US: Utility-scale solar more cost effective than residential rooftop

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In its study, "Comparative Generation Costs of Utility-Scale and Residential-Scale PV in Xcel Energy Colorado’s Service Area," the Brattle Group has concluded that utility-scale solar PV systems are far more cost-effective than residential rooftop ones, due to better economies of scale and greater solar electric output.

The researchers, who used real-world scenarios based on data from Xcel Energy Colorado, say utility-scale PV remained the most cost-effective option across all scenarios, with the generation cost of energy from 300 MW of utility-scale around one half (per kWh) that of 300 MW of 5kW residential systems.

By comparing the per-MWh customer supply costs of adding 300 MWdc of PV panels either via 60,000 distributed 5kW rooftop systems owned or leased by retail customers, with 300 MW of utility-scale plants that sell the generated energy to Xcel Energy Colorado under long-term PPAs, the study concluded that utility-scale power costs in the service territory will range from $66 to $117/MWh (6.6¢/kWh to 11.7¢/kWh), while residential costs will be between $123 and $193/MWh (12.3¢/kWh to 19.3¢/kWh).

The researchers did note, however, that the prices are "based on historical data, and are not necessarily reflective of current market prices."

According to the latest quarterly U.S. Solar Market Insight report, published by the Solar Energy Industries Association (SEIA) and GTM Research, residential system prices were $3.46/Wdc in Q1 2015; while fixed-tilt projects saw installed costs of $1.58/Wdc and tracking projects, $1.80/Wdc.

The prices are based on a bottom-up pricing method, which tracks "wholesale pricing of major solar components and data collected from major installers, with national average pricing supplemented by data collected from utility and state programs."

SEIA and GTM further reported that capacity-weighted average residential system pricing for the U.S., as conveyed by state and utility solar programs for Q1 2015, was $4.43/Wdc. Meanwhile, national weighted-average system pricing for utility-scale systems were said to average $1.79/Wdc.

The Brattle Group went on to say utility-scale systems avoided roughly 50% more carbon emissions than their residential rooftop counterparts, due to better placement and tracking capabilities.

"Thoughtful energy policy requires a thorough understanding of the relative costs of utility- and residential-scale solar PV for achieving policy goals," stated Frank Graves, Brattle principal and leader of the firm’s utilities practice. "By directly comparing the costs and benefits of PV solar deployed in equal amounts of residential- and utility-scale systems based on utility-supplied data, the Brattle study provides a key contribution to the policy discussion about solar PV."