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Utility-Scale PV

Representative Technology

Utility-scale PV systems in the ATB are representative of one-axis tracking systems with performance and pricing characteristics in line with a 1.3 DC-to-AC ratio-or inverter loading ratio (ILR) (Fu, Feldman, and Margolis 2018). PV system performance characteristics in previous ATB versions were designed in the ReEDS model at a time when PV system ILRs were lower than they are in current system designs; performance and pricing in the 2019 ATB incorporates more up-to-date system designs and therefore assumes a higher ILR.

Resource Potential

Solar resources across the United States are mostly good to excellent at about 1,000-2,500 kWh/m²/year. The Southwest is at the top of this range, while Alaska and part of Washington are at the low end. The range for the contiguous United States is about 1,350-2,500 kWh/m²/year. Nationwide, solar resource levels vary by about a factor of two.

The total U.S. land area suitable for PV is significant and will not limit PV deployment. One estimate (Denholm and Margolis 2008) suggests the land area required to supply all end-use electricity in the United States using PV is about 5,500,000 hectares (ha) (13,600,000 acres), which is equivalent to 0.6% of the country's land area or about 22% of the "urban area" footprint (this calculation is based on deployment/land in all 50 states).

/electricity/2019/images/solar/pv-map-mean-us-resource.jpg

Map of the mean solar resource available to PV systems in the United States

Renewable energy technical potential, as defined by Lopez et al. (2012), represents the achievable energy generation of a particular technology given system performance, topographic limitations, and environmental and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand that there are multiple types of potential – resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").

Base Year and Future Year Projections Overview

The Base Year estimates rely on modeled CAPEX and O&M estimates benchmarked with industry and historical data. Capacity factor is estimated based on hours of sunlight at latitude for five representative geographic locations in the United States. The ATB presents capacity factor estimates that encompass a range associated with Low, Mid, and Constant technology cost scenarios across the United States.

Future year projections are derived from analysis of published projections of PV CAPEX and bottom-up engineering analysis of O&M costs. Three different projections were developed for scenario modeling as bounding levels:

Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2017 to 2050; consistent across all renewable energy technologies in the ATB
Mid Technology Cost Scenario: based on the median of literature projections of future CAPEX; O&M technology pathway analysis
Low Technology Cost Scenario: based on the low bound of literature projections of future CAPEX and O&M technology pathway analysis.

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 figures show the Base Year estimate and future year projections for CAPEX costs in terms of $/kW_DC or $/kW_AC. Three cost scenarios are represented: Constant, Mid, and Low technology cost. Historical data from utility-scale PV plants 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.

The PV industry typically refers to PV CAPEX in terms of $/kW_DC based on the aggregated module capacity. The electric utility industry typically refers to PV CAPEX in terms of $/kW_AC based on the aggregated inverter capacity. See Solar PV AC-DC Translation for details. The figures illustrate the CAPEX historical trends, current estimates, and future projections in terms of $/kW_DC or $/kW_AC; current estimates and future projections assume an inverter loading ratio of 1.3 while historical numbers represent reported values.

/electricity/2019/images/solar-util/chart-solar-util-capex-RD-2019.png

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. Capacity-weighted average is also shown.

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 changes)

Sources: historical: Bolinger and Seel (2018) ; Fu, Feldman, and Margolis (2018) ; future projections: 2019 ATB

Recent Trends

Reported historical utility-scale PV plant CAPEX (Bolinger and Seel 2018) is shown in box-and-whiskers format for comparison to the historical benchmarked utility-scale PV plant overnight capital cost (Fu, Feldman, and Margolis 2018) and future CAPEX projections. Bolinger and Seel (2018) provide statistical representation of CAPEX for 88% of all utility-scale PV capacity.

The difference in each year's price between the market and benchmark data reflects differences in methodologies. There are a variety of reasons reported and benchmark prices can differ, as enumerated by Barbose and Dargouth (2018) and Bolinger and Seel (2018) , including:

Timing-related issues: For instance, the time between PPA contract completion date and project placed in service may vary, and a system can be reported as installed in separate sections over time or when an entire complex is complete. For example, in 2014, the reported capacity-weighted average system price was higher than 80% of system prices in 2014 due to very large systems, with multiyear construction schedules, installed in that year. Developers of these large systems negotiated contracts and installed portions of their systems when module and other costs were higher.
Variations over time in the size, technology, installer margin, and design of systems installed in a given year
Which cost categories are included in CAPEX (e.g., financing costs and initial O&M expenses).

Due to the investment tax credit, projects are encouraged to include as many costs incurred in the upfront CAPEX to receive a higher tax credit, which may have otherwise been reported as operating costs. The bottom-up benchmarks are more reflective of an overnight capital cost, which is in line with the ATB methodology of inputting overnight capital cost and calculating construction financing to derive CAPEX.

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 most 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 2019 reflect continued rapid decline supported by analysis of recent power purchase agreement pricing (Bolinger and Seel 2018) for projects that will become operational in 2019 and beyond.

Base Year Estimates

For illustration in the ATB, a representative utility-scale PV plant is shown. Although the PV technologies vary, typical plant 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 plant cost is represented with the projections above.

A system price of $1.10/W_DC in 2017 is based on modeled pricing for a 100-MW_DC, one-axis tracking systems quoted in Q1 2018 as reported by Fu, Feldman, and Margolis (2018) , adjusted for inflation. The $1.10/W_DC price in 2018 is based on modeled pricing for a 100-MW_DC, one-axis tracking systems quoted in Q1 2018 as reported by Fu, Feldman, and Margolis (2018) , adjusted for inflation. The 2017 and 2018 bottom-up benchmarks are reflective of an overnight capital cost, which is in line with the ATB methodology of inputting overnight capital cost and calculating construction financing to derive CAPEX. We focus on larger systems for the 2017 and 2018 values to better align with the current trends in utility-scale installations. EIA (2019) reported that 94 PV installations totaling 4.3 GW_AC were placed in service in 2018 in the United States. While this represents an average of approximately 46 MW_AC, 78% of the installed capacity in 2018 came from systems greater than 50 MW_AC, and 38% from systems greater than 100 MW_AC. Regardless, both 2017 and 2018 figures are in line with other estimated system prices reported by Feldman and Margolis (2018) .

Future Year Projections

Projections of future utility-scale PV plant CAPEX are based on 11 system price projections from 9 separate institutions. Projections include:

Short-term projections made in the past two years: (Avista 2017), (BNEF 2018), (E3 2017), (GTM Research 2018), and (IEA 2018)
Long-term projections made in the last three years: (ABB 2017), (BNEF 2017), (EIA 2019b), (EIA 2018), (IEA 2018c), (IRENA 2016), and (Lam, Branstetter, and Azevedo 2018) .

We adjusted the "min," "median," and "max" projections in a few different ways. All 2017 and 2018 pricing are based on the bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2018 (Fu, Feldman, and Margolis 2018) . These figures are in line with other estimated system prices reported in Q2/Q3 2018 Solar Industry Update (Feldman and Margolis 2018) .

We adjusted the Mid and Low projections for 2019-2050 to remove distortions caused by the combination of forecasts with different time horizons and based on internal judgment of price trends. Without such adjustments, the Mid and Low projections would have increased over time in certain years, or they would have decreased dramatically due to the end of a projection's timeline. The Constant cost scenario is kept constant at the 2018 CAPEX value and assumes no improvements beyond 2018.

The largest annual reductions in CAPEX for the Low projection occur from 2018 to 2019, dropping 14%, which is on par with the average reduction in reported price of 14% between 2010 and 2017 (Bolinger and Seel 2018) . Initial reported pricing for utility-scale power purchase agreements (PPAs) placed in service in 2018 fell to approximately $42/MWh (Real $2018), which is consistent in price with PPAs executed in 2015 and 2016, representing a two- to three-year lag from execution to installation. Looking forward, the capacity average executed PPA price for a provisional set of U.S. projects in 2018 was approximately $23/MWh (Real $2018). If PPAs executed in 2018 follow a similar two-year lag, we would expect those systems to be installed in 2020-2021; therefore, we could see the capacity-weighted average PPA price for systems installed in the year fall from $42/MWh in 2018 to $23/MWh in 2020, or 46% less. The capacity average executed PPA price in 2017 was 15% lower than the capacity-weighted average PPA price for a system installed in 2017. PPA pricing and CAPEX are not perfectly correlated-annual reductions of PPA and CAPEX only have a correlation coefficient of 0.17 from 2010 to 2017; however, the correlation coefficient for reduction over a four-year period in PPA and CAPEX during that time (i.e., PPA or CAPEX reduction from 2010 to 2014, 2011 to 2015, 2012 to 2016, and 2013 to 2017) was 0.95 – from 2010 to 2017, the capacity-weighted average PPA price and CAPEX for systems installed in that year fell 69% and 61% respectively (Bolinger and Seel 2018) .

Looking to 2030 and beyond, various technical, market, and business improvements could significantly reduce PV system costs further, in line with the low and mid CAPEX projections. Many manufacturers have near-term road maps that will greatly exceed the 18.1% module efficiency assumed in the 2018 utility-scale overnight capital cost benchmark; for example, Canadian Solar reported that its mass produced cells will increase 20%-22% in 2018 (depending on cell line) to 22%-24% by 2021 (Canadian Solar 2019) . However, greater efficiencies can still be achieved if the industry can translate gains in the laboratory to mass production, as the current monocrystalline cell efficiency record in a laboratory is 26.1% (EIA 2016a) and (NREL: "Best Research-Cell Efficiency Chart"). Additionally, the industry also has the potential to significantly increase cell efficiencies by using double junction cell technology; for example, perovskite on top of c-Si has a theoretical maximum efficiency of 44% (Fuscher and Bruno 2016) .

