value of solar. The report also includes data and observations about completed or recently announced solar+storage projects. Given its current preeminence in the market, utility-scale PV also dominates much of this report, though data from CPV and CSP projects are also presented where appropriate. Highlights from this year's edition include:

• Installation and Technology Trends:  The use of solar trackers (all single-axis, east-west tracking) dominated 2018 installations with nearly 70% of all new capacity.  After declining for five consecutive years—a reflection of the geographic shift in the market from the high-insolation Southwest to other less-sunny regions—the median long-term average insolation at newly built project sites stabilized in 2018.  New fixed-tilt projects are now seen predominantly in less-sunny regions, while tracking projects are increasingly pushing into these same regions.  Meanwhile, the median inverter loading ratio (“ILR”)—i.e., the ratio of a project’s DC module array nameplate rating to its AC inverter nameplate rating—has grown steadily since 2014, to 1.33 in 2018 for both tracking and fixed-tilt projects, allowing the inverters to operate closer to (or at) full capacity for more of the day.  In 2018, seven utility-scale PV+battery projects came online.
  
  

• Installed Prices:  Median installed PV project prices have steadily fallen by nearly 70% since 2010, to $1.6/W_AC (or $1.2/W_DC) for projects completed in 2018.  The lowest 20^th percentile of projects were priced at or below $1.3/W_AC, with the lowest-priced projects around $1.0/W_AC.  Those 2018 projects that use single-axis trackers exhibited no upfront cost premium (and even slightly lower prices) on average, compared to fixed-tilt installations.  Overall price dispersion across the entire sample has decreased steadily every year since 2013.
  
  

• Operation and Maintenance (“O&M”) Costs:  PV O&M costs were in the neighborhood of $19/kW_AC-year, or $11/MWh, in 2018. These numbers include only those costs incurred to directly operate and maintain the generating plant.
  
  

• Capacity Factors:  The cumulative net AC capacity factors of individual projects range widely, from 12.1% to 34.8%, with a sample median of 25.2%.  This project-level variation is based on a number of factors, including the strength of the solar resource at the project site, whether the array is mounted at a fixed tilt or on a tracking mechanism, the ILR, degradation, and curtailment.  Changes in at least the first three of these factors drove mean capacity factors higher from 2010-vintage to 2013-vintage projects.  Among more-recent project vintages, however, mean capacity factors have remained stagnant or even declined, as a build-out of lower-resource sites has offset an increase in the prevalence of tracking (while the ILR has changed little).
  
  

• PPA Prices and LCOE:  Driven by lower installed project prices and, at least through 2013, improving capacity factors, levelized PPA prices for utility-scale PV have fallen dramatically over time, by $10/MWh per year in most years since 2013.  Most recent PPAs in our sample—including many outside of California and the Southwest—are priced below $40/MWh levelized (in real 2018 dollars), with many priced below $30/MWh and a few even priced below $20/MWh.  Despite these low PPA prices, solar continues to face stiff competition from both wind and natural gas.  Excluding the benefit of the 30% ITC, the median LCOE among operational PV projects in our sample stood at $53.8/MWh in 2018, and has followed PPA prices lower over time, suggesting a relatively competitive market for PPAs.
  
  

• Solar’s Wholesale Market Value:  Falling PPA prices have been matched to some degree by a decline in the wholesale market value of solar (energy + capacity) within higher-penetration solar markets like California.  Due to an abundance of solar energy pushing down mid-day wholesale power prices, solar generation in California earned just 79% of the average energy and capacity price within CAISO’s wholesale market in 2018 (down from 146% back in 2012).  In five of the six other ISO markets analyzed, however, solar still provides above-average value.  In CAISO, falling solar PPA prices have largely kept pace with solar’s declining market value over time, thereby maintaining solar’s competitiveness.  In all other ISOs, solar offers higher value yet similar or even lower PPA prices than in California.
  
  

• Solar+Storage:  Adding battery storage is one way to increase the value of solar. Data from 37 completed or announced PV hybrid projects (with storage duration ranging from 2-5 hours) suggests that sizing of the battery capacity relative to the PV capacity varies widely, depending on the application and specific situation.  Moreover, the size of the incremental PPA price adder for 4-hour storage varies linearly with this ratio, ranging from ~$5/MWh for batteries sized at 25% of PV capacity up to $15/MWh for batteries sized at 75% of PV capacity.  There are a variety of ways in which storage is compensated within these PPAs, some of which are rather creative.  As PV plus battery storage becomes more cost-effective, many developers are now regularly offering it as an upgrade to standalone PV.

At the end of 2018, there were at least 284 GW of utility-scale solar power capacity within the interconnection queues across the nation, 55 GW of which are paired with storage.  The growth within these queues is widely distributed across all regions of the country, and is most pronounced in the up-and-coming Midwest region, which accounts for 26% of the 133 GW added to queues in 2018, followed by the Southwest (21%), Southeast and Northeast (each with 15%), California (10%), Texas (9%), and the Northwest (5%).  Though not all of these projects will ultimately be built as planned, the ongoing influx and widening geographic distribution of solar projects within these queues is as clear of a sign as any that the utility-scale market is maturing and expanding outside of its traditional high-insolation comfort zones.