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Published on July 19th, 2015 | by Joshua S Hill

18

First Solar–Funded Study: Utility-Scale Solar Much More Cost Competitive Than Rooftop Solar

July 19th, 2015 by  


Originally published on Solar Love.

A new study has concluded that utility-scale solar PV systems across the US are “significantly” more cost effective than rooftop solar PV systems.

Specifically, the study, conducted by economists at global consulting firm The Brattle Group, found that utility-scale solar PV systems were more cost effective at achieving the economic and policy benefits of PV solar than rooftop or residential-scale solar was.

The studyComparative Generation Costs of Utility-Scale and Residential-Scale PV in Xcel Energy Colorado’s Service Area, published Monday, is the first of its kind to study a “solar on solar” comparison.

“Over the last decade, solar energy costs for both rooftop and bulk-power applications have come down dramatically,” said Dr. Peter Fox-Penner, Brattle principal and co-author of the study. “But utility-scale solar will remain substantially less expensive per kWh generated than rooftop PV. In addition, utility-scale PV allows everyone access to solar power. From the standpoint of cost, equity, and environmental benefits, large-scale solar is a crucial resource.”

The study yielded two key findings:

  • The generation cost of energy from 300 MW of utility-scale PV solar is roughly ½ the cost per kWh of the output from an equivalent 300 MW of 5kW residential-scale systems when deployed on the Xcel Energy Colorado system, and utility-scale solar remains more cost effective in all scenarios considered in the study.
  • In that same setting, 300 MW of PV solar deployed in a utility-scale configuration also avoids approximately 50% more carbon emissions than an equivalent amount of residential-scale PV solar.

The Brattle Group also summarised the results of their comparison in a handy infographic:

Comparing Benefits and Generation Costs of PV Utility- and Residential-Scale Solar (PRNewsFoto/The Brattle Group)

The report itself was commissioned by American thin-film photovoltaic manufacturer and utility0scale developer First Solar with support from Edison Electric Institute, while Xcel Energy Colorado provided data and technical support. Specifically, the report examined the comparative customer-paid costs of generating power from equal amounts of utility-scale and residential/rooftop-scale solar PV panels in the Xcel Energy Colorado system.

A reference case and five separate scenarios with varying degrees of investment tax credit, PV cost, inflation, and financing parameters were used to yield the report’s results.

The specifics of the study’s findings, which imagined a 2019 Xcel Energy Colorado system, are as follows:

  • utility-scale PV power costs ranged from $66/MWh to $117/MWh (6.6¢/kWh to 11.7¢/kWh) across the five scenarios
  • residential-scale PV power costs were well up, ranging from $123/MWh to $193/MWh (12.3¢/kWh to 19.3¢/kWh) for a typical residential-scale system owned by the customer
  • the costs for leased residential-scale systems were even larger and between $140/MWh and $237/MWh (14.0¢/kWh to 23.7¢/kWh)
  • the generation cost difference between the utility- and residential-scale systems owned by the customer ranged from 6.7¢/kWh to 9.2¢/kWh solar across the scenarios

The authors of the report put these figures into perspective, including the national average for retail all-in residential electric rates in 2014, which were 12.5¢/kWh.






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About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • SecularAnimist

    Centralized utility-scale solar and distributed end-user solar are complementary and we should deploy as much of both as possible as quickly as possible. The same goes for wind.

    If we are to have any hope of avoiding the worst consequences of anthropogenic global warming we need to end the growth in CO2 emissions within 3-5 years and begin VERY rapid reductions to near zero emissions within 10 years. In the USA, electricity generation is the single largest source of emissions, and with today’s mature, powerful, inexpensive solar and wind technology we can easily replace fossil-fueled electricity generation very quickly.

    • Mike Dill

      With wind and solar already costing less than coal and gas, replacement plants for those technologies will not be built. Unfortunately some of those plants will be around for the next thirty years. I expect that in the next ten years the cost of fuel for those plants will be higher (per KWH) than existing wind and solar that have past their PPA dates, which will lead to more shutdowns and shut-ins.

