NREL issues report on costs of solar, battery storage systems

Published on October 30, 2023 by Dave Kovaleski

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The National Renewable Energy Laboratory (NREL) released a report that examines the cost of installed solar photovoltaic (PV) and battery storage systems.

The report – called the U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2023 – found that benchmark prices declined for residential systems, increased for utility-scale systems.

Compared to last year’s report, modeled market prices for installed residential PV systems were 15 percent lower this year. While balance of system costs were higher, they were more than offset by lower module, inverter, logistics, and customer acquisition costs, resulting in overall cost reductions for the representative residential system.

However, modeled market prices for utility-scale systems were 8 percent higher in Q1 2023 than in Q1 2022. Higher inverter, labor, and electrical balance of system (EBOS) costs more than offset lower module, structural balance of system (SBOS), and other soft costs in the 2023 report.

“The costs of network upgrades needed to meet interconnection requirements have risen rapidly as the number of projects in the interconnection queue has increased,” Vignesh Ramasamy, the report’s lead author, said. “Including network upgrade costs is one way we improved our model this year, and those costs account for much of the increase in EBOS costs compared with last year.”

The report stated that the first quarter benchmarks reflect the impact of Inflation Reduction Act (IRA) tax incentives to manufacturers for domestically producing and selling clean energy components. In addition, many U.S. manufacturers are likely taking advantage of the IRA’s Section 45X Advanced Manufacturing Production Tax Credit. Thus, NREL analysts accounted for this credit in modeling domestically manufactured component prices.

The data also showed that the cost for installing community solar is largely similar to the costs of installing a commercial PV system for a single customer. However, there are two important distinctions. One, community solar systems incur more initial costs to acquire numerous residential and commercial subscribers, and two, they incur ongoing costs of subscriber management, including bill management and marketing and customer acquisition.

“Community solar is an increasingly popular way to broaden access to solar energy in the United States,” Jarett Zuboy, report co-author, said. “This year we modeled subscriber acquisition and management expenses to help put the costs of community solar into context with the equity benefits it provides.”

It should be noted that for this year’s benchmark report, the Solar Energy Technologies Office developed a new bottom-up PV and storage cost model with NREL analysts to make the benchmarks simpler and more transparent. In addition, they also expanded the model to address components not previously benchmarked. As such, it relies more on direct inputs from industry experts, and it makes the aggregated and anonymized results from those sources publicly available. This type of transparency into detailed costs can be used to identify the drivers of installed prices and opportunities for system price reductions.