Other factors are also expected to significantly decrease PV system prices. For example, at the end of 2018, the global module price was approximately $0.22/W (Feldman and Margolis 2018) compared to the 2018 utility-scale CAPEX benchmark, which assumes a module price of $0.47/W (Fu, Feldman, and Margolis 2018) . Additionally, systems are converting to medium-voltage power transmission or centralized power conversion centers, which should lower the price of the inverter to a system. Further design simplification and manufacturing automation of inverters should drop prices even lower. Additionally, labor cost improvements can be achieved through automation, preassembly efficiencies, and improvements in wind load design. Low-cost carbon fiber could also greatly reduce structural equipment and labor costs. Many of these improvements are expected to enter the marketplace in the near term while others will require greater R&D or "tech-to-market" investment.

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

Technology innovations that could impact future CAPEX costs are summarized in LCOE Projections.

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.

For the ATB, and based on EIA (2016a) and the NREL Solar PV Cost Model (Fu, Feldman, and Margolis 2018), the utility-scale solar PV plant envelope is defined to include:

Hardware
Module supply
Power electronics, including inverters
Racking
Foundation
AC and DC wiring materials and installation
Electrical infrastructure, such as transformers, switchgear, and electrical system connecting modules to each other and to the control center
Balance of system (BOS)
Land acquisition, site preparation, installation of underground utilities, access roads, fencing, and buildings for operations and maintenance
Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
Financial Costs
Owners' costs, such as development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, and property taxes during construction
Electrical interconnection, including onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (< 1 mile), and necessary upgrades at a transmission substation; distance-based spur line cost (GCC) not included in the ATB
Interest during construction estimated based on six-month duration accumulated 100% at half-year intervals and an 8% interest rate (ConFinFactor).

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)

(See the Financial Definitions tab in the ATB data spreadsheet.)

Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).

In the ATB, CAPEX represents a typical one-axis utility-scale PV plant and does not vary with resource. The difference in cost between tracking and non-tracking systems has been reduced greatly in the United States. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by EIA (2016b) expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs for potential utility-PV plant locations expand the range of CAPEX even further. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

/electricity/2019/images/solar-util/chart-solar-util-capex-definition-RD-2019.png

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

Standard Scenarios Model Results

ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.

CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., but the ReEDS model does include 134 regional multipliers (EIA 2016b).

CAPEX in the ATB does not include a geographically determined spur line (GCC) from plant to transmission grid, but the ReEDS model calculates a unique value for each potential PV plant.

Operation and Maintenance (O&M) Costs

Operations and maintenance (O&M) costs represent the annual fixed expenditures required to operate and maintain a solar PV plant over its lifetime, including:

Insurance, property taxes, site security, legal and administrative fees, and other fixed costs
Present value and annualized large component replacement costs over technical life (e.g., inverters at 15 years)
Scheduled and unscheduled maintenance of solar PV plants, transformers, etc. over the technical lifetime of the plant (e.g., general maintenance, including cleaning and vegetation removal).

The following figure shows the Base Year estimate and future year projections for fixed O&M (FOM) costs. Three cost scenarios are represented. The estimate for a given year represents annual average FOM costs expected over the technical lifetime of a new plant that reaches commercial operation in that year.

/electricity/2019/images/solar-util/chart-solar-util-operation-maintenance-2019.png

Base Year Estimates

FOM of $20/kW_DC - yr is based on modeled pricing for a 100-MW_DC, one-axis tracking systems quoted in Q1 2017 as reported by Fu, Feldman, and Margolis (2018), adjusted for inflation. The values in this report (ATB 2019) are higher than those from ATB 2018 because they better align with the benchmarks reported in Fu, Feldman, and Margolis (2018); the previous edition relied solely on an O&M-to-CAPEX ratio, derived from multiple reports. A wide range in reported prices exists in the market, in part depending on the maintenance practices that exist for a particular system. These cost categories include asset management (including compliance and reporting for incentive payments), different insurance products, site security, cleaning, vegetation removal, and failure of components. Not all these practices are performed for each system; additionally, some factors depend on the quality of the parts and construction. NREL analysts estimate O&M costs can range from $0 to $40/kW_DC - yr.

Future Year Projections

FOM for 2018 is also based on pricing reported in Fu, Feldman, and Margolis (2018), adjusted for inflation. From 2019-2050, FOM is based on the historical average ratio of O&M costs ($/kW-yr) to CAPEX costs ($/kW), 1.2:100, as reported by Fu, Feldman, and Margolis (2018). This ratio is higher than the ratio of O&M costs to historically reported CAPEX costs of 0.7:100, which are derived from 2011 to 2017 historical data reported by Bolinger and Seel (2018), as well as the ratio of O&M costs to CAPEX costs of 1.0:100, which is derived from (IEA 2016) and (Lazard 2018). Historically reported data suggest O&M and CAPEX cost reductions are correlated; from 2011 to 2017, fleetwide average O&M and CAPEX costs fell 50% and 58% respectively, as reported by Bolinger and Seel (2018).

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.

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

The capacity factor represents the expected annual average energy production divided by the annual energy production, assuming the plant operates at rated capacity for every hour of the year. It is intended to represent a long-term average over the lifetime of the plant. It does not represent interannual variation in energy production. Future year estimates represent the estimated annual average capacity factor over the technical lifetime of a new plant installed in a given year.

Other technologies' capacity factors are represented in exclusively AC units; however, because PV pricing in this ATB documentation is represented in $/kW_DC, PV system capacity is a DC rating. The PV capacity factor is the ratio of annual average energy production (kWh_AC) to annual energy production assuming the plant operates at rated DC capacity for every hour of the year. For more information, see Solar PV AC-DC Translation.

The capacity factor is influenced by the hourly solar profile, technology (e.g., thin-film versus crystalline silicon), axis type (e.g., none, one, or two), expected downtime, and inverter losses to transform from DC to AC power. The DC-to-AC ratio is a design choice that influences the capacity factor. PV plant capacity factor incorporates an assumed degradation rate of 0.75%/year (Fu, Feldman, and Margolis 2018)in the annual average calculation. R&D could lower degradation rates of PV plant capacity factor; future projections for Mid and Low cost scenarios reduce degradation rates by 2050, using a straight-line basis, to 0.5%/year and 0.2%/year respectively.

The following figure shows a range of capacity factors based on variation in solar resource in the contiguous United States. The range of the Base Year estimates illustrate the effect of locating a utility-scale PV plant in places with lower or higher solar irradiance. These five values use specific locations as examples of high (Daggett, California), high-mid (Los Angeles, California), mid (Kansas City, Missouri), low-mid (Chicago, Illinois), and low (Seattle, Washington) resource areas in the United States as implemented in the System Advisor Model using PV system characteristics from Fu, Feldman, and Margolis (2018).

/electricity/2019/images/solar-util/chart-solar-util-capacity-factor-2019.png

The data illustrated include estimated degradation over the lifetime of a PV plant, which reduces over time in the Mid and Low scenarios, resulting in a higher average capacity factor over time.

PV system inverters, which convert DC energy/power to AC energy/power, have AC capacity ratings; therefore, the capacity of a PV system is rated in MW_AC, or the aggregation of all inverters' rated capacities, or MW_DC, or the aggregation of all modules' rated capacities. The capacity factor calculation uses a system's rated capacity, and therefore, capacity factor can be represented using exclusively AC units or using AC units for electricity (the numerator) and DC units for capacity (the denominator). Both capacity factors will result in the same LCOE as long as the other variables use the same capacity rating (e.g., CAPEX in terms of $/kW_DC). PV systems' DC ratings are typically higher than their AC ratings; therefore, the capacity factor calculated using a DC capacity rating has a higher denominator. In the ATB, we use capacity factors of 15.9%, 18.9%, 21.0%, 23.2%, and 28.3% for the first year of a PV project and adjust the values to reflect an average capacity factor for the lifetime of a project, calculated with MW_DC, assuming 0.75% module capacity degradation per year in the Base Year and declining to 0.5% and 0.2% module capacity degradation per year by 2050 for the Mid and Low cost scenarios. The adjusted average capacity factor values used in the ATB Base Year are 14.9%, 17.7%, 19.7%, 21.7%, and 26.6%. These numbers would change to approximately 19.4%, 23.0%, 25.6%, 29.3%, and 34.5% if the ATB used MW_AC. The following figure illustrates capacity factor – both DC and AC – for a range of inverter loading ratios for the Base Year. The ATB capacity factor assumptions are based on ILR = 1.3.

/electricity/2019/images/solar-util/chart-solar-util-cf-ilr-comparison-2019.png

Recent Trends

At the end of 2017, the capacity-weighted average AC capacity factor for all U.S. projects installed at the time was 26.0% (including fixed-tilt systems), but individual project-level capacity factors exhibited a wide range (14.3%-35.2%).

/electricity/2019/images/solar-util/chart-solar-util-capacity-factor-historical.jpg

Source: Bolinger and Seel (2018)

The capacity-weighted average capacity factor was more closely in line with the higher end of the range because 55% of installed capacity from the data set was placed in service in the past two years of when the data were collected (and therefore have not degraded substantially), and 67% of the installed capacity was in the southwestern United States or California, where the average capacity factor was 29.8% for one-axis systems and 25.2% for fixed-tilt systems (Bolinger and Seel 2018).

Base Year Estimates

For illustration in the ATB, a range of capacity factors associated with the range of latitude in the contiguous United States is shown.

Over time, PV plant output is reduced. This degradation (at 0.75%) is accounted for in ATB estimates of capacity factor. The ATB capacity factor estimates represent estimated annual average energy production over a 30-year lifetime.

These DC capacity factors are for a one-axis tracking system with a DC-to-AC ratio of 1.3.

