In the first quarter of 2023, the benchmark installation cost per watt for residential solar across the U.S. dropped by 50 cents compared to Q1 2022, while utility-scale solar’s average installation cost per watt rose by 9 cents, the National Renewable Energy Laboratory found in a new report.
NREL also said in a Tuesday release that the trends of “high and volatile component prices” and competition for limited supplies appeared to lessen in 2023 compared to 2022.
In 2022, the average benchmark cost of utility-scale solar installation costs per watt was $1.07, and rose to $1.16 in the first quarter of 2023, while residential installation costs per watt dropped from $3.18 to $2.68.
Balance of system costs — which include costs like wiring, mounting systems and batteries — rose for residential installers in Q1 2023, but were offset by lower costs for modules and logistics, NREL said.
For utility-scale systems, however, the report said that lower prices for modules and some soft costs didn’t offset higher prices for aspects like inverters and labor.
"The costs of network upgrades needed to meet interconnection requirements have risen rapidly as the number of projects in the interconnection queue has increased," said the report's lead author, Vignesh Ramasamy.
NREL also announced a new modeling approach for the annual report in addition to new analyses. The PV System Cost Model, developed by the lab along with the U.S. Department of Energy’s Solar Energy Technologies Office, includes components “not previously benchmarked,” according to NREL’s release.
For the first time, NREL has begun benchmarking the costs of community solar, which the lab said incurs higher up-front costs than single-customer commercial solar installations, as well as the unique ongoing costs of subscriber management, marketing and customer acquisition.
"Community solar is an increasingly popular way to broaden access to solar energy in the United States," report co-author Jarett Zuboy said. "This year we modeled subscriber acquisition and management expenses to help put the costs of community solar into context with the equity benefits it provides."
In addition, NREL is applying new analysis to the data it collects, the report said. This includes accounting for solar manufacturing tax incentives under the Inflation Reduction Act.
