The United States witnessed a decline in the construction costs of solar photovoltaic systems, wind turbines, and natural gas-fired electricity generators in 2021 compared to the previous year, according to recently released data. Solar photovoltaic systems saw a 6% decrease in construction costs, while wind turbines and natural gas-fired generators experienced a 5% and 18% decrease, respectively.
Renewable Energy Dominates New Capacity Additions
Solar, wind, and natural gas accounted for over 91% of the new capacity added to the U.S. electric grid in 2021. There was a 10% increase in investment in new electric-generating capacity, amounting to $50.8 billion dollars.
Understanding the Construction Cost Data
Construction cost data for generators are reported to the EIA through Form EIA-860, the Annual Electric Generator Report. The Electric Generator Construction Costs web page organizes the nominal construction cost values for generators installed each year. The recently released data provide insights into the trends over the years. For additional cost information and trends, the Short-Term Energy Outlook is an excellent resource.
Solar Photovoltaic Systems
The average construction cost for solar photovoltaic systems in the United States decreased by 6% in 2021, reaching $1,561 per kilowatt (kW). This decrease was mainly driven by a 10% drop in the construction cost of crystalline silicon tracking panels, which stood at $1,423/kW, the lowest average cost since 2014. Crystalline silicon fixed-tilt panels, on the other hand, experienced a 5% increase, making them the most expensive among the major solar technologies at $2,047/kW. The average cost of Cadmium telluride panels remained relatively stable, declining only 1% to $1,626/kW in 2021.
The majority of solar panels installed in the United States are crystalline silicon tracking panels that automatically move to follow the sun’s path across the sky. This tracking capability allows for continuous sun exposure, resulting in greater electricity production. In 2021, crystalline silicon tracking systems accounted for 56% of the utility-scale solar capacity added to the U.S. power grid.
Wind Turbines
The average construction cost for U.S. onshore wind turbines decreased by 5% in 2021 to $1,428/kW. All three size groups of wind turbines experienced slight declines in construction costs. The largest wind farms, with more than 200 megawatts (MW) of capacity, saw a 1% decrease to $1,382/kW. Wind farms ranging from 100 MW to 200 MW witnessed a 4.4% decrease, reaching $1,464/kW in 2021. Meanwhile, wind farms with 1 MW to 100 MW of capacity had the most significant cost reduction, with a 22% decrease to $1,949/kW in 2021.
Natural Gas-Fired Generators
The average construction cost for natural gas-fired generators experienced an 18% decrease in 2021 compared to 2020. This decrease was primarily driven by a significant drop in the cost of combustion turbines, which fell by 19% to $512/kW in 2021. On the other hand, the average construction cost for combined-cycle generators increased by 8% in 2021 to $1,252/kW.
Overall, the decreasing costs of renewable energy technologies and natural gas-fired generators are supporting the expansion of clean energy and providing more affordable options for electricity generation in the United States.
Principal contributor: Alex Mey. Article via U.S. EIA’s Today In Energy blog.