Future Year Projections

Projections of capacity factors for plants installed in future years are unchanged from the Base Year for the Constant cost scenario. Capacity factors for Mid and Low cost scenarios are projected to increase over time, caused by a straight-line reduction in PV plant capacity degradation rates from 0.75%, reaching 0.5%/year and 0.2%/year by 2050 for the Mid and Low cost scenarios respectively. The following table summarizes the difference in average capacity factor in 2050 caused by different degradation rates in the Constant, Mid, and Low cost scenarios.

2050 Utility PV DC Capacity Factors by Resource Location and Cost Scenario

	Seattle, WA	Chicago, IL	Kansas City, MO	Los Angeles, CA	Daggett, CA
Low Cost (0.30% degradation rate)	15.5%	18.4%	20.5%	22.6%	27.6%
Mid Cost (0.50% degradation rate)	15.2%	18.1%	20.1%	22.2%	27.1%
Constant Cost (0.75% degradation rate)	14.9%	17.7%	19.7%	21.7%	26.6%

Solar PV plants have very little downtime, inverter efficiency is already optimized, and tracking is already assumed. That said, there is potential for future increases in capacity factors through technological improvements beyond lower degradation rates, such as less panel reflectivity and improved performance in low-light conditions.

Standard Scenarios Model Results

The ReEDS model output capacity factors for wind and solar PV can be lower than input capacity factors due to endogenously estimated curtailments determined by system operation.

Plant Cost and Performance Projections Methodology

Currently, CAPEX – not LCOE – is the most common metric for PV cost. Due to differing assumptions in long-term incentives, system location and production characteristics, and cost of capital, LCOE can be confusing and often incomparable between differing estimates. While CAPEX also has many assumptions and interpretations, it involves fewer variables to manage. Therefore, PV projections in the ATB are driven primarily by CAPEX cost improvements, along with minor improvements in operational cost and cost of capital.

The Constant, Mid, and Low technology cost cases explore the range of possible outcomes of future PV cost improvements:

Constant Technology Cost Scenario: no improvements made beyond today
Mid Technology Cost Scenario: current expectations of price reductions in a "business-as-usual" scenario
Low Technology Cost Scenario: expectations of potential cost reductions given improved R&D funding, favorable financing, and more aggressive global deployment targets.

While CAPEX is one of the drivers to lower costs, R&D efforts continue to focus on other areas to lower the cost of energy from utility-scale PV, such as longer system lifetime and improved performance.

Projections of future utility-scale PV plant CAPEX are based on 11 system price projections from 9 separate institutions. The short-term forecasts were primarily provided by market analysis firms with expertise in the PV industry, through a subscription service with NREL. The long-term forecasts primarily represent the collection of publicly available, unique forecasts with either a long-term perspective of solar trends or through capacity expansion models with assumed learning by doing. Short-term U.S. price forecasts made in the past two years include: (Avista 2017), (BNEF 2018), (E3 2017), (GTM Research 2018), and (IEA 2018b). Long-term projections made in the past three years include (ABB 2017), (BNEF 2017), (EIA 2019b), (IEA 2018a), (IRENA 2016), and (Lam, Branstetter, and Azevedo 2018).

Short-Term Forecast Institutions: Avista, Bloomberg New Energy Finance, CAISO, GTM Research, International Energy Agency
Long-Term Forecast Institutions: ABB; Bloomberg New Energy Finance; International Energy Agency; IRENA; Lam, Branstetter, and Azevedo (2018); U.S. Energy Information Administration.

To adjust all projections to the ATB's assumption of single-axis tracking systems, 7% was added to all price projections that assumed fixed-tilt tracking technology, and 3.5% was added for all price projections that did not list whether the technology was fixed-tilt or single-axis tracking. All price projections quoted in $/W_AC were converted to $/W_DC using a 1.3 ILR. In instances in which literature projections did not include all years, a straight-line change in price was assumed between any two projected values. To generate Mid and Low technology cost scenarios, we took the "median" and "min" of the data sets; however, we only included short-term U.S. forecasts until 2030 as they focus on near-term pricing trends within the industry. Starting in 2030, we include long-term global and U.S. forecasts in the data set, as they focus more on long-term trends within the industry. It is also assumed that after 2025, U.S. prices will be on par with global averages; the federal tax credit for solar assets reverts down to 10% for all projects placed in service after 2023, which has the potential to lower upfront financing costs and remove any distortions in reported pricing, compared to other global markets. Additionally, a larger portion of the United States will have a more mature PV market, which should result in a narrower price range. Changes in price for the Mid and Low technology cost scenarios between 2020 and 2030 are interpolated on a straight-line basis.

We adjusted the "median" and "min" projections in a few different ways. All 2017 and 2018 pricing are based on the bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2018 (adjusted for inflation)(Fu, Feldman, and Margolis 2018). These figures are in line with other estimated system prices reported in Q2/Q3 2018 Solar Industry Update (Feldman and Margolis 2018).

We derive future FOM based on the historical average ratio of O&M costs ($/kW-yr) to CAPEX costs ($/kW), 1.2:100, as reported by Fu, Feldman, and Margolis (Fu, Feldman, and Margolis 2018). Historically reported data suggest O&M and CAPEX cost reductions are correlated; from 2011 to 2017 fleetwide average O&M and CAPEX costs fell 50% and 58% respectively, as reported by Bolinger and Seel (2018).

O&M cost reductions are likely to be achieved over the next decade by a transition from manual and reactive O&M to semi-automated and fully automated O&M where possible. While many of these tasks are very site and region specific, emerging technologies have the potential to reduce the total O&M costs across all systems. For example, automated processes of sensors, monitors, remote-controlled resets, and drones to perform operations have the potential to allow O&M on PV systems to operate more efficiently at lower cost. Not all tasks have a clear path of automation due to complexity, safety, and some policy. This is one reason some level of manual interventions will likely exist for quite some time. Also, as systems age, O&M tasks that rely strictly on manpower are likely to increase in cost over the system lifetime.

Projections of capacity factors for plants installed in future years are unchanged from 2018 for the Constant cost scenario. Capacity factors for Mid and Low cost scenarios are projected to increase over time, caused by a straight-line reduction in PV plant capacity degradation rates, reaching 0.5%/year and 0.2%/year by 2050 for the Mid and Low cost scenarios respectively.

Levelized Cost of Energy (LCOE) Projections

Levelized cost of energy (LCOE) is a summary metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.

The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for utility-scale PV across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside of the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform and tax credits. The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term utility-scale PV plants are associated with Utility PV: Kansas City. Data for all the resource categories can be found in the ATB Data spreadsheet; for simplicity, not all resource categories are shown in the figures. In the R&D + Market LCOE case, there is an increase in LCOE from 2018-2020, caused by an increase WACC, and an increase from 2023-2024, caused by the reduction in tax credits.

R&D Only | R&D + Market

R&D Only

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R&D + Market

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The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term utility-scale PV plants are associated with Utility PV-Kansas City.

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

The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term utility-scale PV plants are associated with Utility PV-Kansas City. The increase in LCOE in 2024 is due to the phase-down of the ITC.

R&D Only + Market Financial Assumptions (dynamic background rates, taxes)

The methodology for representing the CAPEX, O&M, and capacity factor assumptions behind each pathway is discussed in Projections Methodology. In general, the degree of adoption of technology innovation distinguishes the Constant, Mid, and Low technology cost scenarios. These projections represent trends that reduce CAPEX and improve performance. Development of these scenarios involves technology-specific application of the following general definitions:

Constant Technology: Base Year (or near-term estimates of projects under construction) equivalent through 2050 maintains current relative technology cost differences
Mid Technology Cost Scenario: Technology advances through continued industry growth, public and private R&D investments, and market conditions relative to current levels that may be characterized as "likely" or "not surprising"
Low Technology Cost Scenario: Technology advances that may occur with breakthroughs, increased public and private R&D investments, and/or other market conditions that lead to cost and performance levels that may be characterized as the " limit of surprise" but not necessarily the absolute low bound.

To estimate LCOE, assumptions about the cost of capital to finance electricity generation projects are required, and the LCOE calculations are sensitive to these financial assumptions. Two project finance structures are used within the ATB:

R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA 2019b)and excludes effects of tax reform and tax credits.
R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2019 as well as effects of tax reform, and tax credits. For a detailed discussion of these assumptions, see Project Finance Impact on LCOE.

A constant cost recovery period – over which the initial capital investment is recovered – of 30 years is assumed for all technologies throughout this website, and can be varied in the ATB data spreadsheet.

The equations and variables used to estimate LCOE are defined on the Equations and Variables page. For illustration of the impact of changing financial structures such as WACC, see Project Finance Impact on LCOE. For LCOE estimates for the Constant, Mid, and Low technology cost scenarios for all technologies, see 2019 ATB Cost and Performance Summary.

In general, differences among the technology cost cases reflect different levels of adoption of innovations. Reductions in technology costs reflect the cost reduction opportunities that are listed below.

Modules

Increased module efficiencies and increased production-line throughput to decrease CAPEX; overhead costs on a per-kilowatt basis will go down if efficiency and throughput improvement are realized
Reduced wafer thickness or the thickness of thin-film semiconductor layers
Development of new semiconductor materials
Development of larger manufacturing facilities in low-cost regions

Balance of system (BOS)

Increased module efficiency, reducing the size of the installation
Development of racking systems that enhance energy production or require less robust engineering
Integration of racking or mounting components in modules
Reduction of supply chain complexity and cost

Creation of standard packaged system design
Improvement of supply chains for BOS components in modules

Improved power electronics

Improvement of inverter prices and performance, possibly by integrating microinverters

Decreased installation costs and margins

Reduction of supply chain margins (e.g., profit and overhead charged by suppliers, manufacturer, distributors, and retailers); this will likely occur naturally as the U.S. PV industry grows and matures
Streamlining of installation practices through improved workforce development and training and developing standardized PV hardware
Expansion of access to a range of innovative financing approaches and business models
Development of best practices for permitting interconnection and PV installation such as subdivision regulations, new construction guidelines, and design requirements.

