U.S. Construction Costs: Modest Increases For Solar And Wind, Significant Decrease For Natural Gas In 2022 - SolarQuarter

Oct 29, 2024

In 2022, the construction costs for solar and wind energy in the United States saw a slight rise, while costs for natural gas generators dropped significantly. According to recent data, the average construction costs for solar photovoltaic systems increased by 1.7%, reaching $1,588 per kilowatt (kW). Wind turbine costs also rose by 1.6%, bringing the average to $1,451/kW. Notably, investment in new electric-generating capacity decreased by 27% from the previous year, totaling $36.9 billion.

Solar energy saw a mixed bag of cost trends. The construction costs for crystalline silicon tracking panels increased by 13% to $1,605/kW, marking the highest price since 2018. These tracking systems automatically adjust to follow the sun, maximizing sunlight exposure and energy production. However, the average cost of crystalline silicon fixed-tilt panels dropped by 13%, although they remained the most expensive option at $1,788/kW. Additionally, the cost of Cadmium telluride panels fell by about 6%, reaching $1,529/kW.

Wind energy also experienced varied cost trends. The overall increase in average construction costs for onshore wind turbines can be attributed to higher expenses for larger wind farms. Wind farms with a capacity between 100 megawatts (MW) and 200 MW saw a 10% increase in costs, averaging $1,614/kW. The largest wind farms, exceeding 200 MW, also faced increased costs, averaging $1,402/kW, a 1.4% rise. Meanwhile, construction costs for smaller wind farms, those with capacities ranging from 1 MW to 100 MW, decreased by an average of 7.3%, bringing the costs down to $1,806/kW.

In contrast, the construction costs for natural gas-fired generators fell sharply, decreasing by 11%. This decline was mainly due to a significant drop in costs for combined-cycle facilities, which saw an average construction cost decrease of 42%, now at $722/kW. However, other natural gas technologies experienced cost increases. The average construction cost for combustion turbines nearly doubled, rising to $1,006/kW, while internal combustion engines using natural gas increased by 27%, reaching $1,677/kW.

These three energy sources—solar, wind, and natural gas—accounted for 86% of the new capacity added to the U.S. electric grid in 2022. The data, reported to the U.S. Energy Information Administration (EIA) through the EIA-860 Annual Electric Generator Inventory, reflects nominal construction cost values for generators installed each year. The findings also show trends from past years, contributing to a clearer understanding of the evolving landscape of electric generation in the United States.

While construction costs for solar and wind technologies rose slightly in 2022, natural gas generator costs saw a significant decline. This shift reflects ongoing changes in the energy sector, influencing future investment decisions and energy strategies across the country.