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Quantifying The Benefits of Utility-Scale Solar PV

Posted 13 July 2015 6:13 PM by Jim Woodruff

Today, economists at The Brattle Group released a report finding that utility-scale photovoltaic (PV) solar generation costs are approximately half those of residential-scale PV and emission reduction benefits are significantly greater. The study, called “Comparative Generation Costs of Utility-Scale and Residential-Scale PV in Xcel Energy Colorado’s Service Area,” is the first to focus on a “solar-to-solar” comparison of equal amounts of residential- and utility-scale PV solar using data from an actual utility system. 

Utility-scale, residential-scale and community solar PV systems all provide significant benefits to consumers, businesses and society.  Yet, several highly visible and frequently contentious regulatory discussions about the impact of solar on electric rates have focused attention on the costs and benefits of residential-scale PV versus fossil fuels—largely ignoring other sources of solar energy such as utility-scale, commercial and industrial, or community solar. Given the cost and emission reduction benefits achieved at scale, it is important for regulators to consider all sources of solar electricity, particularly if they are looking to maximize the policy benefits of procuring solar capacity at the lowest overall system cost.   

Key findings of the Brattle study include:

  • The generation cost of energy from 300MW of utility-scale PV solar is roughly one-half the cost per kWh of the output from an equivalent 300MW of 5kW residential-scale systems when deployed on the Xcel Energy Colorado system, and utility-scale solar remains more cost effective in all scenarios considered in the study.
  • In the same setting, 300MW of utility-scale PV solar deployed in a utility-scale configuration also avoids approximately 50% more carbon emissions than an equivalent amount of residential-scale PV solar.

The analysis finds that projected 2019 utility-scale PV power costs in Xcel Energy Colorado’s service territory will range from $66/MWh to $117/MWh (6.6¢/kWh to 11.7¢/kWh) across all scenarios, while projected power costs for a typical, customer-owned  PV system will range from $123/MWh to $193/MWh (12.3¢/kWh to 19.3¢/kWh). These prices are based on historical data and are not necessarily reflective of current market prices, but nevertheless provide an accurate comparison of the magnitude of cost differences between residential- and utility-scale systems.

The Brattle report attributes the large difference in per-MWh costs between utility- and residential-scale systems primarily to economies of scale and greater solar electric output resulting from optimized panel orientation and tracking assumed for utility-scale systems.

The Brattle report also cites key environmental benefits including water savings, fuel price hedging, energy security, energy resilience, greenhouse gas reductions and criteria air pollutant reductions.  Most of the environmental or social benefits are positively correlated with MWh output; therefore, there is greater benefit in utility-scale systems because of the significantly higher relative output of those systems. For example, the improved orientation and tracking of utility-scale solar systems result in a higher capacity factor that avoids approximately 50% more carbon dioxide emissions than the same capacity of residential-scale solar PV on the Xcel Energy Colorado system.

While the Brattle report only studied generation costs, the authors note that the cost advantage of utility-scale PV generation is unlikely to be reversed by differences in transmission, distribution, or ancillary services costs.

The Brattle report fills a research gap and provides policy makers with transparent and verifiable information regarding comparative costs and benefits of utility-scale and residential-scale solar systems. 

View the full report here.