FOM cost reduction represents optimized O&M strategies, reduced component replacement costs, and lower frequency of component replacement.

Commercial PV

Representative Technology

For the ATB, commercial PV systems are modeled for a 300-kW_DC fixed-tilt (5°), roof-mounted system. Flat-plate PV can take advantage of direct and indirect insolation, so PV modules need not directly face and track incident radiation. This gives PV systems a broad geographical application, especially for commercial PV systems.

Resource Potential

Solar resources across the United States are mostly good to excellent at about 1,000-2,500 kWh)/m²/year. The Southwest is at the top of this range, while only Alaska and part of Washington are at the low end. The range for the contiguous United States is about 1,350-2,500 kWh/m²/year. Nationwide, solar resource levels vary by about a factor of two.

Distributed-scale PV is assumed to be configured as a fixed-tilt, roof-mounted system. Compared to utility-scale PV, this reduces both the potential capacity factor and amount of land (roof space) that is available for development. A recent study of rooftop PV technical potential (Gagnon et al. 2016) estimated that as much as 731 GW (926 TWh/yr) of potential exists for small buildings (< 5,000 m² footprint) and 386 GW (506 TWh/yr) for medium (5,000-25,000 m²) and large buildings (> 25,000 m²).

Map of the mean solar resource available to PV systems in the United States

Base Year and Future Year Projections Overview

Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2017 to 2050; consistent across all renewable energy technologies in the ATB
Mid Technology Cost Scenario: based on the median of literature projections of future CAPEX and O&M technology pathway analysis
Low Technology Cost Scenario: based on the low bound of literature projections of future CAPEX and O&M technology pathway analysis.

Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

The following figure shows the Base Year estimate and future year projections for CAPEX costs. Three technology cost scenarios are represented: Constant, Mid, and Low. Historical data from commercial 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.

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

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 changes)

Recent Trends

Reported historical commercial-scale PV installation CAPEX (Barbose and Dargouth 2018) is shown in box-and-whiskers format for comparison to historical commercial-scale PV benchmark overnight capital cost and ATB future CAPEX projections. The data in Barbose and Dargouth (2018) represent 81% of all U.S. residential and commercial PV capacity installed through 2017 and 75% of capacity installed in 2017.

Timing-related issues: For instance, the time between contract completion date and project placed in service may vary.
Variations over time in the size, technology, installer margin, and design of systems installed in a given year
Which cost categories are included in CAPEX (e.g., financing costs and initial O&M expenses).

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 2018 reflect continued rapid decline in pricing supported by analysis of recent system pricing for projects that became operational in 2018 (Feldman and Margolis 2018).

The range in CAPEX estimates reflects the heterogeneous composition of the commercial PV market in the United States.

Base Year Estimates

For illustration in the ATB, a representative commercial-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 $1.83/W_DC in 2017 and $1.79/W_DC in 2018 are based on bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2018 (Fu, Feldman, and Margolis 2018), adjusted for inflation. The 2017 and 2018 bottom-up benchmarks are reflective of an overnight capital cost, which is in line with the ATB methodology of inputting overnight capital cost and calculating construction financing to derive CAPEX. These figures are in line with other estimated system prices reported by Feldman and Margolis (2018).

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 commercial PV installation CAPEX are based on seven system price projections from five separate institutions. We adjusted the "min," "median," and "max" projections in a few different ways. All 2017 pricing is based on the capacity-weighted average historically reported commercial PV prices reported in Tracking the Sun XI (Barbose and Dargouth 2018). All 2018 pricing is based on the bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2018 (Fu, Feldman, and Margolis 2018). These figures are in line with other estimated system prices reported in Q2/Q3 2018 Solar Industry Update (Feldman and Margolis 2018).

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

Technology innovations that could impact future CAPEX costs are summarized in LCOE Projections.

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. For commercial PV, this is modeled for a host-owned business model only with access to debt.

For the ATB, and based on EIA (2016b) and the NREL Solar-PV Cost Model (Fu, Feldman, and Margolis 2018), the distributed solar PV plant envelope is defined to include:

Hardware
Module supply
Power electronics
Racking
Foundation
AC and DC materials and installation
Balance of system (BOS)
Site and/or roof preparation
Permitting, inspection, and interconnection costs
Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
Financial costs
Owners costs, such as development costs, legal fees, and insurance costs
Depreciation and interest on debt (ConFinFactor).

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)

(See the Financial Definitions tab in the ATB data spreadsheet)

Regional cost variations are not included in the ATB (CapRegMult = 1). Because distributed PV plants are located directly at the end use, there are no grid connection costs (GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).

In the ATB, CAPEX represents a typical distributed residential/commercial PV plant and does not vary with resource. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by EIA (2016b) expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

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

Standard Scenarios Model Results

CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., but dSolar does include state-level cost multipliers (EIA 2016b).

Operation and Maintenance (O&M) Costs

Operations and maintenance (O&M) costs represent the annual expenditures required to operate and maintain a solar PV plant over its lifetime:

Insurance, property taxes, site security, legal and administrative fees, and other fixed costs
Present value and annualized large component replacement costs over technical life (e.g., inverters at 15 years)
Scheduled and unscheduled maintenance of solar PV plants, transformers, etc. over the technical lifetime of the plant (e.g., general maintenance, including cleaning and vegetation removal).

Base Year Estimates

FOM of $18/kWDC - yr is based on modeled pricing for a commercial PV system quoted in Q1 2017 as reported by Fu, Feldman, and Margolis (2018), adjusted for inflation. The values in this report (ATB 2019) are higher than those from ATB 2018 to better align with the benchmarks reported in Fu, Feldman, and Margolis (2018); the previous edition relied solely on an O&M-to-CAPEX ratio, derived from multiple reports (IEA 2016). A wide range in reported prices exists in the market, in part depending on what maintenance practices exist for a particular system. These cost categories include asset management (including compliance and reporting for incentive payments), different insurance products, site security, cleaning, vegetation removal, and failure of components. Not all these practices are performed for each system; additionally, some factors depend on the quality of the parts and construction. NREL analysts estimate O&M costs can range from $0 to $40/kWDC - yr.

Future Year Projections

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.

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

PV system capacity is not directly comparable to other technologies' capacity factors. Other technologies' capacity factors are represented in exclusively AC units (see Solar PV AC-DC Translation). However, because PV pricing in this ATB documentation is represented in $/W_DC, PV system capacity is a DC rating. Because each technology uses consistent capacity ratings, the LCOEs are comparable.

PV plant capacity factor incorporates an assumed degradation rate of 0.75%/year (Fu, Feldman, and Margolis 2018) in the annual average calculation. R&D could lower degradation rates of PV plant capacity factor; future projections for Mid and Low cost scenarios reduce degradation rates by 2050, using a straight-line basis, to 0.5%/year and 0.2%/year respectively.

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The data illustrated include estimated degradation over the lifetime of a PV plant, which reduces over time in the Mid and Low scenarios (resulting in a higher average capacity factor over time).

Base Year Estimates

For illustration in the ATB, a range of capacity factors is associated with solar irradiance diversity and the range of latitude for five resource locations in the contiguous United States:

Low: Seattle, Washington
Low-mid: Chicago, Illinois
Mid: Kansas City, Missouri
High-mid: Los Angeles, California
High: Daggett, California

First-year operation capacity factors as modeled range from 12.7% to 20.8%, though these depend significantly on geography and system configuration (e.g., fixed-tilt versus single-axis tracking).

Over time, PV installation output is reduced due to degradation in module quality. This degradation is accounted in ATB estimates of capacity factor over the 30-year lifetime of the plant. The adjusted average capacity factor values in the ATB Base Year are 11.9%, 14.0%, 15.2%, 17.3%, and 19.6%.

Future Year Projections

Projections of capacity factors for plants installed in future years are unchanged from the Base Year for the Constant technology cost scenario. Capacity factors for Mid and Low cost scenarios are projected to increase over time, caused by a straight-line reduction in PV plant capacity degradation rates, reaching 0.5%/year and 0.2%/year by 2050 for the Mid and Low cost scenarios respectively. The following table summarizes the difference in average capacity factor in 2050 caused by different degradation rates in the Constant, Mid, and Low cost scenarios.

2050 Commercial PV DC Capacity Factors by Resource Location and Cost Scenario

	Seattle, WA	Chicago, IL	Kansas City, MO	Los Angeles, CA	Daggett, CA
Low Cost (0.30% degradation rate)	12.3%	14.5%	15.8%	18.0%	20.3%<
Mid Cost (0.50% degradation rate)	12.1%	14.3%	15.5%	17.7%	20.0%
Constant Cost (0.75% degradation rate)	11.9%	14.0%	15.2%	17.3%	19.6%

Standard Scenarios Model Results

dSolar does not endogenously consider curtailment from surplus renewable energy generation, though this is a feature of the linked ReEDS-dSolar model (Cole et al. 2016), where balancing area-level marginal curtailments can be applied to distributed PV generation as determined by scenario constraints.

Plant Cost and Performance Projections Methodology

Currently, CAPEX – not LCOE – is the most common metric for PV cost. Due to differing assumptions in long-term incentives, system location and production characteristics, and cost of capital, LCOE can be confusing and often incomparable between differing estimates. While CAPEX also has many assumptions and interpretations, it involves fewer variables to manage. Therefore, PV projections in the ATB are driven entirely by plant and operational cost improvements.

