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Price of solar energy in U.S. falls to 5c/kWh

Staff writer ▼ | October 2, 2015
Solar energy pricing is at an all-time low, according to a new report released by Berkeley Lab.
Solar energy
Solar power   This improvement among more-recent projects
Driven by lower installed costs, improved project performance, and a race to build projects ahead of a reduction in a key federal incentive, utility-scale solar project developers have been negotiating power sales agreements with utilities at prices averaging just 5c/kWh.

These prices reflect receipt of the 30% federal investment tax credit, which is scheduled to decline to 10% after 2016, and would be higher if not for that incentive. By comparison, average wholesale electricity prices across the United States ranged from 3 to 6 cents/kWh in 2014, depending on the region.

Installed project costs have fallen by more than 50% since 2009. Median up-front project costs have dropped from around $6.3/W in 2009 to $3.1/W for projects completed in 2014.

Some projects built in 2014 were priced as low as $2/W, and the 20th percentile of the sample declined sharply from $3.2/W in 2013 to $2.3/W in 2014. (All numbers are reported in AC watts and 2014 dollars.)

Newer solar projects generate electricity more efficiently. Projects completed in 2013 performed at an average capacity factor of 29.4% (in AC terms) in 2014 - a notable improvement over the 26.3% and 24.5% average 2014 capacity factors realized by projects built in 2012 and 2011, respectively.

This improvement among more-recent project vintages is due to a combination of several trends: newer projects have been sited in better solar resource areas on average, and have increasingly oversized the solar collector field and/or employed tracking technology to increase energy capture.