      Unfortunately it may be to late for some.

  • Jason hm

    Novelty is a powerful driver of markets and in the next few decades the power industry is going to be hard pressed to compete in the rural and suburban areas with larger lots. People are going to enjoy cutting the cord even if they have to pay a little more for the privilege. It’ll become a status symbol and social game because it aligns with what Americans like to think of themselves as more independent in both spirit and need.

  • Dag Johansen

    I believe Xcel (the utility) paid for the study so it is even more biased than you would think.

  • LH

    I do not disagree with the results of the study within its scope and set of assumptions.

    However,

    1. “utility-scale solar PV systems across the US are “significantly” more cost effective than rooftop solar PV systems”

    Not when the grid goes down.

    What price Independence ? With tumbling PV, battery, inverter etc. prices a local system appears to be the only cost effective way to deal with power outages (the assumption of the study presumably is that no outages occur).

    If a power outage is sufficiently short then a battery backup for a grid or local solution should not affect the results of the study. However the progressive destabilization of society through earnings imbalance, import dependence, development of unpayable etc. (a lot of etc.) increasingly casts doubt on any assurance of a corporation/government solution.

    2. Government actions in the otherwise free market can, and often do, alter the nature of the results presented.

    Governments typically act without the agreement of the parties affected. Time and again governments do not appear to represent the interests of the individual (in practice they appear to rarely have to, they usually do not even have to represent the interests of the minority that elected them), however they appear to so for marketing purposes and perhaps other reasons such as self-delusion. Even if they do today there is no guarantee that they will do so tomorrow.

    Likewise corporations frequently do not represent the interest of their own customers, again they appear to do so for marketing purposes etc.

    3. “The specifics of the study’s findings, which imagined a 2019 Xcel Energy Colorado system…”

    This is obviously a limited scope. Presumably results will be different elsewhere to varying degrees.

    • LH

      “development of unpayable etc.” should read
      “development of unpayable debt etc.”

  • vensonata

    This is a great time to really work through the details of this discussion: utility vs residential. The U.S. Sunshot pegged the costs by 2020 as 6centskwh utiltity and 9 cents kwh residential. Or $1 watt for utility and $1.50 for residential. Not a 2 fold difference. Since Australia has reached $1.50 watt installed residential, it is quite realistic. (It seems they have gotten lower than that but it is subsidized. The exchange rate needs to be taken into account as well). According to Tony Seba new transmission costs in Germany are 7cents kwh. So if the solar utility is building new transmission even if it attains 5cents kwh for electricity they are still way too high. If they use already established transmission then fine. But those locations may be used up rather quickly.
    So at 6cents kwh for grid and 9cents kwh for residential the grid can’t compete. Except of course for the 70% of residences that are unsuitable for PV!
    The next thing I notice about the comparison is ground mount on tracker vs fixed roof mount. Why not compare residential ground mount on tracker with utility? I have 8 kw ground mount and 4 kw roof mount. Ground mount costs for mounting are high but production is near max. Rooftop on the right kind of roof (standing metal seams) is cheap since it is only clips. So this study is too general, it is not useless, but many more factors need to be considered.

    • Vensonata

      Update on rooftop in Australia. Best price installed for a 10 kwh system is $1.22 U.S. Watt. That is without any subsidy. With subsidy it is an amazing 74 cents watt! So at $1.22 that is under 7.5 cents kwh. That price is from July 17, 2015 in Adelaide, South Australia. Reported by Solar Choice website. That flies in the face of the utility claims.

      • Bob_Wallace

        At the Intersolar Conference in San Francisco last week people were talking about utility scale solar dropping to as low as 2 c/kWh. Wind is on the way to 3 c/kWh.

        Unsubsidized prices. Brand new world.