We created Constant, Mid and Low CAPEX cases to explore the range of possible outcomes of future PV cost improvements. The Constant technology cost scenario represents no CAPEX improvements made beyond today, the Mid cost case represents current expectations of price reductions in a "business-as-usual" scenario, and the Low cost case represents current expectations of potential cost reductions given improved R&D funding and more aggressive global deployment targets.

While CAPEX is one of the drivers to lower costs, R&D efforts continue to focus on other areas to lower the cost of energy from residential PV. While these are not incorporated in the ATB, they include longer system lifetime, improved performance and reliability, and lower cost of capital.

Projections of future commercial PV installation CAPEX are based on seven system price projections from five separate institutions. Projections included short-term U.S. price forecasts made in the past six months and long-term global and U.S. price forecasts made in the past primarily provided by market analysis firms with expertise in the PV industry, through a subscription service with NREL. The long-term forecasts primarily represent the collection of publicly available, unique forecasts with either a long-term perspective of solar trends or through capacity expansion models with assumed learning by doing.

Short-Term Forecast Institutions: Bloomberg New Energy Finance, GTM Research, Navigant Research (Labastida and Gauntlett 2016), U.S. Energy Information Administration
Long-Term Forecast Institutions: Bloomberg New Energy Finance, CAISO, and U.S. Energy Information Administration.

In instances in which literature projections did not include all years, a straight-line change in price was assumed between any two projected values. To generate Mid and Low technology cost scenarios, we took the "median" and "min" of the data sets; however, we only included short-term U.S. forecasts until 2030 as they focus on near-term pricing trends within the industry. Starting in 2030, we include long-term global and U.S. forecasts in the data set, as they focus more on long-term trends within the industry. It is also assumed after 2025 U.S. prices will be on par with global averages; the federal tax credit for solar assets reverts down to 10% for all projects placed in service after 2023, which has the potential to lower upfront financing costs and remove any distortions in reported pricing, compared to other global markets. Additionally, a larger portion of the United States will have a more mature PV market, which should result in a narrower price range. Changes in price for the Mid and Low technology cost scenarios between 2020 and 2030 are interpolated on a straight-line basis.

We adjusted the "median" and "min" projections in a few different ways. All 2017 and 2018 pricing is based on the bottom-up benchmark analysis reported in U.S. Solar Photovoltaic System Cost Benchmark Q1 2018 (Fu, Feldman, and Margolis 2018).

We adjusted the Mid and Low cost projections for 2019-2050 to remove distortions caused by the combination of forecasts with different time horizons and based on internal judgment of price trends. The Constant cost projection case is kept constant at the 2018 CAPEX value, assuming no improvements beyond 2018.

All prices quoted in W_AC are converted to W_DC (1 W_AC=1.1 W_DC).

From 2019-2050, FOM is based on the historical average ratio of O&M costs ($/kW-yr) to CAPEX costs ($/kW), 1.0:100, as reported by Fu, Feldman, and Margolis (2018). Historically reported data suggest O&M and CAPEX cost reductions are correlated; from 2010 to 2018 benchmark commercial PV O&M and CAPEX costs fell 47% and 66% respectively, as reported by Fu, Feldman, and Margolis (2018).

Projections of capacity factors for plants installed in future years are unchanged from 2018 for the Constant technology cost scenario. Capacity factors for Mid and Low cost scenarios are projected to increase over time, caused by a straight-line reduction in PV plant capacity degradation rates from 0.75%, reaching 0.5%/year and 0.2%/year by 2050 for the Mid and Low cost scenarios respectively.

Levelized Cost of Energy (LCOE) Projections

The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for commercial PV across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside of the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform and tax credits. The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term commercial PV plants are associated with Comm (commercial) PV: Kansas City. Data for all the resource categories can be found in the ATB Data spreadsheet; for simplicity, not all resource categories are shown in the figures. In the R&D + Market LCOE case, there is an increase in LCOE from 2018-2020, caused by an increase WACC, and an increase from 2023-2024, caused by the reduction in tax credits.

R&D Only | R&D + Market

R&D Only

/electricity/2019/images/solar-distrib/chart-solar-dist-lcoe-RD-2019.png

R&D + Market

/electricity/2019/images/solar-distrib/chart-solar-dist-lcoe-market-2019.png

The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term commercial PV plants are associated with Comm PV: Kansas City

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

The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term commercial PV plants are associated with Comm PV: Kansas City

R&D Only + Market Financial Assumptions (dynamic background rates, taxes)

Constant Technology Cost Scenario: Base Year (or near-term estimates of projects under construction) equivalent through 2050 maintains current relative technology cost differences
Mid Technology Cost Scenario: Technology advances through continued industry growth, public and private R&D investments, and market conditions relative to current levels that may be characterized as "likely" or "not surprising"
Low Technology Cost Scenario: Technology advances that may occur with breakthroughs, increased public and private R&D investments, and/or other market conditions that lead to cost and performance levels that may be characterized as the "limit of surprise" but not necessarily the absolute low bound.

R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA 2019b)and excludes effects of tax reform and tax credits.
R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2019 as well as effects of tax reform and tax credits. For a detailed discussion of these assumptions, see Project Finance Impact on LCOE.

A constant cost recovery period – over which the initial capital investment is recovered-of 30 years is assumed for all technologies throughout this website, and can be varied in the ATB data spreadsheet.

Modules

Increased module efficiencies and increased production-line throughput to decrease CAPEX; overhead costs on a per-kilowatt basis will go down if efficiency and throughput improvement are realized
Reduced wafer thickness or the thickness of thin-film semiconductor layers
Development of new semiconductor materials
Development of larger manufacturing facilities in low-cost regions

Balance of system (BOS)

Increased module efficiency, reducing the size of the installation
Development of racking systems that enhance energy production or require less robust engineering
Integration of racking or mounting components in modules
Reduction of supply chain complexity and cost

Creation of standard packaged system design
Improvement of supply chains for BOS components in modules

Improved power electronics

Improvement of inverter prices and performance, possibly by integrating microinverters

Decreased installation costs and margins

Reduction of supply chain margins (e.g., profit and overhead charged by suppliers, manufacturer, distributors, and retailers); this will likely occur naturally as the U.S. PV industry grows and matures.
Streamlining of installation practices through improved workforce development and training and developing standardized PV hardware
Expansion of access to a range of innovative financing approaches and business models
Development of best practices for permitting interconnection and PV installation such as subdivision regulations, new construction guidelines, and design requirements.

FOM cost reduction represents optimized O&M strategies, reduced component replacement costs, and lower frequency of component replacement.

Geothermal

Geothermal technology cost and performance projections have been updated with analysis and results from the GeoVision: Harnessing the Heat Beneath our Feet report (DOE, 2019). The GeoVision report is a collaborative multiyear effort with contributors from industry, academia, national laboratories, and federal agencies. The analysis in the report updates resource potential estimates as well as current and projected capital and O&M costs based on rigorous, bottom-up modeling.

Representative Technology

Hydrothermal geothermal technologies encompass technologies for exploring for the resource, drilling to access the resource, and building power plants to convert geothermal energy to electricity. Technology costs depend heavily on the hydrothermal resource temperature and well productivity and depth, so much so that project costs are site-specific and applying a "typical" cost to any given site would be inaccurate. The 2019 ATB uses scenarios developed by the DOE Geothermal Technology Office (Mines, 2013) for representative binary and flash hydrothermal power plant technologies. The first scenario assumes a 175°C resource at a depth of 1.5 km with wells producing an average of 110 kg/s of geothermal brine supplied to a 30-MW_e binary (organic Rankine cycle) power plant. The second scenario assumes a 225°C resource at a depth of 2.5 km with wells producing 80 kg/s of geothermal brine supplied to a 40-MW_e dual-flash plant. These are mid-grade or "typical" temperatures and depths for binary and flash hydrothermal projects. The ReEDS model uses the full hydrothermal supply curve. The 2019 ATB representative technologies fall in the middle or near the end of the hydrothermal resources typically deployed in ReEDS model runs.

Resource Potential

The hydrothermal geothermal resource is concentrated in the western United States. The total mean potential is 39,090 MW: 9,057 MW identified and 30,033 MW undiscovered (USGS, 2008). The resource potential identified by the U.S. Geological Survey (USGS, 2008) at each site is based on available reservoir thermal energy information from studies conducted at the site. The undiscovered hydrothermal technical potential estimate is based on a series of GIS statistical models for the spatial correlation of geological factors that facilitate the formation of geothermal systems.

Map of the favorability of occurrence for geothermal resources in the western United States

Warmer colors equate with higher favorability. Identified geothermal systems are represented by black dots. Source: USGS, 2008

The U.S. Geological Survey resource potential estimates for hydrothermal were used with the following modifications:

Installed capacity of about 3 GW in 2016 is excluded from the resource potential.
Resources on federally protected and U.S. Department of Defense (DOD) lands, where development is highly restricted are excluded from the resource potential, as are resources on lands where significant barriers that prevent or inhibit development of geothermal projects were identified by Augustine, Ho, and Blair (2019).

Renewable energy technical potential, as defined by Lopez et al. (2012), represents the achievable energy generation of a particular technology given system performance, topographic limitations, and environmental and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand that there are multiple types of potential-resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").

Base Year and Future Year Projections Overview

The Base Year cost and performance estimates are calculated using Geothermal Electricity Technology Evaluation Model (GETEM), a bottom-up cost analysis tool that accounts for each phase of development of a geothermal plant (DOE "Geothermal Electricity Technology Evaluation Model").

Cost and performance data for hydrothermal generation plants are estimated for each potential site using GETEM. Model results are based on resource attributes (e.g., estimated reservoir temperature, depth, and potential) of each site. GETEM inputs are derived from the Business-as-Usual (BAU) scenario from GeoVision ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)).
Site attribute values are from (USGS, 2008) for identified resource potential and from capacity-weighted averages of site attribute values of nearby identified resources for undiscovered resource potential.
GETEM is used to estimate CAPEX, O&M, and parasitic plant losses that affect net energy production.

