Published on September 17th, 2017 | by Tina Casey0
US Celebrates Record 29% Drop In Utility-Scale Solar Costs — But Tariff Cloud Looms
September 17th, 2017 by Tina Casey
Last week, the US Energy Department was gushing about its latest report on solar costs, with a record-breaking 29% decline in utility-scale solar leading the charge. Enjoy it while you can. A big tariff decision is coming down the pike as early as next week, and that could throw a Hoover Dam’s worth of cold water on the US solar industry.
First, The Good News About Solar
The record-breaking news for utility-scale solar was impressive considering that the cost of solar has already been declining steadily for years.
To be clear, the biggest news was confined to the utility-scale sector. However, residential and commercial solar installations continued their long-term slide, racking up decreases of 6% and 15%, respectively.
NREL (the Energy Department’s National Renewable Energy Laboratory) crunched the numbers for the first quarter of 2017 compared to 2016 to come up with the results.
For total installed system costs for all three sectors, NREL arrived at these figures:
“… the total installed system cost, which is one of the primary inputs used to compute LCOE, has declined to $2.80 per direct current watts (Wdc) for residential systems, $1.85 Wdc for commercial, $1.03 Wdc for fixed-tilt utility-scale systems, and $1.11 Wdc for one-axis tracking utility-scale systems.”
Unsurprisingly, NREL puts the primary driver of falling costs down to lower prices for photovoltaic modules and revved-up competition.
A lot of other factors go into the installed cost of solar facilities, including labor, permitting, site inspections and grid connections. These “soft costs” are also going down but still present a stubborn obstacle (for more on soft costs check out the SunShot Catalyst competition).
For all the details, check out the new NREL report on solar costs.
Three Cheers For President Obama
NREL also notes that the cost of utility-scale solar has now met a goal established by President Obama in 2011, under the SunShot initiative.
The goal was to reduce the cost of solar to a competitive level with fossil fuels by 2020. With the first-quarter figures for 2017 in hand, utility-scale solar has now met that goal — three years early.
NREL estimates that the residential and commercial sectors are about 85% of the way toward achieving their 2020 goals, so prospects on that score look good, too.
As the name suggests, SunShot was designed to vault the US into a global leadership position in the solar industry, leveraging the nation’s sprawling network of federal laboratories.
The US solar industry once did lead the world in solar tech, primarily through the country’s space programs. However, the advanced PV cells developed for this niche market were too pricey to compete for broader applications. The domestic solar industry was floundering before the Obama Administration stepped in with SunShot grants and incentives for private industry to step up its game.
Last week’s NREL announcement is actually the second time in recent days that the Energy Department has trolled President Trump* over SunShot, though without mentioning President Obama by name.
The earlier potshot occurred when the Energy Department announced that it was refocusing SunShot’s 2030 goals to focus on grid resiliency — with an emphasis on integrating more renewables.
That announcement included a generous shout-out to the Obama Administration:
“… With DOE’s help, the solar industry has drastically cut costs to enable technological innovation and market growth. In the last 10 years, the amount of solar power installed in the U.S. has increased from 1.1 gigawatts (GW) in 2007 to an estimated 47.1 GW in 2017—enough to power the equivalent of 9.1 million average American homes.”
Tariff Clouds Darken Solar Skies
Now for the bad news!
Earlier this year, Suniva and SolarWorld brought a case for tariff protection before the US International Trade Commission, and CleanTechnica’s Joshua Hill noted the potential damage:
“… the US solar industry could lose a third of its workforce, or approximately 88,000 jobs.”
GTM Research weighed in with an analysis, concluding that:
“… a successful ruling in favor of Suniva and SolarWorld — companies which are both foreign-owned, and in bankruptcy — would devastate the US solar industry, risking up to two-thirds of solar installations expected over the next five years.”
The US Solar Energy Industries Association also clapped back at Suniva and Solarworld:
“Our estimates show that even in the states where Suniva and its lone supporter, SolarWorld, have operations, if the petition succeeds, there would be many times more jobs lost than expected gains for two struggling companies.”
Meanwhile, noted tariff enthusiast Donald J. Trump could be eyeballing the Suniva/Solar World case as a vehicle for checking off at least one item on his to-do list. Axios reporter Rebecca Zisser has the inside scoop:
“President Trump is probably going to slap tariffs on solar-energy imports if a federal trade agency recommends them, according to an administration official and other experts.”
By putting hard numbers on the potential job losses, the US solar industry has provided Trump with an easy out for refusing this particular tariff opportunity.
As of this writing, a decision from ITC is expected by September 22 so hold on to your hats.
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Photo via NREL