NREL forecasts rising US utility-scale solar costs, falling residential prices

The US Department of Energy’s National Renewable Energy Laboratory (NREL) has updated its annual cost modeling tool in light of the US Inflation Reduction Act (IRA). It has identified higher labor costs for utility-scale solar projects and falling hardware costs due to new manufacturing tax credits.

From pv magazine USA

NREL, in collaboration with the Solar Energy Technologies Office (SETO), recently released its US Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2023.

This year’s analysis indicates a contrasting trend: While utility-scale solar project costs are on the rise, residential project expenses are decreasing. An 8% increase in utility-scale costs can be attributed to rising labor expenses, which have been influenced by the IRA’s implementation of new prevailing wage requirements tied to a 30% tax credit. Conversely, residential solar benefitted from reduced prices in modules, inverters, logistics, and customer acquisition, resulting in a 16% overall decrease in residential costs despite rising financing expenses.

For 2023, NREL has refined its cost-modeling methodology by integrating feedback from industry stakeholders and updating its economic assessments to reflect the IRA’s impact on labor and hardware expenses. The analysis now also includes the effects of rising interest rates, which have become a more prominent cost factor than in prior years.

The report also reveals that while US module prices decreased from 2022, module prices are still a bit higher than they were in 2021. Commodity market prices for copper and other metals have settled near their 2021 levels, reducing this year’s costs for racking, and for the electrical balance of system. However, with the Consumer Price Index signaling a 15% inflation increase during the covered period, inflation remains a substantial factor in cost increases.

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