Capacity factor and O&M costs for plants installed in future years are unchanged from the Base Year. Projections for hydrothermal and EGS technologies are equivalent.

Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2015 to 2050; consistent across all renewable energy technologies in the ATB
Mid Technology Cost Scenario: CAPEX cost reduction based on assumed minimum learning as implemented in AEO (EIA, 2015): 10% by 2035; this corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050
Low Technology Cost Scenario: CAPEX based on the Technology Improvement scenario from GeoVision Study ( (DOE, 2019); (Augustine, Ho, & Blair, 2019)); cost and technology improvements change linearly from present values and are fully achieved by 2030.

Representative Technology

As with cost for projects that use hydrothermal resources, EGS resource project costs depend so heavily on the hydrothermal resource temperature and well productivity and depth that project costs are site-specific. The 2019 ATB uses scenarios developed by the DOE Geothermal Technology Office (Mines, 2013) for representative binary and flash EGS power plants assuming current (immature) EGS technology performance metrics. The first scenario assumes a 175°C resource at a depth of 3 km with wells producing an average of 40 kg/s of geothermal brine supplied to a 25-MW_e binary (organic Rankine cycle) power plant. The second scenario assumes a 250°C resource at a depth of 3.5 km with wells producing 40 kg/s of geothermal brine supplied to a 30-MW_e dual-flash plant. These temperatures and depths are at the low-cost end of the EGS supply curve and would be some of the first developed. The ReEDS model uses the full EGS supply curve. Neither of these technologies is typically used.

Resource Potential

The enhanced geothermal system (EGS) resource is concentrated in the western United States. The total potential is greater than 100,000 MW: 1,493 MW of near-hydrothermal field EGS (NF-EGS) and the remaining potential comes from deep EGS.

Map of identified hydrothermal sites and favorability of deep EGS in the United States

Source: Roberts, 2009

The NF-EGS resource potential is based on data from USGS for EGS potential on the periphery of select studied and identified hydrothermal sites (Augustine et al., 2019).

The deep EGS resource potential (Augustine, 2016) is based on Southern Methodist University Geothermal Laboratory temp-at-depth maps and the methodology is from (Tester & et al., 2006).

The EGS resource is thousands of gigawatts (5,000 GW) but many locations are likely not commercially feasible.

Renewable energy technical potential as defined by Lopez et al. (2012) represents the achievable energy generation of a particular technology given system performance, topographic limitations, environmental, and land-use constraints. The primary benefit of assessing technical potential is that it establishes an upper-boundary estimate of development potential. It is important to understand there are multiple types of potential-resource, technical, economic, and market (see NREL: "Renewable Energy Technical Potential").

Base Year and Future Year Projections Overview

The Base Year cost and performance estimates are calculated using the Geothermal Electricity Technology Evaluation Model (GETEM), a bottom-up cost analysis tool that accounts for each phase of development of a geothermal plant (DOE "Geothermal Electricity Technology Evaluation Model").

Cost and performance data for EGS generation plants are estimated for each potential site using GETEM. Model results based on resource attributes (e.g., estimated reservoir temperature, depth, and potential) of each site. GETEM inputs are derived from the GeoVision BAU scenario ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)).
Approaches to restrict resource potential to about 500 GW based on USGS analysis may be implemented in the future.
GETEM is used to estimate CAPEX and O&M and parasitic plant losses that affect net energy production.

Capacity factor and O&M costs for plants installed in future years are unchanged from the Base Year. Projections for hydrothermal and enhanced geothermal system technologies are equivalent.

Constant Technology Cost Scenario: no change in CAPEX, O&M, or capacity factor from 2015 to 2050, consistent across all renewable energy technologies in the ATB
Mid Technology Cost Scenario: CAPEX cost reduction based on assumed minimum learning as implemented in AEO (EIA, 2015): 10% by 2035; this corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050.
Low Technology Cost Scenario: CAPEX based on the GeoVision Technology Improvement scenario ( (DOE, 2019), (Augustine, Ho, & Blair, 2019)). Cost and technology improvements decrease linearly from present values and are fully achieved by 2030.

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. These expenditures include the geothermal generation plant, 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. The estimate for a given year represents CAPEX of a new plant that reaches commercial operation in that year.

Six representative geothermal plants are shown (two are hidden by other lines). Two energy conversion processes are common: binary organic Rankine cycle and flash. Examples using each of these plant types in each of the three resource types are shown. Note that cost curves use 2015 as the reference year in keeping with the GeoVision report (DOE, 2019) used as the data source. This is why the cost curves do not converge to a single point in 2017.

Base Year Estimates

For illustration in the ATB, six representative geothermal plants are shown. Two energy conversion processes are common: binary organic Rankine cycle and flash.

Binary plants use a heat exchanger to transfer geothermal energy to an organic Rankine cycle. This technology generally applies to lower-temperature systems. These systems have higher CAPEX than flash systems because of the increased number of components, their lower-temperature operation, and a general requirement that a number of wells be drilled for a given power output.
Flash plants create steam directly from the thermal fluid through a pressure change. This technology generally applies to higher-temperature systems. Due to the reduced number of components and higher-temperature operation, these systems generally produce more power per well, thus reducing drilling costs. These systems generally have lower CAPEX than binary systems.

Examples using each of these plant types in each of the three resource types (hydrothermal, NF-EGS, and deep EGS) are shown in the ATB.

Costs are for new or greenfield hydrothermal projects, not for re-drilling or additional development/capacity additions at an existing site.

Characteristics for the six examples of plants representing current technology were developed based on discussion with industry stakeholders. The CAPEX estimates were generated using GETEM. CAPEX for NF-EGS and EGS are equivalent.

The following table shows the range of OCC associated with the resource characteristics for potential sites throughout the United States.

Geothermal Resource and Cost Characteristics

	Temp (°C)	>=200C	150-200	135-150	<135
Hydrothermal	Number of identified sites	21	23	17	59
	Total capacity (MW)	15,338	2,991	820	4,632
	Average OCC ($/kW)	3,906	7,720	8,794	16,248
	Min OCC ($/kW)	3,000	4,140	7,004	10,950
	Max OCC ($/kW)	5,491	29,135	11,027	21,349
	Example of plant OCC ($/kW)	4,229	5,455
NF-EGS	Number of sites	12	20
	Total capacity (MW)	787	596
	Average OCC ($/kW)	11,041	26,077
	Min OCC ($/kW)	8,778	18,172
	Max OCC ($/kW)	18,009	39,987
	Example of plant OCC ($/kW)	14,512	32,268
Deep EGS (3-6 km)	Number of sites	n/a	n/a
	Total capacity (MW)	100,000+
	Average OCC ($/kW)	28,418	60,170
	Min OCC ($/kW)	18,320	39,329
	Max OCC ($/kW)	54,047	77,983
	Example of plant OCC ($/kW)	14,512	32,268

Future Year Projections

Projection of future geothermal plant CAPEX for the Low case is based on the GeoVision Technology Improvement scenario (DOE, 2019).

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.

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.

For the ATB – and based on (EIA, 2016) and GETEM component cost calculations – the geothermal plant envelope is defined to include:

Geothermal generation plant

Exploration, confirmation drilling, well field development, reservoir stimulation (EGS), plant equipment, and plant construction
Power plant equipment, well-field equipment, and components for wells (including dry/non-commercial wells)

Balance of system (BOS)

Installation and electrical infrastructure, such as transformers, switchgear, and electrical system connecting turbines to each other and to the control center
Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit

Financial costs

Owners' costs, such as development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, and property taxes during construction
Electrical interconnection and onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (<1 mile), and necessary upgrades at a transmission substation; distance-based spur line cost (GCC) not included in the ATB
Interest during construction estimated based on four-year and five-year duration for hydrothermal and EGS respectively (for the low scenario) and an eight-year duration and ten-year duration for hydrothermal and EGS respectively (for the mid- and constant-scenario) accumulated at different intervals for hydro and EGS based on scheduled at outlined by the GeoVision Study (ConFinFactor).

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor x (OCC x CapRegMult + GCC).

(See the Financial Definitions tab in the ATB data spreadsheet.)

In the ATB, CAPEX is shown for six representative plants. Examples of CAPEX for binary organic Rankine cycle and flash energy conversion processes in each of three geothermal resource types are presented. CAPEX estimates for all hydrothermal NF-EGS potential results in a CAPEX range that is much broader than that shown in the ATB. It is unlikely that all the resource potential will be developed due to the high costs for some sites. Regional cost effects and distance-based spur line costs are not estimated.

Standard Scenarios Model Results

The ReEDS model represents cost and performance for hydrothermal, NF-EGS, and EGS potential in 5 bins for each of 134 geographic regions, resulting in a greater CAPEX range in the reference supply curve than what is shown in examples in the ATB.

CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., and neither does the ReEDS model.

CAPEX in the ATB does not include geographically determined spur line (GCC) from plant to transmission grid, and neither does the ReEDS model.

Operations and maintenance (O&M) costs represent average annual fixed expenditures (and depend on rated capacity) required to operate and maintain a hydrothermal plant over its lifetime of 30 years (plant and reservoir), including:

Insurance, taxes, land lease payments, and other fixed costs
Present value and annualized large component overhaul or replacement costs over technical life (e.g., downhole pumps)
Scheduled and unscheduled maintenance of geothermal plant components and well field components over the technical lifetime of the plant and reservoir.

Note that cost curves use 2015 as the reference year in keeping with the GeoVision report (DOE, 2019) used as the data source. This is why the cost curves do not converge to a single point in 2017.

Base Year Estimates

FOM is estimated for each example of a plant based on technical characteristics.