  • Shiggity

    First Solar has been building power plants since the 1990s, they are good at it.

    Secondly, their solar module tech was never any good for roofs. Their CdTe cells are engineered for ground mounts.

    Does this article have a point? Yes.
    Is it massively taken out of context? Yes.

  • JamesWimberley

    It doesn’t matter. Of course utility solar will always be cheaper. But as long as residential power costs are lower to householders than retail rates, they will adopt solar – regardless of the lower cost to utilities. Brattle’s study confirms that this holds for a good many American householders already, and the number will increase. The utilities are trying desperately to “level the playing field”, as they see it, by imposing discriminatory grid charges on solar roof-owners, using technocratic arguments. It’s not working.

    For the moment, US householders do not sensibly have the nuclear option of grid defection, which is already a serious one in high-price Australia and (hampered by less sun) Germany. The deal looks even better for community microgrids and minigrids. As battery and solar prices fall, defection will look better and better in the USA – especially if, in a deregulated market, community minigrids can contract for backup wholesale. The defection threat will ultimately put a stop to utility efforts to keep all the blanket on their side of the bed.

    • Frank

      Take Hawaii for example, where the price is, get this, down to just over 30 cents from 38 to 46 depending on which island when oil prices were high. And they have good solar resources. There is no future in 30+ cents.

    • Senlac

      Point well made, whether the pay back is 5 years or 7 years, it is still paid back, and once costs are covered then it clear sailing to year 25, if you decide not to upgrade to better technology before then.

  • NicholB

    Isn’t this comparison somewhat simplistic, as it excludes the cost of the grid that distribute that power to the buildings under the roofs where it is consumed?

    This isn’t en either-or question, but a problem of optimisation: what would be the optimal mix of small scale and large scale PV, and how does this relate to the design of the grid?

    And such an optimisation should not be purely on price, but also make sure that the total system is robust against various types of shocks. Over-optimising for ‘efficiency’ can be dangerously detrimental to robustness of the system as a whole. As we have seen when our over optimised and financially highly ‘efficient’ banking system collapsed the world economy.

    • Larmion

      Page 38 and beyond deal with transmission costs. According to their methodology, which seems to be quite objective and well-sourced, the lower distribution costs are far outweighed (by a factor 4-5!) by the much higher other costs.

      As for robustness: the only way in which a power grid can be robust and stable is if there is both redundancy and diversity of supply.

      Redundancy requires a grid topology that allows each consumer and each generator to be reached via several routes (so that something like a fire in a transformer station or a broken cable doesn’t result in widespread power cuts).

      Diversity of supply requires a transmission net capable of bringing in large amounts of power from far flung places (so that the loss of a local generator can be offset and intermittency in wind and sunshine can be at least partially mitigated).

      Both thus require a strong, well maintained grid. If you already have that, it becomes trivial to integrate utility scale generators into the grid. So if you don’t look at economics alone, as you say, the issue of transmission costs actually becomes rather moot.

      • MarTams

        The analysis are all wrong! They should compare what the residents would end up paying to their utilities versus finance charges for the solar, or versus the savings in utility bills by solar rooftop minus interest rates in CD accounts for the cost of the solar rooftop.

        Even if utilities get solar prices cheaper than anything else, they would gladly pocket the difference and charge the residents the same.

        The main problem with rooftop solar are the greedy prices charger by solar installers. If you shop around and hire the installers yourself, you can get net prices half that of SunRun or SolarCity. Likewise, just like the utilities, any savings in the cost of the panels or any technological innovations that speeds up installations, the savings are notable passed on but retained as profits.

        • Aku Ankka

          You may have misunderstood the goal of the study: it was not to find out what might be the cheapest way for end-consumer (assuming certain net-metering scheme), but to find out overall efficiency of approaches, from system (society) perspective.
          Whether it was fairly done can be debated, but I don’t think it is correct to dismiss study because it did not study aspect that you care most about.

  • momo

    Tell Solar City.

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