German Jamison: DOE Officially Marks SunShot’s $1 per Watt Goal for Utility-Scale Solar

It's official. The solar industry has met the 2020 utility-scale solar cost target set by the Energy Department's SunShot Initiative -- three years early.

The DOE released new research today that shows the average price of utility-scale solar is now under $1 per watt and below 6 cents per kilowatt-hour.

That’s higher than the record-breaking project bids we’ve seen in the U.S. and abroad in recent years. But that’s because DOE calculations for leveled cost of energy (LCOE) do not include subsidies -- such as the Investment Tax Credit -- and are based on the average climate in Kansas City, Missouri. (Note: We documented the sub-$1 per watt milestone earlier this year, but the department is using its own metrics.)

“Our mission is to make solar affordable for all Americans, and so our goals are defined for average U.S. climates. We use Kansas City as that example,” said Becca Jones-Albertus, acting deputy director of the SunShot Initiative. “Hitting a 6 cents per kilowatt-hour target for Kansas is a more significant metric than hitting 6 cents in sunnier parts of the country.”

GTM Research reported that U.S. utility-scale fixed-tilt system pricing fell below $1.00 per watt earlier this year using a different methodology.

When the SunShot goals were set in 2011, they seemed aspirational. At that time, utility-scale solar prices were around 27 cents per kilowatt-hour. The U.S. solar industry has achieved a decrease in cost by a factor of four in less than seven years -- beating the DOE's 2020 goal.

"This is a reflection of the speed of change across the entire industry," said Charlie Gay, director of the SunShot Initiative. "Not just solar, but all sorts of [technologoes] are changing at a rapid speed, which makes it daunting to plan the energy system, the networks when so many moving parts are making such rapid progress.”

Daniel Simmons, acting assistant secretary of the Office of Energy Efficiency and Renewable Energy, added that the LCOE for solar doesn't reflect the real-world cost of the technology because solar is not dispatchable. So comparing the LCOE for solar to the cost of a natural gas plant "is not always apples to apples," he said.

The fact that solar and wind are not always on-demand "is a challenge we’re trying to solve with these new funding investments," Simmons said.

In addition to announcing the utility-scale cost target, the DOE's Solar Energy Technologies Office today announced up to $82 million in early-stage research in concentrating solar power ($62 million) and power electronics ($20 million).

Innovation in power electronics technology in particular "are fundamental to solar PV as the critical link between PV arrays and the electric grid," according to the DOE.

Advances in this area will also help grid operators rapidly detect and respond to problems on the grid, protect against physical and cyber vulnerabilities, and enable consumers to manage their electricity use.

“Ten years ago we set these levelized cost of electricity metrics just to calibrate what ballpark we’re in," said Gay. "Now we have a lot of options that are in the ballpark and [cost] depends on time of day value, location value, what are the alternative sources of energy in a particular area, opportunities for managing the grid within that area and combining that type of insight with how the laod profiles are changing."

“Part of the reason I joined DOE is because it’s important for us not only to be looking at our solar world, but to be connecting up with the buildings program for energy efficiency -- so how best to use energy within an area and how best to manage the demand profile that goes with energy use and consumption -- and connecting all of those elements with information resources," he added.

The combination of these technological advancements will directly affect the evolution of solar on the grid.