GETEM is used to estimate FOM for each of the six representative plants. FOM for NF-EGS and EGS are equivalent.

Future Year Projections

Future FOM cost reductions are based on results from the GeoVision scenario (DOE, 2019) and are described in detail in Augustine, Ho, and Blair (2019).

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

The capacity factor represents the expected annual average energy production divided by the annual energy production, assuming the plant operates at rated capacity for every hour of the year. It is intended to represent a long-term average over the technical lifetime of the plant. It does not represent interannual variation in energy production. Future year estimates represent the estimated annual average capacity factor over the technical lifetime of a new plant installed in a given year.

Geothermal plant capacity factor is influenced by diurnal and seasonal air temperature variation (for air-cooled plants), technology (e.g., binary or flash), downtime, and internal plant energy losses.

The following figure shows a range of capacity factors based on variation in the resource for plants in the contiguous United States. The range of the Base Year estimates illustrates Binary or Flash geothermal plants. Future year projections for the Constant, Mid, and Low technology cost scenarios are unchanged from the Base Year. Technology improvements are focused on CAPEX cost elements.

Base Year Estimate

The capacity factor estimates are developed using GETEM at typical design air temperature and based on design plant capacity net losses. An additional reduction is applied to approximate potential variability due to seasonal temperature effects.

Some geothermal plants have experienced year-on-year reductions in energy production, but this is not consistent across all plants. No approximation of long-term degradation of energy output is assumed.

Ongoing work at NREL and the Idaho National Laboratory is helping improve capacity factor estimates for geothermal plants. As this work progresses, it will be incorporated into future versions of the ATB.

Future Year Projections

Capacity factors remain unchanged from the Base Year through 2050. Technology improvements are focused on CAPEX costs. Estimates of capacity factor for geothermal plants in the ATB represent typical operation. The dispatch characteristics of these systems are valuable to the electric system to manage changes in net electricity demand. Actual capacity factors will be influenced by the degree to which system operators call on geothermal plants to manage grid services.

Plant Cost and Performance Projections Methodology

The site-specific nature of geothermal plant cost, the relative maturity of hydrothermal plant technology, and the very early stage development of EGS technologies make cost projections difficult. No thorough literature reviews have been conducted for cost reduction of hydrothermal geothermal technologies or EGS technologies. However, the GeoVision BAU scenario is based on a bottom-up analysis of costs and performance improvements. The inputs for the BAU scenario were developed by the national laboratories as part of the GeoVision effort, and it was reviewed by industry experts.

Projection of future geothermal plant CAPEX for the Low cost case is based on the GeoVision Technology Improvement scenario. It assumes that cost and technology improvements are achieved by 2030 and that costs decrease linearly from present values to the 2030 projected values. The Mid cost case is based on minimum learning rates as implemented in AEO (EIA, 2015): 10% by 2035. This corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue on through 2050. The Constant technology cost scenario retains all cost and performance assumptions equivalent to the Base Year through 2050.

Levelized Cost of Energy (LCOE) Projections

Levelized cost of energy (LCOE) is a simple metric that combines the primary technology cost and performance parameters: CAPEX, O&M, and capacity factor. It is included in the ATB for illustrative purposes. The ATB focuses on defining the primary cost and performance parameters for use in electric sector modeling or other analysis where more sophisticated comparisons among technologies are made. The LCOE accounts for the energy component of electric system planning and operation. The LCOE uses an annual average capacity factor when spreading costs over the anticipated energy generation. This annual capacity factor ignores specific operating behavior such as ramping, start-up, and shutdown that could be relevant for more detailed evaluations of generator cost and value. Electricity generation technologies have different capabilities to provide such services. For example, wind and PV are primarily energy service providers, while the other electricity generation technologies such as geothermal, can provide capacity and flexibility services in addition to energy. These capacity and flexibility services are difficult to value and depend strongly on the system in which a new generation plant is introduced. These services are represented in electric sector models such as the ReEDS model and corresponding analysis results such as the Standard Scenarios.

The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for geothermal across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, technology-specific tariffs, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform, tax credits, and tariffs. The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term geothermal plants are associated with Hydrothermal/Flash. Data for all the resource categories can be found in the ATB Data spreadsheet; for simplicity, not all resource categories are shown in the figures.

R&D Only | R&D + Market

R&D Only

R&D + Market

Note that cost curves use 2015 as the reference year in keeping with the GeoVision report (DOE, 2019) used as the data source. This is why the cost curves do not converge to a single point in 2017.

The ATB representative plant characteristics that best align with those of recently installed or anticipated near-term geothermal plants are associated with Hydrothermal/Flash.

R&D = R&D Only Financial Assumptions (constant background rates, no tax or tariff changes); R&D + Market = R&D Only + Market Financial Assumptions (dynamic background rates, taxes, and tariffs)

Constant Technology: Base Year (or near-term estimates of projects under construction) equivalent through 2050 maintains current relative technology cost differences
Mid Technology Cost Scenario: Technology advances through continued industry growth, public and private R&D investments, and market conditions relative to current levels that may be characterized as "likely" or "not surprising"
Low Technology Cost Scenario: Technology advances that may occur with breakthroughs, increased public and private R&D investments, and/or other market conditions that lead to cost and performance levels that may be characterized as the " limit of surprise" but not necessarily the absolute low bound.

R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA, 2019) and excludes effects of tax reform, tax credits, and tariffs.
R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2018, as well as effects of tax reform, tax credits, and technology-specific tariffs. For a detailed discussion of these assumptions, see Changes from 2018 ATB to 2019 ATB.

Development of exploration and reservoir characterization tools that reduce well-field costs through risk reduction by locating and characterizing low- and moderate-temperature hydrothermal systems prior to drilling
High-temperature tools and electronics for geothermal subsurface operations
Development of reservoir engineering techniques and technologies that enable EGS
More efficient drilling practices and advanced drilling systems such as using flames or lasers to drill through rock; drilling steering technology; and other technologies to reduce drilling costs.

Battery Storage

Energy storage technologies are important to document in the ATB because of their potential role in enhancing grid flexibility, especially under scenarios of high penetration of variable renewable technologies. CSP with TES and Hydropower both include storage capabilities, and a variety of other storage technologies could enhance the flexibility of the electrical grid. This section documents assumptions about only one of them: 4-hour, utility-scale, lithium-ion battery storage. NREL has completed recent analysis on ranges of costs related to other battery sizes (Fu, Remo, & Margolis, 2018) with relative costs represented in Figure ES-1 of the report (included below) which looked at 4-hour to 0.5 hour battery duration of utility scale plants.

The ATB does not currently have costs for distributed battery storage-either for residential nor commercial applications behind the meter nor for a micro-grid or off-grid application. NREL has completed prior work on residential battery plus solar PV system analysis (Ardani et al., 2017) resulting in a range of costs of PV+battery systems as shown in the figure below. Note these costs are for 2016 and published in 2017, so we anticipate battery costs to be significantly lower currently.

Base Year and Future Year Projections Overview

Battery cost and performance projections are based on a literature review of 25 sources published between 2016 and 2019, as described by Cole and Frazier (2019) . Three different projections from 2017 to 2050 were developed for scenario modeling based on this literature:

High Technology Cost Scenario: generally based on the maximum of literature projections of future CAPEX and O&M technology pathway analysis; distinct from the Constant technology cost scenarios used among renewable energy technologies in the ATB
Mid Technology Cost Scenario: generally based on the median of literature projections of future CAPEX and O&M technology pathway analysis
Low Technology Cost Scenario: generally based on the low bound of literature projections of future CAPEX and O&M technology pathway analysis.

Standard Scenarios Model Results

ATB CAPEX, O&M, and round-trip efficiency assumptions for the Base Year and future projections through 2050 for High, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.

Representative Technology

The representative technology was a utility-scale lithium-ion battery storage system with a 15-year life and a 4-hour rating, meaning it could discharge at its rated capacity for four hours as described by Cole and Frazier (2019) . Within the ATB spreadsheet, the costs are separated into energy and power cost estimates, which allow capital costs to be constructed for durations other than 4 hours according to the following equation:

Total System Cost ($/kW) = Battery Pack Cost ($/kWh) × Storage Duration (hr) + BOS Cost ($/kW)

For more information on the power vs. energy cost breakdown, see Cole and Frazier (2019) .

Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

Recent Trends

Costs of lithium-ion battery storage systems have declined rapidly in recent years, prompting greater interest in utility-scale applications.

Base Year Estimates

The Base Year cost estimate is taken from Fu, Remo, and Margolis (2018). Comparisons to other reported costs for 2018 are included in Cole, Wesley & Frazier, A. Will (2019). Although the ATB uses a 2017 Base Year, the 2018 estimate based on the literature is the first year reported in the ATB, with a value of $1,484/kW in 2017 dollars.

Future Projections

Future projections are taken from Cole and Frazier (2019), which generally used the median of published cost estimates to develop a Mid Technology Cost Scenario and the minimum values to develop a Low Technology Cost Scenario. Analysts' judgment was used to select the long-term projections to 2050 from a sparse data set.

CAPEX Definition

The literature review does not enumerate elements of the capital cost of lithium-ion batteries (Cole, Wesley & Frazier, A. Will, 2019). However, the NREL storage cost report does detail a breakdown of capital costs with the actual battery pack being the largest component but significant other costs are also included. This breakdown is different if the battery is part of a hybrid system with solar PV. These relative costs for utility-scale standalone battery and battery + PV are demonstrated in the figure below (Fu, Remo, & Margolis, 2018).

