A Wood Mackenzie report in September expects solar PV system costs to rise for the first time in a decade, but the National Renewable Energy Laboratory’s (NREL) annual cost benchmarking report shows continued overall cost declines for installed solar photovoltaic (PV) and battery storage systems in Q1 2021.
The U.S. Solar Photovoltaic System and Energy Storage Cost Benchmark: Q1 2021 shows costs continue to fall for residential, commercial rooftop, and utility-scale PV systems—by 3%, 11%, and 12%, respectively, compared to last year. Balance of systems costs did increase or remain flat across sectors this year though, which is a change. However, the higher BOS costs were offset by a 19% reduction in module cost, according to NREL, causing overall costs to continue their decade-long decline.
The report’s authors used a bottom-up cost modeling approach that accounts for all system and project development costs incurred during installation to model the costs for residential, commercial, and utility-scale PV systems, with and without energy storage.
They also modeled typical installation techniques and business operations from an installed-cost perspective. This strategy ensures that hardware costs reflect the actual purchase price of components as well as the sales price paid to the installer, including profits. The benchmarks assume a business environment unaffected by the novel coronavirus pandemic and represent national averages.
“As the costs of construction-related raw materials have increased during the pandemic, the total balance of systems material cost has either stayed relatively the same, or, in some cases, increased by a marginal percentage compared to the balance of systems cost reported in the Q1 2020 benchmark report. The major cost drivers that helped reduce the system installation costs of PV and energy storage systems in Q1 2021 were lower module cost, increased module efficiency, and lower battery pack cost,” said NREL’s solar and storage techno-economic analyst, Vignesh Ramasamy.
Energy storage costs decline too
Starting with the 2020 PV benchmark report, NREL began including PV-plus-storage and standalone energy storage costs in its annual reports. The 2021 benchmark report finds continued cost declines across residential, commercial, and industrial PV-plus-storage systems, with the greatest cost declines for utility-scale systems (up to a 12.3% reduction). Standalone storage systems also saw cost declines.
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