Falling Costs Drove Solar Installations in the US in 2021

Installed costs for standalone utility-scale solar projects fell by 75% since 2010

September 28, 2022


Nearly 12.5 GW of new utility-scale solar capacity came online in the U.S. in 2021, taking the cumulative capacity to 51.34 GW across 1,131 projects.

Falling costs drove the strong installation trend. Median installed costs for standalone utility-scale solar projects have steadily fallen by more than 75% since 2010, to $1.35/W for 62 projects installed in 2021. The median cost for solar projects with battery storage systems was $3.46/W, according to a Lawrence Berkeley National Laboratory report.

Single-axis tracking systems were used in 90% of all new utility-scale solar installations in 2021.

The report said utility-scale solar projects’ levelized cost of energy (LCOE) fell by about 85% since 2010 to $33/MWh in 2021. This number decreases to $27/MWh if the federal Investment Tax Credit (ITC) is factored in. The dip in LCOE is driven by lower project costs, improving capacity factors, lower operating expenses, and longer design life.

Aided by the ITC, most power purchase agreements were priced around $20/MWh for projects located in the West and $30-$40/MWh for projects elsewhere in the continental U.S.

Across all 7 Independent System Operators (ISOs) and 35 additional utilities, there was 674 GW of solar in interconnection queues at the end of 2021. More than 40% of this proposed solar capacity is paired with battery storage, with the highest concentration of these solar plus battery projects in California ISO and the non-ISO West.

Over 930 GW of zero-carbon generating capacity is currently seeking transmission access. With over 676 GW, solar accounts for the largest share of generation capacity in the queues. A substantial wind capacity of 247 GW is also seeking interconnection. Offshore projects account for 31% or 77 GW of the capacity.

Solar could account for as much as 40% of the U.S. electricity supply by 2035 and 45% by 2050 with aggressive cost reductions, supportive policies, and large-scale electrification.

The country will add an average of over 29 GW of solar capacity annually through 2026. However, the deployment pace is short of reaching President Joe Biden’s 2035 clean energy targets. To achieve the targets, the industry needs to install over 80 GW of solar annually from 2022 through 2035.