{"id":11922,"date":"2015-12-28T11:36:56","date_gmt":"2015-12-28T17:36:56","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=11922"},"modified":"2016-10-05T17:20:30","modified_gmt":"2016-10-05T22:20:30","slug":"a-sunny-future-for-utility-scale-solar","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2015\/12\/28\/a-sunny-future-for-utility-scale-solar\/","title":{"rendered":"A Sunny Future for Utility-Scale Solar"},"content":{"rendered":"

\"512px-Nellis_AFB_Solar_panels\"<\/a>Utility-scale solar and distributed solar both have an important role to play in reducing greenhouse emissions, and both have made great strides in the past year.<\/p>\n

Utility-scale solar, the focus of this article, is reaching<\/a> \u201cgrid parity\u201d (i.e., cost equivalency) with traditional generation in more areas across the country.\u00a0 And solar received a major boost when the federal tax incentive was recently extended<\/a> through 2021. The amount of the incentive decreases over time, but the solar industry may be able to offset the lower tax incentive if costs continue to decline.\u00a0 New changes in policy and technology may further boost its prospects.<\/p>\n

Record year for utility-scale solar<\/strong><\/p>\n

Some of the world\u2019s largest solar plants came on-line in the U.S. during the past year, such as the 550-megawatt (MW) Topaz Solar<\/a> plant in San Luis Obispo County, California and the 550MW Desert Sunlight<\/a> plant in Desert Center, California. Last year saw a record increase<\/a> in the amount of new utility-scale solar photovoltaic generation installed \u2013 about four gigawatts (GW), a whopping 38 percent increase over 2013, and enough solar power to supply electricity to 1.2 million homes.\u00a0 This number is expected to increase in 2015 when the final numbers are in.<\/p>\n

The first reported contract for solar power under five cents per kilowatt-hour (kWh) occurred<\/a> in 2014: Austin Energy\u2019s 25-year power purchase agreement (PPA) with SunEdison for 150 MW of solar power.\u00a0 The trend continued in 2015, when Nevada Energy secured<\/a> a 4.6 cent per kWh PPA with SunPower<\/a>.<\/p>\n

But perhaps the most impressive milestone for utility-scale solar in the past year is that it is increasingly reaching grid parity with traditional generation.<\/p>\n

The industry uses a \u201clevelized-cost analysis\u201d to compare the cost of different power sources. The analysis reviews all the costs needed to produce power for each type of plant \u2013 such as construction costs, operation and maintenance expenses, and fuel costs \u2013 as well as the amount of power generated by each type of plant. Then the \u201clevelized\u201d cost to produce a single megawatt-hour (MWh) of power for each plant is calculated. This allows for an apples-to-apples comparison of how much it costs to produce a single unit of power.<\/p>\n

[Tweet “A sunny future for utility-scale #solar”]<\/p>\n

A natural gas combined cycle plant has the lowest levelized cost for traditional power plants (including coal and nuclear), at $61\/MWh to $87\/MWh. The levelized cost for large solar, when including the federal tax incentive, has been reported as low as the $46\/MW (see the Nevada Energy and SunPower PPA examples above).\u00a0 When the cost of environmental externalities, including air pollution, greenhouse gas emissions, or water withdrawals, are fully accounted for, utility-scale solar provides even greater benefits.<\/p>\n

Solar owes its gains to several factors. The cost for PV solar panels has decreased<\/a> over 60 percent since 2010. A flurry of projects is coming on line now, before the tax incentive decrease takes effect. State policy is also a major driver of the increase in solar installations. But this growth is really expected to explode in the coming years.<\/p>\n

Future outlook is bright<\/strong><\/p>\n

Future decreases in the tax incentive present a challenge. In addition, falling natural gas prices will make it more difficult for large solar plants to remain competitive with combined cycle plants unless policies can be put in place to recognize the cost of environmental externalities. But a number of factors point to a bright, long-term future for utility-scale solar plants:<\/p>\n