NREL Reports Continuing PV And PV-Plus-Storage Cost Declines

November 29, 2021

by Peter Maloney
November 29, 2021

A new report from the National Renewable Energy Laboratory (NREL) finds continued cost declines across residential, commercial, and industrial photovoltaic (PV)-plus-storage systems, with the greatest cost declines for utility-scale systems. Standalone storage systems also saw cost declines.

The findings were included in NREL’s U.S. Solar Photovoltaic System and Energy Storage Cost Benchmark: Q1 2021, which was released this month. Starting with NREL’s 2020 PV benchmark report, NREL began including PV-plus-storage and standalone energy storage costs in its annual reports.

Meanwhile, NREL’s new report also finds that costs continued to fall for residential, commercial rooftop, and utility-scale PV systems—by 3%, 11%, and 12%, respectively, compared to last year.

 In a change from previous years’ reports, balance of systems costs have increased or remained flat across sectors this year. However, this increase in balance of systems cost was offset by a 19% reduction in module cost, causing overall costs to continue their decade-long decline.

NREL said that 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. NREL said 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,” said NREL’s solar and storage techno-economic analyst Vignesh Ramasamy.

“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,” he said.

In a second report, Photovoltaic Module Technologies: 2020 Benchmark Costs and Technology Evolution Framework Results, NREL researchers calculate a minimum sustainable price (MSP) — the price necessary to support a sustainable business over the long term — for modules.

Specifically, the report calculates that price by using bottom-up manufacturing cost analysis and applying a gross margin of 15%.