CAPital EXpenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. These expenditures include the hardware, the balance of system (e.g., site preparation, installation, and electrical infrastructure), and financial costs (e.g., development costs, onsite electrical equipment, and interest during construction) and are detailed in CAPEX Definition. In the ATB, CAPEX reflects typical plants and does not include differences in regional costs associated with labor, materials, taxes, or system requirements. The related Standard Scenarios product uses regional CAPEX adjustments. The range of CAPEX demonstrates variation with resource in the contiguous United States.

The following figure shows the Base Year estimate and future year projections for CAPEX costs. Three cost scenarios are represented: Constant, Mid, and Low technology cost. Historical data from residential PV installed in the United States are shown for comparison to the ATB Base Year estimates. The estimate for a given year represents CAPEX of a new plant that reaches commercial operation in that year.

Historical data shown in box-and-whiskers format where a bar represents the median, a box represents the 20^th and 80^th percentiles, and whiskers represent the minimum and maximum.

Year represents Commercial Online Date for a past or future plant.

CAPEX is shown as a single value because it does not vary with solar resource.

R&D Only Financial Assumptions (constant background rates, no tax or tariff changes)

Recent Trends

Reported residential PV installation CAPEX (Barbose et al. 2017) is shown in box-and-whiskers format for comparison to the ATB current CAPEX estimates and future projections. The data in Barbose and Dargouth (2017) represent 83% of all U.S. residential and commercial PV capacity installed through 2016 and 76% of capacity installed in 2016. The weighted-average market report numbers are expected to be higher than the national cost number projected here, as many of the historical installations are in states (e.g., California) where installation costs are higher than the national cost number.

PV pricing and capacities are quoted in kW_DC (i.e., module rated capacity) unlike other generation technologies, which are quoted in kW_AC. For PV, this would correspond to the combined rated capacity of all inverters. This is done because kW_DC is the unit that the majority of the PV industry uses. Although costs are reported in kW_DC, the total CAPEX includes the cost of the inverter, which has a capacity measured in kW_AC.

CAPEX estimates for 2016 reflect a continued rapid decline in pricing supported by analysis of recent system cost and pricing for projects that became operational in 2016 (Feldman et al. (2017)).

Base Year Estimates

For illustration in the ATB, a representative residential-scale PV installation is shown. Although the PV technologies vary, typical installation costs are represented with a single estimate because the CAPEX does not vary with solar resource.

Although the technology market share may shift over time with new developments, the typical installation cost is represented with the projections above.

A system price of $3.78/W_DC in 2016 represents the capacity-weighted average reported price of a residential-scale PV system installed in 2016 reported in Tracking the Sun X (Barbose and Dargouth (2017)) and adjusted to remove regional cost multipliers based on geographic location of projects installed in 2015. The $2.90/W_DC in 2017 is based on bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2017 (adjusted for inflation, and accounting for $0.1/W higher than expected module prices due to tariff concerns in the R&D + Market sensitivity case) (Fu et al. (2017)). These figures are in line with other estimated system prices reported in Feldman et al. (2017).

The Base Year CAPEX estimates should tend toward the low end of observed cost because no regional impacts are included. These effects are represented in the historical market data.

Future Year Projections

Projections of future residential PV installation CAPEX are based on 11 system price projections from seven separate institutions with short-term projections made in the past year and long-term projections made in the last four years. We adjusted the " min," " median," and " max" projections in a few different ways. All 2016 pricing is based on the capacity-weighted average historically reported residential PV system price reported in Tracking the Sun X (Barbose and Dargouth (2017)). All 2017 pricing is based on the bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2017 (adjusted for inflation, and accounting for $0.1/W higher than expected module prices due to tariff concerns in the R&D + Market sensitivity case) (Fu et al. (2017)). These figures are in line with other estimated system prices reported in Feldman et al. (2017).

We adjusted the Mid and Low cost projections for 2018-2050 to remove distortions caused by the combination of forecasts with different time horizons and based on internal judgment of price trends. In addition, because the projections were made before the Section 201 proclamation implementing a tariff on imported PV modules and cells, we adjusted projections to incorporate Section 201 tariff per pricing from internal NREL analysis in the R&D + Market sensitivity case. The Constant technology cost scenario is kept constant at the 2017 CAPEX value, assuming no improvements beyond2017.

A detailed description of the methodology for developing future year projections is found in Projections Methodology.

Technology innovations that could impact future O&M costs are summarized in LCOE Projections.