Operation and Maintenance (O&M) Costs

Base Year Estimates

Cole and Frazier (2019) assumed no variable operation and maintenance (VOM) cost. All operating costs were instead represented using fixed operation and maintenance (FOM) costs. The FOM costs include augmentation costs needed to keep the battery system operating at rated capacity for its lifetime. In the ATB, FOM is defined as the value needed to compensate for degradation to enable the battery system to have a constant capacity throughout its life. The literature review states that FOM costs are estimated at 2.5% of the $/kW capital costs.

Future Projections

In the ATB, the FOM cost remains constant at 2.5% of capital costs in all scenarios.

Round-trip efficiency is the ratio of useful energy output to useful energy input. Cole and Frazier (2019) identified 85% as a representative round-trip efficiency, and the ATB adopts this value.

Coal

The ATB includes three coal power plant types: coal-new, coal-IGCC, and coal-CCS. The cost and performance characteristics of these plants are adapted from EIA data rather than derived from original analysis.

Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

Coal power plant CAPEX is taken from the AEO2019 Reference Scenario (EIA, 2019a) with the adjustments discussed in the CAPEX definition section. The ATB includes only a single CAPEX projection for each type of coal plant.

/electricity/2019/images/coal/chart-coal-capex-RD-2019.png

Current estimates and future projections calculated from AEO2019, modified as described in the CAPEX section.

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

Comparison with Other Sources

/electricity/2019/images/coal/chart-coal-overnight-capital-cost-2019.png

Data sources include the ATB, (Black & Veatch, 2012), (Lazard, 2016), (Zoelle et al., 2015), and (Rubin, Davison, & Herzog, 2015).

Lazard (2016) does not explicitly define its ranges with and without CCS; thus, the high end of their pulverized coal and IGCC ranges and the low end of their IGCC-CCS range are assumed to be the middle of the full reported range. All sources have been normalized to the same dollar year. Costs vary due to differences in system design (e.g., coal rank), methodology, and plant cost definitions. The coal capital costs include environmental controls to meet current federal regulations.

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.

For coal power plants, CAPEX equals interest during construction (ConFinFactor) times the overnight capital cost (OCC).

Overnight capital costs are modified from AEO2019 (EIA, 2019a). The EIA projections were adjusted by removing the material price index. The material price index accounts for projected changes in the price index for metals and metals products, and it is independent of the learning-based cost reductions applied in the EIA projections.

For the ATB, coal-CCS technology is ultra-supercritical pulverized coal technology fitted with CCS. Both 30% capture and 90% capture options are included for the coal-CCS technology. The CCS plant configuration includes only the cost of capturing and compressing the CO₂. It does not include CO₂ delivery and storage.

	Overnight Capital Cost ($/kW)	Construction Financing Factor (ConFinFactor)	CAPEX ($/kW)
Coal-new: Ultra-supercritical pulverized coal with SO₂ and NO_x controls	$3,711	1.087	$4,036
Coal-IGCC: Integrated gasification combined cycle (IGCC)	$4,055	1.087	$4,409
Coal-CCS: Ultra-supercritical pulverized coal with carbon capture and sequestration (CCS) options (30% / 90% capture)	$5,180 / $5,728	1.087	$5,633 / $6,229

The various coal technologies have the same construction financing factor, which is a simplification. The factor will vary based on the construction schedule, which is likely to be longer for plants with CCS than those without CCS.

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)

See the Financial Definitions tab in the ATB data spreadsheet.

In the ATB, CAPEX represents each type of coal plant with a unique value. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by (EIA, 2016) expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

/electricity/2019/images/coal/chart-coal-capex-definition-RD-2019.png

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

Operation and Maintenance (O&M) Costs

Coal power plant fixed and variable O&M costs are taken from table 8.2 of the AEO2019, and they are assumed to be constant over time.

/electricity/2019/images/coal/chart-coal-operation-maintenance-2019.png

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

The capacity factor represents the assumed annual energy production divided by the total possible annual energy production, assuming the plant operates at rated capacity for every hour of the year. For coal plants, the capacity factors are typically lower than their availability factors. Coal plant availability factors have a wide range depending on system design and maintenance schedules.

The capacity factor of dispatchable units is typically a function of the unit's marginal costs and local grid needs (e.g., need for voltage support or limits due to transmission congestion).

Coal power plants have typically been operated as baseload units, although that has changed in many locations due to low natural gas prices and increased penetration of variable renewable technologies. The average capacity factor used in the ATB is the fleet-wide average reported by EIA for 2017. The high capacity factor represents a new plant that would operate as a baseload unit. New coal plants would likely be more efficient than existing coal plants, and therefore would be more likely to be dispatched more often, resulting in capacity factors closer to the "high" level than the "average" level, but actual capacity factors will vary based on local grid conditions and needs.

Even though IGCC and coal with CCS have experienced limited deployment in the United States, it is expected that their performance characteristics would be similar to new coal power plants.

/electricity/2019/images/coal/chart-coal-capacity-factor-2019.png

Current estimates and future projections calculated from AEO2019 (EIA, 2019a) and modified.

Levelized Cost of Energy (LCOE) Projections

Biopower

The ATB includes both dedicated biopower cost options and a biomass cofired with coal option. The cost and performance characteristics of these plants are adapted from EIA data rather than derived from original analysis.

Capital Expenditures (CAPEX): Historical Trends, Current Estimates, and Future Projections

Biopower plant CAPEX is taken from the AEO2019 Reference Scenario (EIA, 2019a) with the adjustments discussed in the CAPEX definition section.

/electricity/2019/images/biomass/chart-biomass-capex-RD-2019.png

Current estimates and future projections calculated from AEO2019 (EIA, 2019a) and modified.

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

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year.

Fuel costs are taken from the Billion Ton Update study (DOE et al., 2011).

	Overnight Capital Cost ($/kW)	Construction Financing Factor (ConFinFactor)	CAPEX ($/kW)
Dedicated: Dedicated biopower plant	$3,827	1.042	$3,990
CofireOld: Pulverized coal with sulfur dioxide (SO₂) scrubbers and biomass co-firing	$4,013	1.042	$4,184
CofireNew: Advanced supercritical coal with SO₂ and NO_x controls and biomass co-firing	$4,013	1.042	$4,184

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)

See the Financial Definitions tab in the ATB data spreadsheet.

In the ATB, CAPEX represents each type of biopower plant with a unique value. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by (EIA, 2016) expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

/electricity/2019/images/biomass/chart-biomass-capex-definition-RD-2019.png

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

Operation and Maintenance (O&M) Costs

Biopower power plant fixed and variable O&M costs are taken from table 8.2 of the AEO2019, and they are assumed to be constant over time.

Capacity Factor: Expected Annual Average Energy Production Over Lifetime

The capacity factor represents the assumed annual energy production divided by the total possible annual energy production, assuming the plant operates at rated capacity for every hour of the year. For biopower plants, the capacity factors are typically lower than their availability factors. Biopower plant availability factors have a wide range depending on system design, fuel type and availability, and maintenance schedules.

Biopower plants are typically baseload plants with steady capacity factors. For the ATB, the biopower capacity factor is taken as the average capacity factor for biomass plants for 2017, as reported by EIA.

Biopower capacity factors are influenced by technology and feedstock supply, expected downtime, and energy losses.

/electricity/2019/images/biomass/chart-biomass-capacity-factor-2019.png

Current estimates and future projections are taken as the 2017 capacity factor from EIA (2019b).

Levelized Cost of Energy (LCOE) Projections

The following three figures illustrate LCOE, which includes the combined impact of CAPEX, O&M, and capacity factor projections for biomass across the range of resources present in the contiguous United States. For the purposes of the ATB, the costs associated with technology and project risk in the U.S. market are represented in the financing costs but not in the upfront capital costs (e.g., developer fees and contingencies). An individual technology may receive more favorable financing terms outside the United States, due to less technology and project risk, caused by more project development experience (e.g., offshore wind in Europe) or more government or market guarantees. The R&D Only LCOE sensitivity cases present the range of LCOE based on financial conditions that are held constant over time unless R&D affects them, and they reflect different levels of technology risk. This case excludes effects of tax reform, tax credits, and changing interest rates over time. The R&D + Market LCOE case adds to these financial assumptions: (1) the changes over time consistent with projections in the Annual Energy Outlook and (2) the effects of tax reform and tax credits. Data for all the resource categories can be found in the ATB data spreadsheet; for simplicity, not all resource categories are shown in the figures.

R&D Only | R&D + Market

R&D Only

/electricity/2019/images/biomass/chart-biomass-lcoe-RD-2019.png

R&D + Market

/electricity/2019/images/biomass/chart-biomass-lcoe-market-2019.png

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

R&D Only + Market Financial Assumptions (dynamic background rates, taxes)

The LCOE of biopower plants is directly impacted by the differences in CAPEX (installed capacity costs) as well as by heat rate differences. For a given year, the LCOE assumes that the fuel prices from that year continue throughout the lifetime of the plant.

Regional variations will ultimately impact biomass feedstock costs, but these are not included in the ATB.

The projections do not include any cost of carbon.

Fuel costs are taken from the Billion Ton Update study (DOE et al., 2011).

R&D Only Financial Assumptions: This sensitivity case allows technology-specific changes to debt interest rates, return on equity rates, and debt fraction to reflect effects of R&D on technological risk perception, but it holds background rates constant at 2017 values from AEO2019 (EIA, 2019a) and excludes effects of tax reform and tax credits. A constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies.
R&D Only + Market Financial Assumptions: This sensitivity case retains the technology-specific changes to debt interest, return on equity rates, and debt fraction from the R&D Only case and adds in the variation over time consistent with AEO2019 (EIA, 2019a) as well as effects of tax reform and tax credits. As in the R&D Only case, a constant cost recovery period-or period over which the initial capital investment is recovered-of 30 years is assumed for all technologies. For a detailed discussion of these assumptions, see Project Finance Impact on LCOE.

References

The following references are specific to this page; for all references in this ATB, see References.

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