A brand new Credit score Suisse report means that from 2025 by 2032, the US may see photo voltaic and wind energy buy agreements frequently signed for underneath $0.01/kWh, resulting from a mixture of producing and challenge tax credit.
From pv magazine USA
The US Inflation Reduction Act (IRA) may grow to be a transformative doc, enabling a grand experiment in vitality era at a nationwide degree, in line with a brand new report by Credit score Suisse. It believes that the US has a chance to grow to be a world chief in clear vitality, very similar to it’s already within the fossil business.
Among the many many concepts mentioned within the doc is a putting prediction – there could also be solar energy tasks whose levelized value of electrical energy (LCOE) drops beneath a penny per kilowatt hour, bottoming round $0.04/kWh ($4/MWh) in 2029. We may see these costs as quickly as 2025, they usually may persist past 2030.
If we mix just a few information factors, we will see how this quantity is feasible – and would possibly even have room to go decrease. First, the IRA pays photo voltaic panel producers as much as $0.18/W when manufacturing modules. Every merchandise alongside the module provide chain will get a chunk – polysilicon, wafers, cells and modules.
Think about that it has solely been just a few years since First Solar told Bloomberg that their manufacturing prices have been round $0.20/W – with the IRA, they’re on a pathway to a $0.02/W product. Since First Photo voltaic has almost bought out for the upcoming few years, and will not really feel sufficient stress to succeed in pricing that low, this writer doesn’t anticipate probably the most excessive lows to materialize. However in line with this report, there are many different photo voltaic module producers that might get to a vital value of $0.06/W to §0.10/W.
The bottom quantity could possibly be pushed upward by demand, as some market projections recommend that we may see 100 GW of solar demand by the top of the last decade.
The report additionally means that the US would possibly grow to be a internet exporter of photo voltaic modules to the worldwide market, whereas pushing our pure value of producing modules towards $0.20/W close to the top of the 2030s. That’s nonetheless 33% better than estimates for China’s estimated prices (per the chart, above).
Second, we’ve to layer on the Manufacturing Tax Credit score (PTC). For 10 years after a challenge is constructed, it’ll obtain an inflation adjusted tax credit score for each kilowatt-hour generated. Bigger tasks are likely to take the PTC in lieu of the Investment Tax Credit, largely resulting from challenge scale and capability issue.
Moreover – we will enhance the PTC two occasions, by about one-third every time. The primary enhance will come from modules manufactured with home content material, and the second will come from constructing photo voltaic in vitality communities.
Once we mix a budget IRA photo voltaic panels with the PTC, we’ll begin to see home solar energy PPAs at $0.00/kWh sooner or later within the second half of the last decade. PPAs beneath zero have occurred earlier than.
It’s clear why Credit score Suisse spent greater than 100 pages going far past simply wind and photo voltaic in its report. That features loads of dialogue about cheaply manufactured inexperienced hydrogen as properly. Will the hydrogen be produced with $0/kWh photo voltaic? Hydrogen can have its personal further incentive of $3/kg.
