In-brief analysis
October 22, 2024
The landscape of energy construction costs in the U.S. revealed a nuanced picture for 2022, as solar photovoltaic systems and wind turbines held nearly steady compared to the previous year, while natural gas-fired generators took a notable dip of 11%. Specifically, solar generator construction costs crept up by a modest 1.7%, with wind projections following closely behind at a 1.6% increase.
Remarkably, these three pivotal energy sources—solar, wind, and the ever-debatable natural gas—accounted for a staggering 86% of the new capacity woven into the fabric of the U.S. electric grid in 2022. However, the appetite for investment in new electric-generating infrastructure plummeted, plummeting by 27% from 2021 levels to a total of $36.9 billion.
Cost assessments for generators were meticulously reported to the Energy Information Administration (EIA) via the EIA-860, the Annual Electric Generator Inventory. The discussions herein revolve around our electric generator construction cost data, meticulously cataloging nominal construction costs for newly installed generators by reporting year. A deeper dive into historical trends and supplementary cost insights awaits those perusing our Short-Term Energy Outlook.
Solar
Average construction costs for solar systems across the board in the U.S. ascended by 1.7%, reaching $1,588 per kilowatt (kW) in 2022. This uptick was predominantly fueled by a remarkable 13% increase in construction costs for crystalline silicon tracking panels, which soared to an impressive $1,605/kW, marking the apex of pricing since 2018.
Conversely, the average cost for crystalline silicon fixed-tilt panels exhibited a noteworthy decline of 13%, though they retained their crown as the priciest option among major solar technologies at $1,788/kW. Meanwhile, the Cadmium telluride panels also saw a six percent drop, settling at $1,529/kW.
Predominantly, the U.S. has embraced crystalline silicon tracking panels, which ingeniously follow the sun’s trajectory across the heavens. This innovative mechanism allows for maximized sunlight exposure, significantly amplifying electricity yield.
Wind
On the wind front, the average construction cost for U.S. onshore turbines inched up by 1.6%, hitting $1,451/kW. This rise was largely attributed to higher expenses associated with wind farms boasting a nameplate capacity above 100 megawatts (MW). Costs for farms within the 100 MW to 200 MW range escalated by 10%, resulting in an average of $1,614/kW. In an interesting twist, construction expenses for the largest wind projects—those exceeding 200 MW—rose marginally to $1,402/kW, a 1.4% uptick. Conversely, smaller wind farms (ranging from 1 MW to 100 MW) experienced a price reduction of 7.3%, averaging $1,806/kW in 2022.
Natural gas
In a starkly contrasting trend, the average construction cost for natural gas-fired generators plummeted by 11% from 2021 to 2022, driven primarily by substantial cost reductions in combined-cycle facilities. Average expenses for these generators fell catastrophically by 42% to $722/kW.
Nevertheless, not all natural gas technologies flaunted similar luck in cost reductions. The average construction expense for combustion turbines nearly doubled, soaring to $1,006/kW, while costs for internal combustion engines powered by natural gas escalated by 27% to $1,677/kW.
Principal contributor: Alex Mey